We believe there are significant opportunities for our Company and the entire Burger King system by:
Driving sales and traffic in the U.S. and Canada: We have identified the following four pillars that we believe will enable us to drive future sales and traffic in the U.S. and Canada:
- Menu. The strength of our menu has been built upon our signature flame-grilled cooking process, which we believe results in better tasting burgers. Our menu strategy seeks to optimize our menu by focusing on our core products, such as our flagship Whopper® sandwich, while enhancing our menu to broaden our appeal to women, parties with kids and seniors. Our recently launched initiative to focus on our food expanded our product platforms and introduced 21 new or improved menu items in 2012. We believe that our renewed focus on our food will provide us the opportunity to meaningfully increase same store sales and margins.
- Marketing & Communications. We have established a data driven marketing process which is focused on driving restaurant sales and traffic, while targeting a broader consumer base with more inclusive messaging. Through our food-centric marketing communication strategy, we believe we can refocus our consumers on our food, which is a core asset and competitive differentiator.
- Image. We believe that our contemporary "20/20 design," which draws inspiration from our signature flame-grilled cooking process, will drive same store sales, higher profits and strong return on invested capital. To encourage franchisees to commit to these remodeling efforts, we developed a lower cost remodeling alternative and provided our U.S. franchisees with access to a third-party financing program. As of December 31, 2013, ~30% of the North America system was in the "20/20 design", and our goal is to have 40% reimaged by 2015.
- Operations. We have restructured our field teams through our "field optimization project," to significantly increase our field presence and restaurant visits by reducing the span of control of our field teams. We believe that this reduction in the number of restaurants for which a field employee is responsible will improve all aspects of restaurant operations, including food quality, guest service, speed of service and restaurant cleanliness. We also redefined the role of a field employee to be that of a "business coach" who is responsible for closely working with the restaurant teams and franchisees to achieve their sales, profit, and operational goals. The field employees‘ variable compensation is linked to the performance of those franchise restaurants. We believe that this "business coach" approach will ensure accountability and alignment with our franchisees. We have also launched standardized operational metrics to evaluate restaurants that focus on those core competencies that we believe will maximize the guest experience. We believe that enhancing our guests‘ experience increases traffic to restaurants and provides us and our franchisees the opportunity to improve sales and margins.
Accelerating international development: The expansion of our international restaurant network is an integral part of our global portfolio realignment project. As part of this project we expect to accelerate our international development with strategic partners and joint ventures. Generally, these strategic arrangements grant one or more franchisees the exclusive right to develop and manage Burger King restaurants in a specific country or region in exchange for commitments for substantial new restaurant development and a minority equity interest in the joint venture. We expect to focus our international expansion plans predominantly in high-growth emerging markets where we believe our current penetration is low relative to our potential. During 2011-12 we entered into joint venture and master franchise agreements in Brazil, Russia, and China. In 2013, we entered into joint venture and master franchise agreements in South Africa, India, and France. We expect to introduce the Burger King brand in additional new markets during 2014 and beyond.
Aggressively pursuing refranchising opportunities: We are aggressively pursuing opportunities to refranchise our domestic and international Company restaurants to new and existing franchisees, with the goal of approaching a 100% franchised system. We believe that a highly franchised business model will make our business less capital intensive and enhance our profits and margins.
Maintaining strong focus on corporate-level cost structure: We are focused on identifying opportunities to continually drive corporate-level general and administrative ("G&A") efficiencies by (1) maintaining our "Zero Based Budgeting" program, which is a method of annual planning designed to build a strong ownership culture by requiring departmental budgets to estimate and justify costs and expenditures from a "zero base," rather than focusing on the prior year‘s base, and (2) tying a portion of management‘s incentive compensation specifically to our G&A budget.