Question-and-Answer Session
Operator
(Operator Instructions) Your first question is from the line of Mark Smith.
Mark Smith - Feltl and Company
Just a handful of questions here -- first, can you talk about the subsidizing of your franchisees? Is that primarily in the commissary line where that’s been mostly affected?
Nigel Travis
Good morning. Yeah, primarily it’s in the commissary line. As I said in my remarks, we are concerned about pricing becoming a major issue and a major deterrent with consumers, so we are trying to encourage the system to make sure that they are sensible in the way that they price. Clearly legally we can’t tell them how to price but it is important that we make it easier for them to be sensible in their pricing. So we’ve worked very hard in a number of areas and there’s a whole series of actions that we have worked. In fact, from the middle of last year when we started to anticipate the problems this year, we’ve subsidized the franchisees some. We’ve tried to improve our deals with our suppliers, as I mentioned in my remarks. We’ve also I think worked very hard at trying to improve the efficiency of our PJ Food Service operations. I mean, some of the things they are doing with technology, it’s just simply amazing.
And this is all the result of a significant investment we made in software starting last year and carrying on to this year.
So it’s a mixed bag but primarily we’re trying to ensure that our franchisees are cushioned from the worst excesses of price increases.
J. David Flanery
Mark, the other thing that we have the ability to do, which is really no different than how we normally act, is on the area of royalties where a particular area may, a franchisee may have issues. We do have the ability to do some subsidy there, although we use that sparingly and that’s kind of our rifle approach, whereas food service is something that affects the whole system.
Nigel Travis
I think it’s worth saying that, I mentioned it a couple of times in my remarks and so did you, about this desire to keep stores open. We want to keep great franchisees in business. People who do not fit the brand or could be deemed as bad franchisees, we want them out of the system and the whole franchise community supports us in that desire. So we are very focused on keeping good franchisees healthy during these tough times and I believe that will be great for the system down the road.
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