About RSI
Restaurant Services, Inc. (RSI), at www.rsiweb.com , is the supply chain manager for the BURGER KING^® system and the exclusive purchasing agent for the vast majority of products and distribution services used by RSI’s members - BURGER KING^® restaurant owners in the United States.

Founded in 1991 as an independent member-owned cooperative, RSI acts on behalf of BURGER KING^® restaurants in the U.S. to achieve best commercial terms for food, packaging, premiums, promotional products, restaurant supplies, equipment, and distribution services. The cooperative negotiates the purchase of about $3 billion a year in products and distribution services on behalf of its members.

RSI works closely with restaurant owners, Burger King Corporation (BKC), food and packaging suppliers, marketing agencies, equipment vendors, distributors and information systems providers to streamline and improve the supply chain efficiency of the system.

RSI has a 20-member Board of Directors comprised of two BURGER KING^® franchisees nominated from each of nine geographical districts across the U.S., one representative of BKC, and one franchisee representing minority interests. The cooperative maintains a close working relationship with BKC, with respective roles and responsibilities outlined in a formal Operating Agreement.

In an industry marked by intense competition, RSI’s key responsibility is to negotiate commercial terms and conditions for a continuous supply of specified products at the best cost to help BURGER KING^® restaurants operate profitably. Expenses tend to rise over time and market conditions often limit restaurants’ ability to pass increases on to their customers. In this challenging environment, cost control at the restaurants’ back door is critical to restaurant profitability.

RSI is proud of the role it plays in support of its members, contributing to the growth and success of the BURGER KING^® brand.

The RSI Vision and Mission
RSI’s vision is “To be the BEST purchasing and supply chain organization in the foodservice industry.” Supporting this vision is the RSI mission: “To ensure, at the best cost and at established performance standards, a continuous supply of the products and services necessary to build, operate and maintain BURGER KING^® restaurants for the benefit of our members.”

Corporate Structure
Incorporated in Delaware on October 31, 1991, RSI operates as a cooperative under Subchapter T of the Internal Revenue Code. Accordingly, the company distributes, as patronage dividends, substantially all income earned on the basis of business conducted with its members. RSI has delivered a patronage dividend to its members each year since it was formed.

The company is not exempt from income taxes and therefore is subject to federal and state income taxes with respect to all non-patronage sourced income and any earnings not paid to members. RSI’s operations cover the United States and selected international business.

Subsidiaries
RSI is parent to two other entities – Supply Chain Services, LLC and Restaurant Services Canada Inc.

• Supply Chain Services, LLC
  Established in 2003, Supply Chain Services, LLC (“SCS”) performs “non-traditional” supply chain services for RSI members, other BURGER KING^® restaurant operators, including restaurant operators outside of North America and other customers outside of the BURGER KING^® system (as approved by the Board of Directors). “Non-traditional” services are those outside the scope of RSI’s Operating Agreement with BKC. The net income of SCS accrues to RSI members and is distributed through RSI’s patronage process.

• Restaurant Services Canada Inc.
  In 2005, Restaurant Services Canada Inc. (“RSCI”) was established to provide food & packaging purchasing, distribution and supply chain management services for BURGER KING^® restaurants in Canada. Purchasing negotiations for products and services seek to achieve mutual benefit for BURGER KING^® restaurants in Canada and the United States by leveraging their combined purchasing power.

RSI's Relationship with Burger King Corporation
There is a formal relationship between the two organizations that is unique to the BURGER KING^® system. An Operating Agreement signed in April, 1992 between RSI and BKC describes the respective roles and responsibilities of RSI and BKC.

In summary, BKC is responsible for brand strategy, marketing programs, product specifications, food quality and safety standards and the approval and disapproval of suppliers and distributors. RSI is responsible for negotiating commercial terms and conditions for the sale and delivery of products and distribution services to BURGER KING^® restaurants in the United States.

Membership
RSI is owned by its members – BURGER KING^® franchisees and BKC. Any BURGER KING^® franchisee operating one or more BURGER KING^® restaurants in the United States is eligible for membership in RSI. In order to be entitled to vote, receive notices of meetings and elections, and receive patronage payments from RSI, members are first required to file a membership form. To elect Board representatives or decide on matters presented to them by the Board, each registered member is entitled to one vote, regardless of how many restaurants the member owns.

Organization
To facilitate continuity of management, directors on the RSI Board serve two-year staggered terms. Directors play an active role in the oversight of RSI’s operations and the establishment of policies for RSI through their participation on the Board and on Board Committees that are aligned with the company’s primary areas of operation.

