Baskin Robbins 2013 Annual Report Download - page 15

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-5-
International operations
Our international business is organized by brand and by country and/or region. Operations are primarily conducted through
master franchise agreements with local operators. In certain instances, the master franchisee may have the right to sub-
franchise. In addition, we have joint ventures with a local, publicly-traded company in Japan, and with local companies in
Australia for the Baskin-Robbins brand, in Spain for the Dunkin' Donuts brand, and in South Korea for both the Dunkin'
Donuts and Baskin-Robbins brands. By teaming with local operators, we believe we are better able to adapt our concepts to
local business practices and consumer preferences. We have had an international presence since 1961 when the first Dunkin'
Donuts restaurant opened in Canada. As of December 28, 2013, there were 4,833 Baskin-Robbins restaurants in 46 countries
outside the U.S. and 3,181 Dunkin' Donuts restaurants in 32 countries outside the U.S. Baskin-Robbins points of distribution
represent the majority of our international presence and accounted for 67% of international franchisee-reported sales and 87%
of our international revenues for fiscal year 2013.
Our key markets for both brands are predominantly based in Asia and the Middle East, which accounted for approximately
71.8% and 15.4%, respectively, of international franchisee-reported sales for fiscal year 2013. For fiscal year 2013, $2.0 billion
of total franchisee-reported sales were generated by restaurants located in international markets, which represented 22.1% of
total franchisee-reported sales, with the Dunkin' Donuts brand accounting for $684 million and the Baskin-Robbins brand
accounting for $1.4 billion of our international franchisee-reported sales. For the same period, our revenues from international
operations totaled $138.6 million, with the Baskin-Robbins brand generating approximately 87% of such revenues.
Overview of key markets
As of December 28, 2013, the top foreign countries and regions in which the Dunkin' Donuts brand and/or the Baskin-Robbins
brand operated were:
Country Type Franchised brand(s) Number of restaurants
South Korea Joint Venture Dunkin’ Donuts 902
Baskin-Robbins 1,065
Japan Joint Venture Baskin-Robbins 1,157
Middle East Master Franchise Agreements Dunkin’ Donuts 338
Baskin-Robbins 706
South Korea
Restaurants in South Korea accounted for approximately 38% of total franchisee-reported sales from international operations
for fiscal year 2013. Baskin-Robbins accounted for 61% of such sales. In South Korea, we conduct business through a 33.3%
ownership stake in a combination Dunkin' Donuts brand/Baskin-Robbins brand joint venture, with South Korean shareholders
owning the remaining 66.7% of the joint venture. The joint venture acts as the master franchisee for South Korea, sub-
franchising the Dunkin' Donuts and Baskin-Robbins brands to franchisees. The joint venture also manufactures and supplies the
franchisees operating restaurants located in South Korea with ice cream, donuts and coffee products.
Japan
Restaurants in Japan accounted for approximately 22% of total franchisee-reported sales from international operations for fiscal
year 2013, 100% of which came from Baskin-Robbins. We conduct business in Japan through a 43.3% ownership stake in a
Baskin-Robbins brand joint venture. Our partner also owns a 43.3% interest in the joint venture, with the remaining 13.4%
owned by public shareholders. The joint venture manufactures and sells ice cream to franchisees operating restaurants in Japan
and acts as master franchisee for the country.
Middle East
The Middle East represents another key region for us. Restaurants in the Middle East accounted for approximately 15% of total
franchisee-reported sales from international operations for fiscal year 2013. Baskin-Robbins accounted for approximately 76%
of such sales. We conduct operations in the Middle East through master franchise arrangements.
Industry overview
According to The NPD Group/CREST® (“CREST®”), the QSR segment of the U.S. restaurant industry accounted for
approximately $255 billion of the total $423 billion restaurant industry sales in the US for the twelve months ended December
2013. The U.S. restaurant industry is generally categorized into segments by price point ranges, the types of food and beverages
offered, and service available to consumers. QSR is a restaurant format characterized by counter or drive-thru ordering and