Burger King 2013 Annual Report Download - page 43

Table of Contents
Comparable Sales Growth
During 2013, negative system comparable sales growth of (0.9)% in the U.S. and Canada was primarily due to continued softness in consumer
spending, ongoing competitive headwinds and the comparison against a strong 2012 when we launched the largest menu expansion in the brand’s history in
April 2012.
During 2012, system comparable sales growth of 3.5% in the U.S. and Canada was driven primarily by the implementation of our Four Pillars strategy.
During 2012, we enhanced our menu by launching four new menu platforms (salads, wraps, smoothies and desserts), expanded our chicken, coffee and
ancillary platforms and made compelling limited time offer promotions. We also implemented a marketing strategy that targets a broader consumer base with
more inclusive messaging and food centric advertising designed to balance value promotions and premium limited-time offerings.
Company restaurants
During 2013, Company restaurant revenues decreased primarily due to the net refranchising of Company restaurants during the past two years. CRM%
increased in 2013 primarily as a result of retaining restaurants with higher than average CRM%.
During 2012, Company restaurant revenues decreased primarily due to the net refranchising of Company restaurants during 2012, partially offset by
comparable sales growth.
During 2012, the decrease in CRM% reflects an increase in promotional activity to drive traffic and trial of limited time offer menu items, increases in
food, paper and product costs and an increase in repair and maintenance expenses associated with restaurants prepared for refranchisings, partially offset by
favorable adjustments to our self insurance reserve.
Franchise and Property
During 2013, the increase in franchise and property revenues was driven primarily by increases in royalties and property revenues derived from the net
refranchising of Company restaurants during the past two years. These factors were partially offset by the effects of negative comparable sales growth,
negative net restaurant growth and unfavorable FX impact.
During 2012, the increase in franchise and property revenues was driven by increases in royalties and property revenues derived from the net
refranchising of Company restaurants during 2012 and comparable sales growth. Additionally, franchise and property revenues increased as a result of a
$10.4 million increase in franchise fees and other revenue mainly driven by the timing of renewals as a result of incentives provided to franchisees to accelerate
restaurant remodels.
During 2013 and 2012, franchise and property expenses increased primarily due to new leases and subleases associated with additional restaurants
leased or subleased to franchisees as a result of the net refranchising of Company restaurants.
Segment income
During 2013, segment income decreased due to a decrease in CRM, partially offset by an increase in franchise and property revenues net of expenses
and a decrease in Segment SG&A.
During 2012, segment income increased due to an increase in franchise and property revenues net of expenses and a decrease in Segment SG&A,
partially offset by a decrease in CRM.
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Source: Burger King Worldwide, Inc., 10-K, February 21, 2014 Powered by Morningstar® Document Research℠
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