Burger King 2010 Annual Report Download - page 52

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Table of Contents
June 30, 2010, and a reduction in renewal franchise fees of $2.9 million, or 31%, for the fiscal year ended June 30, 2010, compared to
the prior fiscal year. Renewal franchise fees decreased primarily due to fewer franchise agreement expirations and temporary extensions
of expired franchise agreements in the U.S. as discussed above. These factors were partially offset by the impact of a net increase in the
number of franchise restaurants during the fiscal year ended June 30, 2010 as well as an increase in the effective royalty rate in the
U.S. The impact from the movement of currency exchange rates was not significant in this segment for the period.
Franchise revenues in EMEA/APAC increased by $12.8 million, or 7%, to $186.2 million for the fiscal year ended June 30, 2010,
compared to the prior fiscal year, due to positive franchise comparable sales growth in EMEA/APAC of 1.2% (in constant currencies),
reflecting strong performance in markets such as Turkey, Spain, Italy, Australia, New Zealand, and Korea, a $4.3 million favorable
impact from the movement of currency exchange rates and the impact of a net increase in the number of franchise restaurants during
fiscal 2010. Partially offsetting these factors were negative franchise comparable sales growth in Germany and the Netherlands and a
$2.0 million decrease in initial franchise fees due to fewer franchise restaurant openings compared to the prior fiscal year.
Latin America franchise revenues increased by $1.5 million, or 3%, to $48.4 million for the fiscal year ended June 30, 2010,
compared to the prior fiscal year. The increase was primarily the result of the favorable impact of $0.7 million from the movement of
currency exchange rates for the fiscal year ended June 30, 2010, and the impact of a net increase in the number of franchise restaurants
during fiscal 2010.
Property Revenues
Total property revenues for the fiscal year ended June 30, 2010, remained relatively unchanged compared to the prior fiscal year,
reflecting the net effect of changes to our property portfolio, which includes the impact of refranchising certain Company restaurants
and opening new restaurants leased or subleased to franchisees, offset by reduced revenues from percentage rents as a result of negative
franchise comparable sales growth in the U.S.
In the U.S. and Canada, property revenues increased by $3.0 million, or 3%, to $91.1 million for the fiscal year ended June 30,
2010, compared to the prior fiscal year. The increase was primarily due to an increase in the number of properties in our property
portfolio in the U.S. during the fiscal year, resulting primarily from refranchisings and the favorable impact of $0.5 million from the
movement of currency exchange rates in Canada, partially offset by decreased revenues from percentage rents resulting from negative
franchise comparable sales growth in the U.S.
Property revenues in EMEA/APAC decreased by $2.8 million, or 11%, to $22.6 million for the fiscal year ended June 30, 2010,
compared to the prior fiscal year. The decrease was primarily driven by a reduction in the number of properties in our property portfolio
and a $0.3 million unfavorable impact from the movement of currency exchange rates for the period.
Operating Costs and Expenses
Food, paper and product costs
Total food, paper and product costs decreased by $18.7 million, or 3%, to $585.0 million for the fiscal year ended June 30, 2010,
compared to the prior fiscal year, primarily due to the reduction in Company restaurant revenues discussed above and net decreases in
commodity costs in the U.S. and Canada segment for the fiscal year. These factors were partially offset by the unfavorable impact from
the movement of currency exchange rates of $4.6 million. As a percentage of Company restaurant revenues, total food, paper and
product costs decreased by 0.3% to 31.8% for the fiscal year ended June 30, 2010, primarily due to lower commodity costs in the
U.S. and Canada segment and the benefits realized from strategic pricing initiatives across all segments.
In the U.S. and Canada, food, paper and product costs decreased by $20.4 million, or 5% to $419.6 million for the fiscal year
ended June 30, 2010, compared to the prior fiscal year. The decrease was primarily due to the reduction in Company restaurant
revenues discussed above and lower commodity costs in the U.S. for the fiscal
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