Pizza Hut 2004 Annual Report Download - page 39

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In฀ 2004,฀ the฀ increase฀ in฀ Worldwide฀ Company฀ sales฀ was฀
driven฀by฀new฀unit฀development,฀acquisitions฀of฀franchisee฀
restaurants฀(primarily฀certain฀units฀in฀Canada฀which฀we฀now฀
operate),฀and฀ same฀ store฀sales฀ growth,฀partially฀offset฀by฀
refranchising฀ and฀ store฀ closures.฀ Excluding฀ the฀ favorable฀
impact฀of฀both฀foreign฀currency฀translation฀and฀the฀YGR฀acqui-
sition,฀Worldwide฀Company฀sales฀increased฀4%฀in฀2003.฀The฀
increase฀was฀driven฀by฀new฀unit฀development,฀partially฀offset฀
by฀store฀closures฀and฀refranchising.
In฀2004,฀the฀increase฀in฀Worldwide฀franchise฀and฀license฀
fees฀was฀driven฀by฀new฀unit฀development,฀same฀store฀sales฀
growth,฀and฀refranchising,฀partially฀offset฀by฀store฀closures฀
and฀acquisitions฀of฀franchisee฀restaurants฀(primarily฀certain฀
units฀in฀Canada฀which฀we฀now฀operate).฀Excluding฀the฀favor-
able฀impact฀of฀both฀foreign฀currency฀translation฀and฀the฀YGR฀
acquisition,฀Worldwide฀franchise฀and฀license฀fees฀increased฀
5%฀in฀2003.฀The฀increase฀was฀driven฀by฀new฀unit฀develop-
ment,฀royalty฀rate฀increases฀and฀same฀store฀sales฀growth,฀
partially฀offset฀by฀store฀closures.
In฀2004,฀the฀increase฀in฀U.S.฀Company฀sales฀was฀driven฀
by฀ new฀ unit฀ development฀ and฀ same฀ store฀ sales฀ growth,฀
partially฀offset฀by฀refranchising฀and฀store฀closures.฀Excluding฀
the฀favorable฀impact฀of฀the฀YGR฀acquisition,฀U.S.฀Company฀
sales฀ increased฀ 2%฀ in฀ 2003.฀ The฀ increase฀ was฀ driven฀ by฀
new฀unit฀development,฀partially฀offset฀by฀store฀closures฀and฀
refranchising.
U.S฀same฀store฀sales฀includes฀only฀Company฀restaurants฀
that฀have฀been฀open฀one฀year฀or฀more.฀U.S.฀blended฀same฀
store฀sales฀include฀KFC,฀Pizza฀Hut฀and฀Taco฀Bell฀Company-
owned฀restaurants฀only.฀U.S.฀same฀store฀sales฀for฀Long฀John฀
Silver’s฀and฀A&W฀restaurants฀are฀not฀included.฀Following฀are฀
the฀same฀store฀sales฀growth฀results฀by฀brand:
฀ Same฀ ฀ Average฀
฀ Store฀ ฀ Guest฀
2004฀ Sales฀ Transactions฀ Check
KFC฀ (2)%฀ (4)%฀ 2%
Pizza฀Hut฀ 5%฀ 2%฀ 3%
Taco฀Bell฀ 5%฀ 3%฀ 2%
฀ Same฀ ฀ Average฀
฀ Store฀ ฀ Guest฀
2003฀ Sales฀ Transactions฀ Check
KFC฀ (2)%฀ (4)%฀ 2%
Pizza฀Hut฀ (1)%฀ (4)%฀ 3%
Taco฀Bell฀ 2%฀ 1%฀ 1%
In฀2004,฀blended฀Company฀same฀store฀sales฀increased฀3%฀
due฀to฀increases฀in฀average฀guest฀check฀and฀transactions.฀In฀
2003,฀blended฀Company฀same฀store฀sales฀were฀flat฀due฀to฀
a฀decrease฀in฀transactions฀offset฀by฀an฀increase฀in฀average฀
guest฀check.
