Mr. Hill: Presently, we are the largest casual dining concept in the world. This past year, 1999, we ended with 2.3 billion in system sales and 1,168 restaurants, and we recently opened our 1,200th restaurant. Even though we have the mass and the scale that we have, we're a very young concept because the majority of our restaurants have been built in the last seven years. 951 restaurants were built between 1993 and 1999. The concept is characterized by several things ' a very broad menu that appeals to a large number of people, food that is prepared to order and served in about 15 minutes by people we go to great lengths to select. These are people who care about other people and who are having fun. Also, it is served in a convenient neighborhood location. We think all of that equals very high value. The last characterization is that about 77% of our restaurants are owned and operated by franchisees, the balance by the company.
TWST: Why do you have so many franchises, as opposed to company-owned
stores?
Mr. Hill: It's part of an extension of an early strategy that Abe Gustin
had. As you may recall, I believe I said in our last interview that
conventional wisdom held that you could not franchise casual dining '
that it was too complicated. Abe believed that you could franchise
casual dining and proved it. As a matter of fact, the development that
we have today, and the ownership we have of distribution and
convenience, is a result of the advantage of having 55 domestic
franchisees developing very aggressively. At the same time, it also
produces what I call an annuity revenue stream. That is the royalty we
get on franchise development, which provides some insulation in a
volatile market. These entrepreneurs who put their capital at risk, get
up every day and go into the restaurants, have a sizeable commitment to
operating them according to the standards of the concept.
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