McDonalds and Buffalo Wild Wings: Comparing two restaurant chains (LO 6-1)

McDonalds Corporation franchises and operates more than 36,000 fast-service restaurants around the world. Buffalo Wild Wings franchises and operates more than 1,000 restaurants in North America. Buffalo Wild Wings features chicken wings and a full bar in its restaurants.

Financial information for each company follows. The data for Buffalo Wild Wings predates its acquisition by Inspire Brands in February 2018.

Selected Financial Data

Required:

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 for both companies sales at company-owned stores are the same (on a per store basis) as sales for the same companys franchised stores. Estimate each companys franchise fee rate, which is stated as a percentage of each franchisees sales revenue.

3. Perform a cause-of-change analysis from 2008 to 2012 for each company to disaggregate the increase in revenues from company-owned stores between growth in the average number of average stores open and growth in revenues per store. Also perform a cause-of-change analysis from 2012 to 2016.

4. Perform similar analyses for franchise fee revenues.

5. What do your analyses from requirements 3 and 4 tell you about the companies growth strategies and how they differ from each other and over time?

Buffalo Wild Wings 2011 2012 2013 2008 2009 2010 2014 2015 2016 197 363 232 420 259 473 319 498 381 510 434 559 491 591 596 579 631 609 2007 Number of stores operating at yearend: Company-owned 161 Franchised 332 Revenues ($ in millions): Company-owned store sales Franchise fees Total $379.7 $488.7 $555.2 $717.4 $964.0 $1,185.4 $1,423.0 $1,715,0 $1,891.6 42.7 58.1 67.1 76.6 81.4 93.2 97.7 95.2 422.4 538.9 613.3 784.5 1,040.6 1,266,8 1,516.2 1,812.7 1,986.8 50.2 McDonald's 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Number of stores operating at yearend: Company-owned 6,906 6,502 6,262 6,399 6,435 6,598 6,738 6,714 6,444 5,669 Franchised 24,471 25,465 26,216 26,338 27,075 27,882 28,691 29,544 30,081 31,230 Revenues ($ in millions): Company-owned store sales $16,560.9 $15,458.5 $16,233.3 $18,292.8 $18.602.5 $18,874.2 $18,169.3 $16,488.0 $15,295.0 Franchise fees 6,961.5 7,286,2 7,841.3 8,713.2 8,964.5 9,231.5 9,272.0 8,925.0 9,327.0 Total 23,522.4 22,744.7 24.074.6 27,006.0 27.567.0 28.105.7 27,441.3 25,413.0 24,622.0