Pizza Hut 2002 Annual Report Download - page 7

almost the entire population of 1.3 billion people. As a result of these capabilities, combined with the superlative
operating skills of the Chinese team, we are currently opening more than 200 restaurants in China each year. I’m
more convinced than ever that KFC in China will one day become a bigger business than KFC in the U.S. After all,
KFC is the Chinese customer’s favorite brand of any kind…period.
The biggest challenge we face today is developing new markets…getting to scale in
Continental Europe, in Brazil with KFC, and in India with Pizza Hut. Opening up KFCs
in Germany is a challenge given consumers’ unfamiliarity with the brand and their
preference for beef products. As a result, we plan to test KFC-A&W multibrand
restaurants in Germany in 2003, providing consumers with a hamburger option.
Results for KFC in France and Holland have been very promising. We now have an
outstanding group of well-capitalized franchisees to grow Pizza Hut in India. And we
just formed a joint venture in Brazil with experienced food service operators who
have the local knowledge to help us get up and running. But it’s tough sledding
because building operational capability outside the U.S. takes time. Our approach is to be patient and ever-mind-
ful of overall profitability and returns. Our international business self funds its new development from the cash flow
it generates, and we have a very disciplined process to ensure we maintain and build our high returns on capital.
As I hope you can tell, we’re truly excited about our international opportunity. We have little competition and lots
of runway to continue growing profitability. The facts speak for themselves. We are building a powerful interna-
tional business and our goal is to be nothing less than the premier global restaurant company. We intend to grow
our international profits at a mid-teens rate, with great returns for years to come.
#2 MULTIBRANDING GREAT BRANDS. The question I get asked most often is how do you
compete in the tough U.S. market? Our answer is to be the best in the world at providing customers branded
restaurant choice. We have category-leading, highly differentiated brands with proprietary products that succeed
as stand-alone restaurant concepts. Yet our customers have told us loud and clear that we can break away from
the pack by offering two of our great brands in the same restaurant. We call it multibranding, and here’s why it’s
such a big idea.
For years, McDonald’s has been the envy of the industry for their high average U.S. unit volumes, at about $1.6 mil-
lion, almost twice that of the average Yum! Brands restaurant in the U.S. One reason why McDonald’s has such high
volumes is they offer the consumer more choices. In fact, they offer seven different types of food — everything from
burgers, chicken, fish, and shakes to breakfast. McDonald’s has something for everybody and this drives sales.
5.
1,975 of our nearly 33,000
restaurants are now
multibranded and account
for almost $2 billion in
annual system sales.
13,000
multibranded
units
We have the
potential for
in the U.S. alone.
“It’s all about my
customers. They
tell me they come
here because there
is something for
everyone in the
family. Burgers for
the kids, fish for
mom and a Root
Beer Float
for dad.”
Stephanie Hankins,
Long John Silver’s/A&W
We’re committed to
doubling our number of
international restaurants in the
next eight to ten years by
continuing to grow at a clip of
1,000+ new restaurants
each year.