Pizza Hut 2007 Annual Report Download - page 7

5
1,000,000+
great customer
maniacs around
the globe
put a smile
on customers’
faces every day!
business continues to struggle and while we are confident of achieving long-term success,
the fact is our plans have not yet paid off. South Korea is another underperforming country,
and we have put in new management to give the business a fresh set of eyes and the right
new initiatives.
Forthe longer term, we are clearly mindful of the need to develop new growth opportunities,
and that’s why we are aggressively developing emerging markets with huge populations.
Take India for example, a country with over a billionpeople,60% under the age of 30, and
an economy growing 8% annually over the past three years. We take pride in ourprogress
at Pizza Hut, where we now have 140 restaurants in 35 cities and have beennamed the
“Most Trusted FoodServiceBrand” in India for three years running by the ;OL ,JVUVTPJ
large and rapidly growing market. Like China, we are building an outstanding local team
and putting the infrastructure in place to capitalize in India on what is clearly acknowledged
as the next major marketin the world. In Russia, I’m pleased to report our partnership with
Rostik’s, the country’snumber one fast food chicken chain, looks to be everything we’d
hoped for. We’ve made major headway converting the majority of our approximately 100 res-
taurants to KFC’s product line which our customers absolutely love. By the way, considering
that it took us ten years to develop 100 restaurants in China and India, ourpartnership with
Rostik’s gave us a gigantic jumpstart with local operating expertise in Russia’svery chal-
lenging operating environment. What’s more, countries like Vietnam, a small country with a
surprising 80 million people is on ourradar screen. We now have 40 KFCs and 2 Pizza Hut
casual dining restaurants there, with a target to have at least 100 KFCs by 2010. We are
also making plans to leverage our leading KFC South African platform for further African
expansion,targeting Nigeria first, and we’d like to replicate that on other parts of the continent.
Today,KFC South Africa has 479 restaurants with thehighest KFC transactions in the world
and five-year average system sales growth of 29%. Additionally, we are making big strides in
European markets, where McDonald’shas ahuge presence and we are basically on the ground
floor of a giant skyscraper building. Most people are amazed to learn that ourvery highest
KFC unit volumes in theworld are in France, proving theuniversal appeal of the brand.
Finally, given the popularity of Taco Bell and the fact it is the second most profitable brand
in the U.S., we are now planting the seeds to take it global. We are opening Taco Bells in
the Philippinesand Mexico, with plans to develop in Dubai,India, Spainand Japan over the
next couple of years. While the potentialis immense, the task is difficult because we have
to establish theMexican food category and build awareness of the brand, both of which are
unfamiliar in most countries. We will learn as we go, but our intent is to go, and win big.
;PTLZ. And we are enthusiastic about the prospects for KFC, which now has 31 units in
9 cities. We are consistently growing ourpresence and building sales momentum in this
YRImade $480 million in operating profit during 2007 and together with China, accounts
for over 50% of our operating profits compared to just 20% ten years ago. With the benefit
of increasing global prosperity,ourstrong global competitive positioning, massive, under-
penetrated markets, aggressive franchisee-led growth and exciting new growth drivers, you
can see why we view YRI as ourdivision with the greatest long-term potential. We are now
truly aglobal powerhouse with a realistic new-unit development opportunity that is unrivaled
by anyone in restaurants or retail. In fact, we think YRI’sglobal potential will reach at least
40,000 restaurants to go along with our over 20,000 China estimate.
INTERNATIONAL DIVISION KEY MEASURES: 10% OPERATING PROFIT GROWTH;
AT LEAST 5% SYSTEM SALES GROWTH; 750 NEW UNITSPER YEAR.