McDonald’s corporation franchises and operates more than 30,000 fast-service res
ID: 2416346 • Letter: M
Question
McDonald’s corporation franchises and operates more than 30,000 fast-service restaurants in 119 countries. Buffalo Wild Wings franchises and operates more than 500 restaurants in the United States. Buffalo Wild Wings features chicken wings and a full bar in his restaurants.
Financial information for each of the company follows. EBI donates after tax earnings before interest expense.
Buffalo Wild Wings
2007
2008
2009
2010
2011
Number of stores operating at year end
Company owned
161
197
259
319
319
franchised
332
326
420
473
498
Revenue in Millions
Company owned Stores
379.7
488.7
555.2
717.4
Franchise fees
42.7
50.2
58.1
67.1
Total
422.4
538.9
613.3
784.5
McDonald’s
2007
2008
2009
2010
2011
Number of stores operating at year end
Company owned
6,906
6502
6262
6399
6435
franchised
25,465
25,465
26,216
26,338
27,075
Revenue in Millions
Company owned Stores
16,560.9
15,458.5
16,233.3
18,292.8
Franchise fees
6,961.5
7,286.2
7,841.3
8,713.2
Total
23,522.4
22,744.7
24,074.6
27,006.0
1. Determine the amounts of sales revenue per company-owned store and franchise fees per franchised store for each year and each company. In these computations, use the Average number of stores open during the year.
2. Assume that both companies’ sales at company-owned stores are the same (on per store basis) as sales for the same company’s franchised stores. Estimate each company’s franchise fee rate, which is stated as a percentage of each franchisee’s sales revenue.
3. Perform a cause of change analysis from 2008 to 2011 for each of the company to disaggregate the increase in revenue from company owned stores between growth in the average number of average stores open and growth in revenue per store.
4. Perform a similar analysis for franchise fee revenue
5. What do you analyses from requirement 4 and 5 you about the companies’ growth strategies?
Buffalo Wild Wings
2007
2008
2009
2010
2011
Number of stores operating at year end
Company owned
161
197
259
319
319
franchised
332
326
420
473
498
Revenue in Millions
Company owned Stores
379.7
488.7
555.2
717.4
Franchise fees
42.7
50.2
58.1
67.1
Total
422.4
538.9
613.3
784.5
Explanation / Answer
sales revenue in milliion particular 2007 2008 2009 2010 2011 mac d- comp. owned 2.55 2.38 2.50 2.81 mac d- franchised .27 .28 .30 .33 buffalo- comp. owned 1.51 2.27 2.58 3.34 buffalo- franchised .104 .122 .141 .16