Dunkin' Donuts 2015 Annual Report Download - page 43

-33-
Introduction and overview
We are one of the world’s leading franchisors of quick service restaurants (“QSRs”) serving hot and cold coffee and baked
goods, as well as hard serve ice cream. We franchise restaurants under our Dunkin’ Donuts and Baskin-Robbins brands. With
over 19,000 points of distribution in more than 60 countries worldwide, we believe that our portfolio has strong brand
awareness in our key markets. QSR is a restaurant format characterized by counter or drive-thru ordering and limited or no
table service. As of December 26, 2015, Dunkin’ Donuts had 11,750 global points of distribution with restaurants in 41 U.S.
states and the District of Columbia and in 42 foreign countries. Baskin-Robbins had 7,607 global points of distribution as of the
same date, with restaurants in 43 U.S. states and the District of Columbia and in 47 foreign countries.
We are organized into four reporting segments: Dunkin’ Donuts U.S., Dunkin’ Donuts International, Baskin-Robbins U.S., and
Baskin-Robbins International. We generate revenue from five primary sources: (i) royalty income and franchise fees associated
with franchised restaurants, (ii) rental income from restaurant properties that we lease or sublease to franchisees, (iii) sales of
ice cream and other products to franchisees in certain international markets, (iv) retail store revenue at our company-operated
restaurants, and (v) other income including fees for the licensing of our brands for products sold in non-franchised outlets, the
licensing of the right to manufacture Baskin-Robbins ice cream products sold to U.S. franchisees, refranchising gains, transfer
fees from franchisees, and online training fees.
Approximately 63% of our revenue for fiscal year 2015 was derived from royalty income and franchise fees. Rental income
from franchisees that lease or sublease their properties from us accounted for 12% of our revenue for fiscal year 2015. An
additional 14% of our revenue for fiscal year 2015 was generated from sales of ice cream and other products to franchisees in
certain international markets. The balance of our revenue for fiscal year 2015 consisted of revenue from our company-operated
restaurants, license fees on products sold in non-franchised outlets, license fees on sales of ice cream and other products to
Baskin-Robbins franchisees in the U.S., refranchising gains, transfer fees from franchisees, and online training fees.
Franchisees fund the vast majority of the cost of new restaurant development. As a result, we are able to grow our system with
lower capital requirements than many of our competitors. With only 49 company-operated points of distribution as of
December 26, 2015, we are less affected by store-level costs, profitability, and fluctuations in commodity costs than other QSR
operators.
Our franchisees fund substantially all of the advertising that supports both brands. Those advertising funds also fund the cost of
our marketing, research and development, and innovation personnel. Royalty payments and advertising fund contributions
typically are made on a weekly basis for restaurants in the U.S., which limits our working capital needs. For fiscal year 2015,
franchisee contributions to the U.S. advertising funds were $400.6 million.
We operate and report financial information on a 52- or 53-week year on a 13-week quarter basis with the fiscal year ending on
the last Saturday in December and fiscal quarters ending on the 13th Saturday of each quarter (or 14th Saturday when
applicable with respect to the fourth fiscal quarter). The data periods contained within fiscal years 2015, 2014, and 2013 reflect
the results of operations for the 52-week periods ending on December 26, 2015, December 27, 2014, and December 28, 2013,
respectively.
Selected operating and financial highlights
Fiscal year
2015 2014 2013
Systemwide sales growth 4.1 % 5.1 % 5.8 %
Comparable store sales growth (decline):
Dunkin’ Donuts U.S.(1) 1.4 % 1.7 % 3.3 %
Dunkin’ Donuts International 0.5 % (2.0)% (0.4)%
Baskin-Robbins U.S.(1) 6.1 % 4.9 % 1.0 %
Baskin-Robbins International (1.9)% (1.2)% 1.9 %
Total revenues $ 810,933 748,709 713,840
Operating income 319,567 338,858 304,736
Adjusted operating income 400,477 365,956 340,396
Net income attributable to Dunkin’ Brands 105,227 176,357 146,903
Adjusted net income 187,893 186,113 165,761
(1) Comparable store sales growth for Dunkin’ Donuts U.S. and Baskin-Robbins U.S. for fiscal years 2014 and 2013 have been revised
to include only those restaurants that have been open at least 78 weeks (approximately 18 months) to conform to the current period