Pizza Hut 2002 Annual Report Download - page 13

Opposite
KFC is China’s # 1 brand
and opened the country’s
first “drive-thru” in Beijing
in 2002.
11.
We clearly can make the case that no other restaurant company has the kind of
opportunity that we do outside of the United States. Now our largest and fastest
growing division, Yum! Restaurants International, is a powerful international busi-
ness and our goal is to be nothing less than the premier global restaurant company.
David: How have you leveraged our people capability and sharpened our focus to nearly double our profits the
past five years?
Pete: I’m proud of the fact that our executives on average have 17 years of experience in the business. I think they
are the most talented leaders in the industry who have worked hard to build incredible teams and a strong franchise
system. In the early ‘90s before our spin-off as a public company, the international division planted too many flags
in too many countries. We were spread too thin, we didn’t have proper resources in each country and we incurred large
operating losses. In the last five years, we’ve become more disciplined about where we have company operations and
about the tools we provide around the world. There are two factors that have emerged: A narrower focus on equity
operations and much more disciplined tools that we manage with, among both company and franchise partners.
David: How did you decide where to focus our company equity investment?
Pete: We’ve been focusing our equity investment in four key markets
— China, the U.K., Korea and Mexico.
That’s been our story for the last two or three years. Each of these large company markets generates a great deal
of our profit and is well established with strong brands and strong growth potential.
Sam: Pete’s right. Take China for instance. There’s no doubt in my mind, we aren’t even close to reaching our full
potential there. China has roughly five times the population of the U.S., and KFC has about 5,000 units in the U.S.,
so at the same level of penetration we should have about 25,000 units in China someday. I’m proud of the fact that
we’ve been rated the #1 brand in China today — so our true potential may even be bigger.
Pete: We also think we’re making the right strategic bets on the growth of certain developing and start-up markets
that should be very rapidly growing in the next five years — namely, KFC Europe and we’re just starting in KFC Brazil.
Graham: In Western Europe, we’ve focused our initial investment in three important countries: France, Germany and
The Netherlands. The early results in France and The Netherlands in particular underscore the consumer appeal of
KFC and the unique nature of its products. Germany has been more difficult but, even there, we’re getting prom-
ising results in the bigger cities. Across the three countries there are now over 70 KFC units and our expansion
efforts have only just begun! We see parallel company and franchise development in these three markets as pro-
viding the springboard for more rapid penetration of other countries throughout the Continent.
BECOMING THE PREMIER GLOBAL RESTAURANT COMPANY
ROUNDTABLE PARTICIPANTS:
From left to right, top to bottom:
1. David Novak, Yum!, Chairman and
Chief Executive Officer, is the moderator
of this discussion.
2. Pete Bassi, YRI, President
3. Scott Bergren, YRI, Chief Concept Officer
4. Sam Su, President, Greater China
5. Graham Allan, Managing Director, Europe
1. 2. 3.
4. 5.