Pizza Hut 2000 Annual Report Download - page 5

TRICON GLOBAL RESTAURANTS 3
1. International Expansion
Our International business now represents about a third
of our profits and we have only scratched the surface of
our development opportunity. In 2000, we opened a record
929 new traditional units. We are confident we will be able
to at least repeat this pace of development in 2001, and in
years to come. To put the profit opportunity into perspective,
McDonald’s makes over a billion dollars a year in Europe
alone. That’s more than what all of Tricon makes today. And
the only serious international restaurant brands are KFC,
Pizza Hut and McDonald’s. Our two global brands, KFC
and Pizza Hut, are universally accepted by our customers
around the world. Led by Pete Bassi, we have the people,
infrastructure and processes in place to drive consistent
mid-teens profit growth from here on out.
2. Blended U.S. Sales Growth
We have three category-leading brands, and we believe that
over time, having a portfolio of brands reduces our exposure
to temporary ups and downs of a single brand and will enable
us to deliver consistent same store sales growth. That’s why
blended same store sales growth is a good way to measure
our progress. This represents our number one challenge as
blended same store sales declined 2% in 2000 after two years
of 4% growth. To upgrade our
concept leadership, we success-
fully recruited Emil Brolick
from Wendy’s and Cheryl
Bachelder from Domino’s to
be Presidents of Taco Bell and
KFC, respectively. Both of
these executives have proven
track records for driving sus-
tainable same store sales growth
and building customer-focused
organizations. They will join
Tricon leads the
industry with multi-
branded restaurants,
resulting in a busi-
ness that represents
$1 billion in annual
system sales.
Mike Rawlings of Pizza Hut to lead our efforts to increase
our focus on running great restaurants and differentiating
our brands in everything we do. Our average unit volumes
are about half of McDonald’s and we are not capacity con-
strained. There is no doubt that we have significant sales
opportunity at each brand.
3. Multibranding
Multibranding is putting two or even three of our brands in
one restaurant asset. We now are the world’s multibranding
leader with a business that accounts for $1 billion in annual
system sales. We want you to know why we are so enthusiastic
about multibranding. First and most important, it’s a huge
customer win. Customers tell us time and again that they
prefer having more than one of our brands in the same asset
because it gives them more choices for the entire family.
Next, we generate higher cash flow per unit in multibranded
units. And finally, we are able to add new restaurants in trade
areas that we could not penetrate with a single brand. These
are trade areas where the real estate is expensive, as in the
Northeast, or in rural areas where there are not enough people
to support just one brand. This gives us the ability to further
expand our leading brands effectively with good returns. For
example, of the 509 U.S. traditional units we opened in 2000,