Pizza Hut 2001 Annual Report Download - page 6

Consider this. Back in
1992, McDonald’s had a little over
4,000 international restaurants — today, they have
nearly 16,000! When you look at Tricon today, we have
over 10,000 international restaurants with two global
brands — more than 6,000 KFC’s and over 4,000 Pizza
Huts. We’re committed to doubling our business in the
next eight to ten years by growing at a clip of 1,000+
new restaurants a year. We’re focusing our operations
in 7 countries which accounted for over 70% of our
ongoing operating profit in 2001 and we also have our
franchise and joint-venture partners driving growth by
opening nearly 70% of our new restaurants.
China is our shining star with
approximately 550 KFCs and 65 Pizza
Huts. We now have restaurants in
every province but Tibet, so we are in
position to serve 1.3 billion cus-
tomers. KFC is ranked the number one
brand by Chinese customers, ahead of
Nike, Coke, Pepsi and McDonald’s. One
day I am certain we will have more KFC’s
in China than we do in the U.S. The
opportunities we have in Mexico, Korea,
the United Kingdom and continental Europe are also
obvious and within our capability. You can expect us to
grow our international profits in the mid teen rates for
years to come.
ACCELERATING U.S. GROWTH We will also
accelerate U.S. growth. This is a tougher task because
the U.S. market is more mature and more competitive.
But we know we have underutilized restaurant assets
and are underpenetrated.
Our U.S. average unit volumes are only about
half of McDonald’s and believe me, we are not capacity
constrained. There’s no question we are
capable of generating significantly higher
sales out of our 20,000 existing restaurants in the U.S.
What’s more, our individual brands only have
about half of the number of restaurants McDonald’s
has in the United States. Burger King also has 8,000
units with $1.1 million average unit volumes. In
comparison, Taco Bell and KFC have over 5,000 restau-
rants, excluding license units. We believe we can
achieve at least Burger King distribution levels for both
Taco Bell and KFC.
Growing the core business is Job #1 for any
company and it’s Job #1 for us. Over the
past 10 years we’ve averaged about
2% same store sales growth, and
we think we can take our sales to
higher levels with the one-two
punch of improved restaurant
operations and continued marketing
and product innovation. Our U.S.
companies are singlemindedly organized to
get this job done.
MULTIBRANDING: A BREAKTHROUGH STRATEGY
More recently, we have identified a breakthrough
strategy that will transform our U.S. business and drive
average unit volumes—we call it multibranding.
One reason McDonald’s has $1.6 million average
unit volumes is they offer the consumer more choices. In
fact, they offer seven different food types — everything
from burgers, chicken, fish, and shakes to breakfast.
This drives sales by broadening consumer appeal.
However, our Tricon brands focus on one
category. Pizza Hut has pizza in its name. KFC means
Kentucky Fried Chicken. Taco Bell means Mexican. And
every time we’ve tried to move into new categories,
4
In 2001, we set a record
by opening 1,041 restaurants, excluding
license units, outside of the U.S. Far left,
we’re celebrating the opening of our 500th
(we opened our 600th in 2002) in China,
and left, our 70th KFC in Beijing.
We’re
committed to
doubling our international
business in the next eight to
ten years by growing at a
clip of 1,000+units
a year.