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CHAPTER $6$ Essentials of Financial Statement Analysis

CASES

C$6-1$

McDonald's and Buffalo

Wild Wings: Comparing two restaurant chains

McDonald's 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

Buffalo Wild Wings

Revenues $($ $ in millions$)$:

Source: Form $10-$Ks for Buffalo Wild Wings and McDonald's Corporation for $2007-2016.$

Required:

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.

Assume that for both companies sales at company$-$owned stores are the same $($on a 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.