Pizza Hut 1999 Annual Report Download - page 5

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most important achievements in 1999 was our new product success. We entered new
product segments with considerable long-term growth potential at each of our brands:
“on the go” with sandwiches at KFC
“value” with The Big New Yorker at Pizza Hut
“big taste, hot value” with Chalupas at Taco Bell
These new products add to our leading category market share. As a result, we are going forward
with a significant opportunity for future growth off an even stronger competitive foundation.
In 1999, Pizza Hut had another outstanding year, with
same store sales up 9%. On Super Bowl Sunday,
Pizza Hut launched The Big New Yorker pizza, the
most successful new product introduction in the
pizza category in recent history. This 16"
authentic New York style pizza is offered
at a unique $9.99 value price, appealing
directly to the heavy pizza consumer com-
pelled by value and product innovation. With
our existing popular Pan, Thin Crust, Stuffed Crust
and Hand-Tossed pizzas, Pizza Hut is delivering on its
competitive positioning to have the “Best Pizzas Under One Roof.” In fact, Pizza Hut
outperformed its major competitors for the year in same store sales growth and grew
market share in the key traditional segment.
At KFC, our strategy is to reposition the brand as the “chicken experts for all
chicken occasions,” not just fried chicken on the bone. KFC grew same
store sales by 2% in the year. However, while KFC dominates the chicken
on the bone segment with our world-famous Original Recipe and about
a 40% market share, this segment has been relatively flat. Our growth
in recent years has come from adding concept layers, like the intro-
duction of Colonel’s Crispy Strips, which added about $120,000 to the
average KFC restaurant. We now own about a 10% share of the $4 bil-
lion strips category after four years. Our goal with the introduction of
chicken sandwiches is to add another concept layer to reignite KFC’s
topline growth. After our introductory quarter, we now own 8% of the
$5 billion sandwich category. Nearly a fifth of all Quick Service
Restaurant users have tried our sandwiches, and they’ve told us their
intent to repurchase is over 85%. Research says we have the best
chicken sandwiches of any national competitor and we’re currently gen-
erating $130,000 of annualized sales per restaurant — our challenge now
is to make sandwiches more incremental to the base business. Our entire
system, especially our franchisees, are committed to making sandwiches
a success because we know we have such a strong consumer proposition.
While Taco Bell’s same store sales were flat for the year, we began to make
great progress by refocusing on Quick Service Restaurant consumers who
already crave Taco Bell’s great-tasting food and rate it #1 on “value.” Our
strategy is to reinforce Grande Taste, Loco Value — Big Taste, Great Value —
David C. Novak
Chief Executive Officer
3