Papa Johns 2010 Annual Report Download - page 49

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42
Domestic franchise and development fees were $340,000 in 2010, or a decrease of $179,000 from 2009,
consisting of the following (in thousands, except unit data):
2010 2009
Increase
(Decrease)
Total units opened 169 79 90
Units opening with no fees 165 63 102
Unit opening fees 60$ 273$ (213)$
Franchise renewal fees 3 15 (12)
Cancellation, transfer and extension fees 277 231 46
Total franchise and development fees
340
$
519
$
(179)
$
Domestic commissary sales increased 8.8% to $454.5 million in 2010 from $417.7 million in the prior
comparable period. The increase was primarily due to an increase in sales volumes. Our commissaries
charge a fixed dollar mark-up on the cost of cheese. Cheese cost is based upon the BIBP block price,
which increased from $1.55 per pound in 2009 to $1.59 per pound in 2010, or a 2.6% increase.
Other sales decreased $2.1 million to $52.0 million. The decrease was primarily due to a decline in sales
at Preferred.
Our PJUK operations, which is denominated in British pounds sterling and converted to U.S. dollars,
represented approximately 51% and 50% of international revenues in 2010 and 2009, respectively.
International revenues increased 15.7% to $48.0 million in 2010, from $41.5 million in 2009, reflecting
the increase in the number of franchised restaurants over the past year.
Costs and Expenses.
The restaurant operating margin at domestic Company-owned units was 20.2% in
2010 compared to 21.8% in 2009. Excluding the impact of consolidating BIBP, restaurant operating
margin decreased 0.8% to 19.9% for the year ended December 26, 2010 as compared to the
corresponding period in 2009, consisting of the following differences:
•
Cost of sales were 1.3% higher (excluding the consolidation of BIBP) in 2010 as compared to
2009 due to increased discounting of prices to customers.
•
Salaries and benefits were 1.6% lower as a percentage of sales in 2010 compared to 2009,
primarily due to labor efficiencies from implemented initiatives, and a change in pay practices
for certain team members.
•
Advertising and related costs as a percentage of sales were 0.3% higher in 2010 due to an
increase in local marketing initiatives.
•
Occupancy costs and other operating costs, on a combined basis, as a percentage of sales, were
0.8% higher in 2010 primarily due to increased reimbursement rates for certain team members, in
connection with previously noted labor initiatives.
Domestic commissary and other margin was 8.6% in 2010, compared to 9.8% in 2009. Cost of sales was
75.5% of revenues in 2010, compared to 73.8% in 2009. Cost of sales increased primarily due to our
commissaries’ absorbing an increase in prices of certain commodities, including increases in vegetable
products due to the impact from harsh Florida winter weather during 2010. Salaries and benefits were
relatively consistent for both periods at $34.1 million and $33.9 million for 2010 and 2009, respectively.
Other operating expenses increased approximately $3.3 million in 2010 as compared to 2009, primarily
due to higher distribution costs, reflecting increased volumes and an increase in fuel costs.