Popeye's 2014 Annual Report Download - page 40

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Company-Operated Restaurant Operating Profit
Company-operated restaurant operating profit was $14.7 million in 2013 compared to $11.1 million in 2012. The $3.6 million
increase in Company-operated restaurant operating profit was primarily due to an increase in same-store sales of 2.3% and new
restaurant openings in 2013 and 2012. Company-operated restaurant operating profit margin was 18.7% of sales in 2013 compared
to 17.3% of sales in 2012. The higher restaurant operating profit margin was primarily due to overall lower food and commodity
prices, higher beverage rebates, labor efficiencies and increased leverage on occupancy and other expenses. Company-operated
restaurant operating profit margin is a supplemental non-GAAP measure of performance. See the heading entitled “Management’s
Use of Non-GAAP Financial Measures.”
Occupancy Expenses - Franchised Restaurants
Occupancy expenses - franchised restaurants was $3.4 million in 2013, a $0.5 million increase from 2012. The increase was
primarily due to $1.2 million occupancy expenses associated with the twenty-six restaurant properties converted and leased to
franchisees in Minnesota and California under percentage rent arrangements. The increase in occupancy expenses for the converted
properties were partially offset by lower occupancy expenses from properties sold or leases assigned to franchisee operators.
General and Administrative Expenses
General and administrative expenses were $73.4 million in 2013, a $5.8 million increase from 2012. This increase was primarily
attributable to:
• $2.3 million increase in international franchise development and marketing support expenses,
• $1.0 million increase in domestic new restaurant development expenses,
• $0.7 million increase in marketing and menu development expenses,
• $0.5 million increase in multi-unit management expenses in new Company-operated restaurant markets in Indianapolis
and Charlotte,
• $0.5 million increase in stock-based compensation expense, and
• $0.8 million increase in leadership development, global supply chain, domestic franchisee restaurant support and other
expenses, net.
General and administrative expenses remain among the most efficient in the industry at approximately 3.0% of system-wide
sales during 2013 and 2012, respectively.
Depreciation and Amortization
Depreciation and amortization was $6.7 million compared to $4.6 million in 2012. 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 $0.3 million in expense in 2013 compared to other income of $0.5 million in 2012. In 2013, other expense
included $0.4 million in loss on disposals of property and equipment offset by $0.1 million in net gain on sales of assets, net. In
2012, other income includes a $0.3 million gain on the sale of real estate to a franchisee and the recognition of $0.5 million in
deferred gains related to seven properties formerly leased to a franchisee, partially offset by $0.4 million loss on disposal of property
and equipment and other expenses, net.
See Note 16 to our Consolidated Financial Statements for a description of Other expenses (income), net for 2013 and 2012.