Popeye's 2014 Annual Report Download - page 38

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20
Occupancy Expenses - Franchised Restaurants
Occupancy expenses - franchised restaurants was $3.2 million in 2014, a $0.2 million decrease from 2013. The decrease was
primarily due to lower occupancy expenses associated with the twenty-six restaurant properties converted and leased to franchisees
in Minnesota and California under percentage rent arrangements and lower occupancy expenses from properties sold or leases
assigned to franchisee operators.
General and Administrative Expenses
General and administrative expenses were $78.9 million in 2014, a $5.5 million increase from 2013. This increase was primarily
attributable to:
• $2.9 million increase in personnel expenses in the corporate support center primarily related to incentive compensation
and marketing,
• $1.7 million increase in multi-unit management expenses of Company-operated restaurants primarily in our new
Indianapolis and Charlotte markets,
• $1.1 million increase in domestic franchise restaurant support services,
• $0.7 million decrease in provision for credit recoveries,
• $0.5 million increase in domestic new restaurant development expenses, and
• $0.6 million increase in leadership development training and field training expenses,
partially offset by:
• $1.7 million lower royalty expense under the old royalty and supply agreement with Diversified. The Company reinvested
approximately $1.1 million of this savings into the initiatives supporting its Develop Servant Leaders strategy. Going
forward, we plan to reinvest the $3.1 million annual savings from the formula royalty into improving the Popeyes employee
and guest experience; and
• $1.4 million lower information technology outsourcing fees, other professional fees and other general and administrative
expenses, net.
General and administrative expenses remain among the most efficient in the industry at approximately 2.9% and 3.0% of system
wide sales during 2014 and 2013, respectively.
Depreciation and Amortization
Depreciation and amortization was $8.7 million compared to $6.7 million last year. The increase in depreciation and amortization
is primarily attributable to depreciation associated with new Company-operated restaurants, restaurant reimages, acquired restaurant
properties converted and leased to franchisees in Minnesota and California, information technology assets and our corporate support
center facility.
Other Expenses (Income), Net
Other expense was $1.2 million in expense in 2014 compared to other income of $0.3 million last year. In 2014, other expense
included $0.2 million in loss on disposals of property and equipment and $2.0 million in expenses related to executive transition
expenses, offset by $1.0 million in net gain on sale of assets, net. In 2013, other income includes $0.4 million in loss on disposals
of property and equipment offset by $0.1 million in net gain on sales of assets, net.
See Note 16 to our Consolidated Financial Statements for a description of Other expenses (income), net for 2014 and 2013.