Pizza Hut 1999 Annual Report Download - page 22

Download and view the complete annual report

Please find page 22 of the 1999 Pizza Hut annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 72

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72

DAVE DENO, CHIEF FINANCIAL OFFICER: Though 1999
was an outstanding year for Tricon by any meas-
ure, our goal is to make each financial result we
deliver a benchmark to beat going forward. To do
that, we’re boldly pursuing key growth strategies
designed to drive performance year after year.
First and foremost, we’ve made same store sales
growth our superordinate goal. While we are
committed to consistently delivering 2-3% com-
bined same store sales growth each year, we
exceeded even our own expectations with U.S.
combined same store sales growth of 4% in
1999. Recent entry into three new product seg-
ments — with more great menu variety on the
way — promise to strengthen our three leader-
ship brands even more by adding to our already
dominant share of each market category.
Second, we’re driving margin improvement
worldwide by building process and discipline
around what really matters — strong opera-
tions, training, flow-thru, labor retention and
cost management. In our view, Tricon must
always earn the right to own stores by operat-
ing high-return units — so, for company stores
that don’t perform up to potential, we’re reduc-
ing risk by selling restaurants to our franchisees
and other third parties. This past year we
refranchised over 1,400 stores to talented, expe-
rienced operators, which in the process,
generated a healthy cash flow that’s enabled us
to pay down debt and reinvest in the business.
Third, we’re focusing on international growth
— as we see it, our single greatest performance
driver for the long term. This past year, TRI
delivered operating profit of $265 million up
from $172 million in 1997. Returns have
almost doubled and system sales grew 10% in
1999. To build on this momentum, we’re con-
tinuously exploring new growth oppor-
tunities while working to improve return on
company assets in the key countries in
which we operate.
MARK COSBY, CHIEF DEVELOPMENT OFFICER: Fourth,
we’re also building and upgrading more
stores. Over the last two years, we built a new
unit growth machine and completed a plan for
every market and trade area in the United
States. This plan identifies 4,700 new unit oppor-
tunities, which should sustain a 500-600 unit
growth pace for the system for eight to ten years.
A cornerstone of this new unit opportunity is
multi-branding, a strategy that allows us to pen-
etrate trade areas where single branding doesn’t
work. So far, our KFC and Taco Bell 2-n-1’s have
averaged over $1.4 million in sales and 3-n-1’s
have opened at well over $2 million in sales. We
have over 600 multi-brand units in the U.S. today
and plan to have over 2,500 units within the next
20 Dave Deno
Chief Financial Officer
3
then we
make more
money