The majority of RSI’s staff is based at the company’s offices in Coral Gables, Florida. Distribution Services Managers are field-based and assigned to specific U.S. territories.

RSI's Role
RSI negotiates contracts for about $3 billion in products and distribution services a year, but normally does not take title to, or deliver, any products.

Contracts for food, packaging and premiums are negotiated by RSI on behalf of distribution companies located in the United States with suppliers approved by BKC. The distribution companies take delivery of the products and pay the suppliers for them. Restaurants then buy the approved products from the distribution companies.

Similarly, contracts for equipment and facilities including construction programs are negotiated by RSI with suppliers approved by BKC who deliver the equipment to BURGER KING^® restaurants in the United States or execute these programs as appropriate.

For distribution services, agreements are negotiated by RSI on behalf of most members with distributors approved by BKC.

Core Businesses
RSI's core businesses are represented by its four purchasing departments:

• Food & Packaging
• Equipment & Facilities
• Premiums & Promotion Items
• Distribution & Logistics 

These departments develop supply and purchasing strategies and pricing methodologies for their areas of specialization, conduct contract negotiations and manage vendor relationships. They all seek to capitalize on the ways in which developments in information technology may provide new opportunities for increasing the competitive advantage of the BURGER KING^® brand.

Supporting these key functions are the Business Analysis and Promotion Planning, Information Systems, Finance, Legal and Administration departments.

• Food & Packaging
  RSI purchases hundreds of different food and packaging items on behalf of its members. Food procurement covers most of the products needed to build the wide variety of menu offerings featured in a typical BURGER KING^® restaurant. From beef patties and prepared produce to French fries and ketchup, products are sourced in support of the RSI mission. The department is also responsible for the provision of promotional and everyday packaging used to deliver menu items to customers and for the cleaning materials and supplies used to maintain BURGER KING^® restaurants.
  
  Food & Packaging focuses on the management of strategic relationships with suppliers. Much time and energy is devoted to optimizing the interface between suppliers and the other players in the BURGER KING^® system, and to supporting BKC in new product development and marketing initiatives.

• Equipment & Facilities
  Global sourcing, combined with domestic and international procurement programs through BKC approved suppliers and suppliers of ancillary products, enable Equipment & Facilities to consolidate the buying power in the United States of RSI members. Through this department’s negotiations, the operating costs of dining rooms, kitchens, and facilities are aggressively managed to assure “best” cost.
  
  All kitchen needs – fabrication, ovens, microwaves, broilers, toasters, fryers, fry dispensers, bun grillers, holding cabinets, dispensing equipment, shake machines, coffee equipment, small wares, thermometers, refrigeration and ice machines, shelving, emission control devices, ventilation, Drive-Thru systems for the United States - are negotiated through Equipment & Facilities. Uniforms, restaurant décor, water treatment equipment, air conditioning equipment, fire protection, playgrounds, lighting and safety for members are also included.
  
  In addition, the department negotiates and manages programs to support BKC in equipment and facilities rollouts that impact restaurants nationwide, and in construction-related items required in the development and maintenance of new and existing restaurants.
  
  A comprehensive, online e-commerce equipment purchasing guide, the “RSI eRedBook“ provides a proprietary virtual marketplace for members to order equipment and receive the latest Equipment & Facilities updates.

• Premiums & Promotion Items
  RSI works with BKC’s Marketing Department and creative agencies to identify and deliver high-quality, safe, and cost effective premiums (toys) and other promotional items - to the BURGER KING^® system in more than 66 countries worldwide. On behalf of its members, RSI negotiates all commercial terms and conditions for premium and promotional items including tooling and manufacturing in China, ocean freight, import and customs clearance, inland freight to U.S. distribution centers and delivery to restaurants.

• Distribution & Logistics
  RSI purchases distribution services and manages the performance of BKC approved distributors on behalf of over 90% of members’ restaurants in the United States. For distribution centers in the U.S., RSI works with established Local Distribution Committees comprised of members in that area and/or their authorized representatives, to ensure that distributors adhere to performance standards set forth in their distributor service agreements. When appropriate, RSI will identify and recommend new distributors to BKC for approval.

Promotion Planning
The promotions calendar for BURGER KING^® restaurants is busy year-round. RSI supports each promotion with forecasts and analyses of product requirements, collects and interprets menu item sales data and estimates product demand to assist the supply chain in supporting each restaurant.

During each promotion, RSI tracks and reports sales activity while managing inventory to minimize excess inventory exposure at the end of each promotion and reduce the costs that could be incurred by the system if excess inventory is not depleted.