In฀2004,฀the฀increase฀in฀U.S.฀franchise฀and฀license฀fees฀
was฀driven฀by฀same฀store฀sales฀growth,฀new฀unit฀develop-
ment฀and฀refranchising,฀partially฀ offset฀ by฀store฀closures.฀
Excluding฀the฀favorable฀impact฀of฀the฀YGR฀acquisition,฀U.S.฀
franchise฀and฀license฀fees฀remained฀essentially฀flat฀in฀2003฀
as฀a฀decrease฀primarily฀driven฀by฀store฀closures฀was฀largely฀
offset฀by฀new฀unit฀development.
In฀2004,฀the฀increase฀in฀International฀Company฀sales฀was฀
driven฀by฀new฀unit฀development,฀acquisitions฀of฀franchisee฀
restaurants฀(primarily฀certain฀units฀in฀Canada฀which฀we฀now฀
operate),฀and฀ same฀ store฀sales฀ growth,฀partially฀offset฀by฀
refranchising฀and฀store฀closures.฀In฀2003,฀the฀increase฀in฀
International฀Company฀sales฀was฀driven฀by฀new฀unit฀devel-
opment,฀partially฀offset฀by฀refranchising,฀same฀store฀sales฀
declines฀and฀store฀closures.
In฀ 2004,฀ the฀ increase฀ in฀ International฀ franchise฀ and฀
license฀ fees฀ was฀ driven฀ by฀ new฀ unit฀ development,฀ same฀
store฀sales฀growth฀and฀refranchising,฀partially฀offset฀by฀store฀
closures฀ and฀ our฀ acquisitions฀ of฀ franchisee฀ restaurants฀
(primarily฀certain฀units฀in฀Canada฀which฀we฀now฀operate).฀In฀
2003,฀the฀increase฀in฀International฀franchise฀and฀license฀fees฀
was฀driven฀by฀new฀unit฀development,฀royalty฀rate฀increases฀and฀
same฀store฀sales฀growth,฀partially฀offset฀by฀store฀closures.
COMPANY฀RESTAURANT฀MARGINS
2004฀United฀States฀ International฀ Worldwide
Company฀sales฀ 100.0%฀ 100.0%฀ 100.0%
Food฀and฀paper฀ 29.9฀ 35.1฀ 31.8
Payroll฀and฀employee฀benefits฀ 30.5฀ 19.1฀ 26.4
Occupancy฀and฀other฀฀
฀ operating฀expenses฀ 25.8฀ 30.0฀ 27.3
Company฀restaurant฀margin฀ 13.8%฀ 15.8%฀ 14.5%
2003฀ United฀States฀ International฀ Worldwide
Company฀sales฀ 100.0%฀ 100.0%฀ 100.0%
Food฀and฀paper฀ 28.8฀ 35.5฀ 30.9
Payroll฀and฀employee฀benefits฀ 31.0฀ 19.0฀ 27.2
Occupancy฀and฀other฀฀
฀ operating฀expenses฀ 25.6฀ 30.0฀ 27.1
Company฀restaurant฀margin฀ 14.6%฀ 15.5%฀ 14.8%
2002฀ United฀States฀ International฀ Worldwide
Company฀sales฀ 100.0%฀ 100.0%฀ 100.0%
Food฀and฀paper฀ 28.2฀ 36.1฀ 30.6
Payroll฀and฀employee฀benefits฀ 30.9฀ 18.7฀ 27.2
Occupancy฀and฀other฀฀
฀ operating฀expenses฀ 24.9฀ 29.2฀ 26.2
Company฀restaurant฀margin฀ 16.0%฀ 16.0%฀ 16.0%
In฀ 2004,฀ the฀ decrease฀ in฀ U.S.฀ restaurant฀ margins฀ as฀ a฀
percentage฀of฀sales฀was฀driven฀by฀higher฀food฀and฀ paper฀
costs฀and฀higher฀occupancy฀and฀other฀costs,฀partially฀offset฀
by฀the฀impact฀of฀same฀store฀sales฀increases฀on฀restaurant฀
margin.฀Higher฀food฀and฀paper฀costs฀were฀primarily฀driven฀by฀
increased฀commodity฀costs฀(principally฀cheese฀and฀meats)฀
and฀higher฀occupancy฀and฀other฀costs฀were฀primarily฀driven฀
by฀increased฀expense฀resulting฀from฀the฀adjustment฀related฀
to฀our฀accounting฀for฀leases฀and฀the฀depreciation฀of฀leasehold฀
37
Yum!฀Brands,฀Inc.