Pizza Hut 2005 Annual Report Download - page 7
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Please find page 7 of the 2005 Pizza Hut annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.KFC®Snacker,$4completemealsandtheBuildYourOwn
VarietyBucket.Theteamisdedicatedtobethechicken
leaderandbringmoreandmorenewstostrengthenour
ChickenCapitalU.S.A.position.
Significantly,bothTacoBellandKFCachievedrecord
salesduringatimeofrecordgasprices,provingthatwell-
positionedand well-executedbrandswithstrongvalue
propositionscanperformwelleveninthetoughesteco-
nomicenvironments.
OurbiggestdisappointmentintheU.S.wasthatPizza
Hut’ssaleswereflatafterasoftsecondhalfoftheyear.
Frankly,wethinkthereasonisthatcompetitiondidabet-
terjobofbringingvaluetothecategorythanwedid.Letme
assureyouwearefocusedonthisissueandareconfident
thatwewillbemuchmorecompetitivegoingforward.
We’vealsochallengedourselvestodeliversignificantly
higherU.S.profitability.2005wasataleoftwocities.The
firsthalfoftheyearweweredown8%dueinlargepart
tocommodityinflation.Thesecondhalfweachieved+3%
profitgrowth.Wehopetocarrythismomentuminto2006.
U.S. BRAND KEYMEASURES:+5% OPERATINGPROFIT GROWTH;
2–3%BLENDEDSAMESTORESALESGROWTH.
Giventhefactwearetheonlyrestaurantcompanytohave
aportfolioofleadingbrands,weareleadingthewaywith
what wecallmultibranding: offeringour customers two
greatbrandsinonerestaurant.Multibrandinggivesusthe
competitiveadvantageofbrandedvariety.ThisisaYum!
Brandscategoryinnovationthatisdevelopingintoabig
business.Weadded531multibrandingunitsintheU.S.
thisyear,makingourtotalnumberover3,000.Asaresult,
multibrandingaccountsforanestimated$330millionin
U.S.companystoreprofitsandfranchisefees.
OurmostsuccessfulcombinationisKFC/TacoBell.
Thiscomborepresentsaprovenopportunitytoopenhigh
returnnewrestaurantsintradeareasthatusedtobetoo
expensiveordidnothaveenoughpopulationdensitytogo
tomarketwithonebrand.Ourshorttermfocusistotarget
600ruraltradeareaswherethere’snoKFCorTacoBell.
Longerterm,ourgoalwithmultibrandingistoeven-
tuallytakebothTacoBellandKFCto8,000unitsinthe
U.S.comparedtotheover5,000 eachwehavetoday.
ThismayseemlikeastretchbutrememberMcDonald’s
has14,000unitsintheU.S.sothere’splentyofupside
asweimproveoureconomicswithhighersales.
Ifyou’llrecall,that’swhyin2002weacquiredLong
John Silver’s, the leading quick service seafood res-
taurant,andA&WAllAmericanFoodwhichofferspure
beef hamburgers and hot dogs along withit’s famous
rootbeerfloat.Thisacquisitionallowsustosignificantly
expandourmultibrandingpotentialintheU.S.withTaco
Bell/LJSandKFC/A&WandKFC/LJScombinations.We
arealsotestingLJS/A&Wcombos.
Recognizing the power of multibranding, Pizza Hut
has also successfully created and is now expanding
WingStreet,atastylineofflavoredbone-inandboneless
chicken wings for its home delivery units. Pizza Hut/
WingStreet,withits665units,nowrepresentsthelarg-
estwingchainintheU.S.WingStreetiswellonitswayto
beinganationalbrandandwillultimatelybeinthevast
majorityofPizzaHuts.
Multibrandinghasthepotentialtohavethebiggest
unit sales and profit impact in our industry since the
adventofthedrive-thruwindow.Ourprimarychallengeis
tocontinuetobuildtheoperatingcapabilitytosuccess-
fullyruntheserestaurants.Giventheadditionalvariety,
it’ssimply hardertorunarestaurantwithtwo brands.
We’redoingamuchbetterjobofidentifyinganddevel-
opingtherightkindofmanagersandhavemademajor
progresssimplifyingourbackofhousesystems.Weare
alsovalueengineeringourbuildingsandatthesametime
offeringcustomerfriendlyenvironments.Giventheenor-
mousconsumerappeal,whenweexecutewellwehave
awinningproposition.That’sjoboneformultibranding
goingforward.I’mveryconfidentwewillgetthatjobdone
andacceleratedevelopmentaswedo.
MULTIBRANDING KEY MEASURES: AT LEAST 550 MULTIBRAND-
ING ADDITIONS PER YEAR, EARNING A RETURN ON COMPANY
ADDITIONS SEVERAL POINTS ABOVE THE COMPANY’S COST
OFCAPITAL.
Multibrandinghasthe
potentialtohavethebiggest
unitsalesandprofitimpactin
ourindustrysincetheadvent
ofthedrive-thruwindow.
Yum!Brands,Inc. |5.