Commodity Analysis
Many of the food products used in BURGER KING^® restaurants are tied to the commodity price of their ingredients. RSI’s work in commodity analysis and risk management has enabled it to adopt a more sophisticated approach to purchasing strategies, contract provisions and pricing methodologies which help to reduce the impact of inherent commodity volatility.

RSI continues to develop expertise in the commodities market to manage risk associated with commodity price volatility and seasonality on behalf of its members.

Technology
Technology innovations help participants in the supply chain for BURGER KING^® restaurants to communicate and plan more effectively, to make better informed management decisions and, ultimately, to reduce expenses.

RSI provides in-restaurant support to its members for point-of-sale and back-of-house systems and is involved in the development of electronic interface between suppliers and distributors that supports performance reporting.

Capabilities such as advanced planning systems, demand management and forecasting, timely sales data, resource planning, warehouse management, transportation management and electronic commerce can lead to reduced order cycle times, reduced inventory days of supply and ensure that promised delivery dates are met.

Eventually, it is expected that all activities in the U.S. BURGER KING^® restaurant supply chain, from raw material to the consumer, will be integrated while simultaneously allowing key business relationships to be conducted on an exclusive enterprise-to-enterprise basis.

Minority Suppliers
To extend economic and business development opportunities to all communities, RSI actively seeks out minority suppliers.

These suppliers, of course, are measured by the same high quality standards as all of the providers to the BURGER KING^® system. RSI believes it has the right and obligation to actively promote the utilization of minority-owned and/or controlled suppliers so long as they are competitive in price, quality, and service with other approved suppliers within the BURGER KING^® system.

A Minority Supplier Development Action Plan introduced by RSI and BKC has the primary objective of growing the total purchases from ethnic minority suppliers and adding new suppliers each year.

How does a Vendor become approved for the BURGER KING^® system?
BKC approves all vendors and products for the BURGER KING^® system. To have BKC approved status is a high achievement for a company and means it has passed a rigorous series of evaluations.

Suppliers
All suppliers must meet BKC required service, product and/or equipment specifications, maintain certain standards and satisfy other BKC approval criteria on an ongoing basis.

If BKC is asked to approve a new proposed supplier, it will consider the current or potential need for a new supplier. If BKC determines within its sole discretion that a new supplier is necessary or appropriate, it will evaluate the proposed supplier under its current criteria. The evaluation and decision making process typically takes from 90 to 160 days. BKC then communicates its decision to the proposed supplier. BKC monitors approved suppliers and may require a third-party audit and testing to determine their compliance with BKC’s specifications and other requirements. Approved and proposed suppliers will be required to bear BKC’s testing, audit and other costs associated with the company’s evaluation and review of a supplier.

In addition to meeting BKC’s approval requirements, approved suppliers must meet RSI’s commercial requirements to ensure continuous supply of the approved products to the BURGER KING^® system at competitive prices. When considering a new supplier, both BKC and RSI evaluate the supplier’s ability to meet all of their respective criteria.

As a routine component of developing and implementing supply agreements for existing products, RSI will typically consider new suppliers for existing products. A new supplier that has the potential to produce an existing BURGER KING^® approved product at the required standard may contact RSI initially to establish a business rationale for recommendation as a supplier for the BURGER KING^® system. If RSI is satisfied that this supplier can produce the BURGER KING^® product to the established specifications, offer competitive pricing, and assure continuous supply, the cooperative may recommend this supplier to BKC which has the exclusive authority to approve suppliers.

Distributors
As with suppliers, distributors to the BURGER KING^® system must also meet BKC’s strict standards for quality and safety and must be able to meet RSI’s requirements to ensure continuous and reliable supply of the approved products to BURGER KING^® restaurants at competitive distribution rates. The approval process for a new distributor begins when RSI, in concert with BKC, identifies a need for a potential new distribution center in the designated service region. Working with the Local Distribution Committees, RSI will identify qualified companies that have foodservice experience, a proven track record and financial viability. RSI then submits its recommendations to BKC which has the exclusive authority to approve distributors. After the distributor has been approved by BKC and a distributor services agreement has been reached by the distributor and RSI, both the cooperative and the Local Distribution Committee work closely to monitor the ongoing performance of the new distributor.

The Future
RSI believes that its ability to create and maintain a “Best in Class” efficient and responsive supply chain is the key to long-term, sustainable competitive advantage for the BURGER KING^® brand. Together with BKC, suppliers and distributors, RSI continues to develop and implement new technology and electronic systems that align with this thinking and support the company’s mission of ensuring an uninterrupted supply of all the products and services required by our member’s restaurants at the very “best” cost.