Burger King 2009 Annual Report Download - page 60

Table of Contents
percentage of Company restaurant revenues, payroll and employee benefits remained relatively unchanged at 11.8% compared to 11.7%
in fiscal 2007.
Occupancy and Other Operating Costs
Occupancy and other operating costs increased by $20.9 million, or 5%, to $439.0 million in fiscal 2008. This increase was
primarily attributable to the net addition of 57 Company restaurants in fiscal 2008 and a $17.8 million unfavorable impact from the
movement of foreign currency exchange rates, primarily in EMEA. As a percentage of Company restaurant revenues, occupancy and
other operating costs decreased by 0.7% to 24.5% as a result of the benefits realized from the new flexible batch broilers in the United
States and Canada, which includes accelerated depreciation expense on the old broilers recorded in fiscal 2007, the closure of
under−performing restaurants and the refranchising of Company restaurants in the U.K. (including benefits from the write−off of
unfavorable leases) and worldwide Company comparable sales growth of 2.9% (in constant currencies) for the period. These benefits
were partially offset by the unfavorable impact of accelerated depreciation expense related to our restaurant reimaging program in the
United States and Canada.
In the United States and Canada, occupancy and other operating costs increased by $17.3 million, or 7%, to $271.1 million in
fiscal 2008. This increase was primarily driven by the net addition of 87 Company restaurants in fiscal 2008, accelerated depreciation
expense related to our restaurant reimaging program and a $4.0 million unfavorable impact from the movement in foreign currency
exchange rates in Canada. As a percentage of Company restaurant revenues, occupancy and other operating costs decreased by 0.4% to
23.1% primarily as a result of the benefits realized from the accelerated depreciation expense on the old broilers recorded in fiscal 2007
and not recurring this year, and Company comparable sales growth of 2.6% (in constant currencies) for the period in this segment,
partially offset by the unfavorable impact of accelerated depreciation expense related to our restaurant reimaging program.
In EMEA/APAC, occupancy and other operating costs increased by $1.3 million, or 1%, to $149.9 million in fiscal 2008. This
increase was primarily due to a $13.5 million unfavorable impact from the movement in foreign currency exchange rates, partially
offset by the net reduction of 37 Company restaurants in fiscal 2008. As a percentage of Company restaurant revenues, occupancy and
other operating costs decreased by 1.7% to 27.1%, reflecting the benefits realized from the closure of under−performing restaurants and
the refranchising of Company restaurants in the U.K. (including benefits from the write−off of unfavorable leases) as well as Company
comparable sales growth of 3.8% (in constant currencies) for the period in this segment.
In Latin America, occupancy and other operating costs increased by $2.3 million, or 15%, to $18.0 million in fiscal 2008 primarily
due to the net addition of seven new Company restaurants in fiscal 2008. As a percentage of Company restaurant revenues, occupancy
and other operating costs increased by 0.3% to 26.1% primarily as a result of an increase in utilities, property taxes and the cost of
information technology upgrades, including POS systems associated with the additional restaurants.
Selling, General and Administrative Expenses
Selling expenses increased by $8.0 million, or 10%, to $91.0 million in fiscal 2008. The increase was primarily attributable to
$4.1 million of additional sales promotions and advertising expenses generated by higher Company restaurant revenues, a $4.1 million
reduction in the amount of bad debt recoveries compared to the prior year and a $4.1 million unfavorable impact from the movement of
foreign currency exchange rates, primarily in EMEA, partially offset by a $4.0 million reduction in the amount of discretionary
contributions to advertising funds in EMEA.
General and administrative expenses increased by $18.0 million, or 5%, to $408.5 million in fiscal 2008. The increase was
primarily attributable to a $6.2 million increase in stock−based compensation expense, as an additional year of grants is included in the
expense amount. In addition, general and administrative expenses increased as a result of a $4.5 million increase in corporate salary,
fringe benefits and other employee−related costs, a $4.8 million increase in general corporate travel and meeting costs and a
$15.2 million unfavorable impact from the movement of foreign currency exchange rates, primarily in EMEA. These increases were
partially offset by a $1.8 million decrease in operating costs, which includes a decrease in rent expense, utility expense and repairs and
maintenance
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