Sizzling down under.

• Author: Thomas, Christopher
• Position: Sizzler International's operations in Australia - Includes related article

Setting up shop on the other side of the world can be a financial nightmare if you're not prepared for legislative, compensation and reporting differences. Sizzler International's CFO explains how his company took its business to Australia.

It was a "g'day" for Sizzler International when it decided to enter the Australian marketplace in the mid-1980s. The company started out by buying five Bonanza Steak House restaurants and converting them to the Sizzler concept of steak, seafood and a fresh fruit and salad bar.

Fast-forward 10 years. In fiscal year 1994-95, 45 percent (about $423 million) of the company's $938 million in total sales came from its Australian operations, where the company now has 81 Sizzlers (40 franchises and 41 company-operated restaurants) and 92 KFCs (formerly Kentucky Fried Chicken). In the process, Sizzler International has gained a strong base from which to launch and service its expansion into the Asia Pacific region.

Most KFC and Sizzler operations are in the suburban areas of major cities - much like their counterparts in the United States. That's because the company's Australian customer base is largely families, as it is in the United States. However, there are some restaurants in urban areas, where lunch is a larger part of the business.

All in all, Sizzler International's experience in Australia has been positive, but it's also called for a different approach to doing business than in the States. For starters, Australia is a very complex and highly regulated environment, especially for the restaurant business. Regulations are both numerous and complex, and the country has its own statutory reporting system and a high level of corporate, personal and employee benefits taxation.

To deal with this complexity, Sizzler International employs a financial group of 30 people headquartered in Brisbane, who work in the areas of tax, financial planning, payroll, cash management, accounts payable, general ledger and management information systems. They report to the managing director of Australia on a daily basis, with general reporting responsibility to the CFO of Sizzler International.

Sizzler International senior management holds quarterly meetings with Australian operations to review operating results and to assess them against quarterly targets, as well as to discuss strategic business goals. This takes place within the context of the yearly financial plan, which the Australian unit prepares and submits to corporate headquarters for approval. Based on this approved annual plan, the unit establishes parameters for spending, major capital expenditures and short-term budget appropriations. The Australian unit makes local financing arrangements and expenditures within the structure set by corporate. The company meets the unit's short-term financing needs, such as loans for local construction.

A significant challenge in...