Chili's 2008 Annual Report Download - page 15

positioning and operating strength of our world-class brands to grow profitable ongoing comparable
restaurant sales. The basis of this business model will be grounded in our five areas of focus:
• Hospitality;
• Food and beverage excellence;
• Restaurant atmosphere;
• Pace and convenience; and
• International expansion.
Our organization is focused on these five priorities that are designed to grow our base business by
engaging and delighting our guests, differentiating our brands from competitors throughout the industry,
reducing the costs associated with managing our restaurants and establishing a strong presence in key
markets around the world.
Restaurant Development
In fulfilling our long-term vision, and being mindful of our five areas of focus, our restaurant brands
will continue to expand primarily through our franchisees. Our company-owned development will be
restricted to a limited number of restaurants that meet or exceed our internal hurdle rates to ensure
appropriate returns. This restricted company growth will shift the greater portion of new restaurant
development to our expanding franchise community, domestically and internationally.
New restaurant development will be concentrated on certain identified markets to achieve the
necessary levels to improve the competitive position, marketing potential, profitability and return on
invested capital of our restaurant brands. Domestic expansion efforts continue to focus not only on major
metropolitan areas in the United States but also on smaller market areas and non-traditional locations
(such as airports, college campuses, toll plazas, and food courts) that can adequately support our
restaurant brands. International expansion efforts continue to focus on introducing our brands into new
countries and on expanding our brands within existing countries.
As part of our strategy to expand through our franchisees, our overall percentage of franchise
ownership (domestically and internationally) increased in Fiscal 2008. The following table illustrates the
percentages of franchise ownership as of June 25, 2008 for the company and by restaurant brand:
Percentage of Franchise
Operated Restaurants
(domestic and international)
Brinker ...................................... 33%
Chili’s ....................................... 38%
On The Border ................................ 20%
Maggiano’s ................................... 0%
Macaroni Grill ................................. 14%
Domestic Franchise Development and Operations
Our focus on domestic expansion is primarily through growth in our number of franchised restaurants.
We are accomplishing this part of our growth through existing, new or renewed development obligations
with new or existing franchisees. In addition, we have also sold and may sell company-owned restaurants to
our franchisees (new or existing). At June 25, 2008, 28 total domestic development arrangements existed.
A typical domestic franchise development agreement provides for payment of development and initial
franchise fees in addition to subsequent royalty and advertising fees based on the gross sales of each
restaurant. We expect future domestic franchise development agreements to remain limited to enterprises
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