Burger King 2013 Annual Report Download - page 10

Table of Contents
In the United States and in other countries where we manage the advertising fund, we coordinate the development, budgeting and expenditures for all
marketing programs, as well as the allocation of advertising and media contributions, among national, regional and local markets, subject in the United States
to minimum expenditure requirements for media costs and certain restrictions as to new media channels. We are required, however, under our U.S. franchise
agreements, to discuss the types of media in our advertising campaigns and the percentage of the advertising fund to be spent on media with the recognized
franchisee association, currently the National Franchisee Association, Inc. In the United States and certain other markets, we typically conduct a non-binding
poll of our franchisees before introducing any nationally- or locally-advertised price or discount promotion to gauge the level of support for the campaign.
In 2013 and 2012, the advertising fund in the United States was impacted by a temporary reduction in advertising fund contributions paid by the
Company and participating U.S. franchisees associated with incentives to accelerate implementation of restaurant equipment initiatives, and we expect that the
reduction in advertising contributions will continue until 2016. As a result, the Company’s advertising contributions in the U.S. were not material in 2013 and
we anticipate continued de minimus advertising contributions.
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New product development is a key driver of our long-term success. We believe the development of new products can drive traffic by expanding our
customer base, allow restaurants to expand into new day parts, and continue to build brand leadership in food quality and taste. Product innovation begins
with an intensive, data-driven research and development process that analyzes potential new menu items, including extensive consumer testing and ongoing
analysis of the economics of food cost, margin and final price point.
As part of the “Menu” pillar in the U.S. and Canada, we launched Satisfries™, a first of its kind better-for-you French fry, in the third quarter of
2013. In 2014, our menu strategy will focus on enhancing core menu items, such as our great tasting line of burgers and our line of breakfast products, while
delivering compelling value to drive sales and traffic and rolling out fewer, more impactful products.
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Our operations strategy is designed to drive best-in-class restaurant operations by our franchisees and improve friendliness, cleanliness, speed of service
and overall guest satisfaction to drive long-term growth. We have uniform operating standards and specifications relating to selection of menu items,
maintenance and cleanliness of the premises. In addition, all Burger King restaurants are required to be operated in accordance with quality assurance and
health standards which we establish, as well as standards set by federal, state and local governmental laws and regulations. These standards include food
preparation rules regarding, among other things, minimum cooking and holding times and temperatures, sanitation and cleanliness.
We require each franchisee’s managing owner and designated restaurant manager to complete initial and ongoing training programs provided by us,
including minimum periods of classroom and on the job training. BK ® GURU is our digital learning and communications platform for our restaurant-level
teams, providing both basic and advanced training solutions for managers and team members. In the U.S., we and an independent outside vendor administer
the Restaurant Food Safety certification, which is intended to bring heightened awareness to food safety, and includes immediate follow-up procedures to take
any action needed. Additionally, to improve our focus on in-store operations, we use “GUEST TRAC” surveys in the U.S. and many other countries to assess
customer satisfaction with restaurant operations. We have improved our responsiveness to guest experience reporting through a more user-friendly website.
We have a field management structure with “Sales, Profit, and Operations Coaches” who work shoulder-to-shoulder with restaurant teams to increase
customer satisfaction, operational efficiency and franchise profitability. Each coach manages approximately 30 restaurants to enable coaches to partner more
closely with restaurant teams. Our coaches focus on a few, high-impact priorities to steadily improve restaurant operations and guest satisfaction. Our
coaches’ compensation structure is incentivized based on franchise restaurant performance. This structure allows for a “true” partnership in driving
restaurant performance and guest satisfaction.
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General. We grant franchises to operate restaurants using Burger King trademarks, trade dress and other intellectual property, uniform operating
procedures, consistent quality of products and services and standard procedures for inventory control and management. For each franchise restaurant, we
generally enter into a franchise agreement covering a standard set of terms and conditions. Recurring fees consist of monthly royalty and advertising payments.
Franchisees report gross sales on a monthly basis and pay royalties based on gross sales.
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Source: Burger King Worldwide, Inc., 10-K, February 21, 2014 Powered by Morningstar® Document Research℠
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