Pizza Hut 2002 Annual Report Download - page 14

12.
Scott: We have very large franchise businesses around the world and even though they seem to be in mature mar-
kets, we’re confident they can continue their strong growth. It’s counter-intuitive, but the bigger and stronger you
become, the more powerful the brands and the building opportunities become. Specifically, I’m talking about
Canada, Japan, Australia and a lot of Asia.
David: Talk about your approach to driving global brands.
Scott: It’s not a whole lot different than what Yum! does domestically. We follow the Yum! marketing model with
one global brand identity but position the brand so it’s more relevant to the local markets. This way, we can work
in partnership with the countries themselves to adapt the product to be more relevant to local customers. Limited
time offers or flavor improvements are made at the market level. But on issues of brand identity and product seg-
mentation, we continue to work toward a tighter integration of product and brand development between our
international and domestic brands. For example, at the local level we should be using similar product descriptions
in our marketing when introducing new products across the globe.
David: What makes you think we can continue to add 1,000 new units per year?
Sam: This January, we reached 800 stores in China and we are developing at a pace of 200-plus stores a year. This
puts us more than 200 stores ahead of our closest competitor, McDonald’s, with an ever-widening gap. But we are
far from full penetration. Our Pizza Hut business has reached 100 units and is China’s leading brand in the casual
dining category. We are also beginning to develop a strong Pizza Hut delivery business that can be yet another
major growth vehicle. Then, there is always the possibility of other new brands.
Graham: Despite a strong presence in the U.K. and its broad appeal throughout the world, KFC historically has been
only a small player in the rest of Europe. The brand is represented in most Continental countries but has not achieved
true scale in any single country. This gap provides us with a great opportunity for future growth. The potential market is
more than 700 million people and branded quick-service restaurants are now well accepted by consumers across Europe.
Pete: We have five great brands, in addition to Multibranding opportunities, and we’ve really only just begun devel-
oping KFC and PH. These two brands alone have significant potential. We also have strong, dedicated leaders who
are committed to developing this potential
— not to mention the fact that we are the largest real estate developer
in the world. And we can’t forget that there is no shortage of demand for our food.
David: I know we’ve had a great year, but what are your greatest challenges going forward?
Pete: I’d say our greatest challenge is not to lose our focus. We have the strategy and people in place. Now we
have to continue to improve year over year. We are going to be an increasingly larger percentage of Yum! profit
going forward and I’m really excited about our international opportunity. The table is set for us to become the pre-
mier global restaurant company.
Above left Around the world Yum!’s Customer
Maniacs are busy introducing exciting new products
like the KFC Pocket Meal in the U.K.
Above right Celebrations marking the 100th Pizza
Hut in China took place in the port city of Tienjian.
Below left This restaurant — the first KFC in XinJiang,
China — is the 667th KFC in that country.
Below right KFC Thailand celebrated Yum!’s fifth
anniversary by entertaining 200 orphans from rural
Thailand with cake and an appearance from Chicky,
our KFC mascot.