Pizza Hut 2008 Annual Report Download - page 11

Pizza Hut also got a bounce last year out of its Pizza Mia which is great for groups
that want a lot of pizza at a low price – $5 each when you buy three. P’Zone is
another great value for individuals. It weighs in at over a pound and sells for $6.99.
Pizza Hut is gaining solid momentum, too, with its WingStreet conversions. We’re
opening approximately 100 new WingStreets a month with national scale within our
sights in 2009. This branded line of avored chicken wings will be in a position to
advertise on national television by the end of 2009.
KFC, our only major soft spot, had a challenging year. President Gregg Dedrick retired
and he was replaced by Roger Eaton, who brings tremendous experience leading our
businesses, including seven years running the Australian market, where he delivered
consistent same store sales growth in a highly competitive, highly penetrated market.
Most recently, he was Yum!’s Chief Operating and Development Ofcer. Roger is a
great leader who hit the ground running and who is already driving initiatives and
leveraging successes we’ve had in other markets around the globe.
Last year KFC introduced its great-tasting, value-priced toasted chicken wrap, Original
Recipe Strips, and made its $10 grocery store challenge with a seven-piece family
meal that you can’t buy for $9.99 at a grocery store. That was part of the strategy
of providing dinner value to customers in today’s environment.
We’re encouraged that KFC’s turnaround is underway, but we still must overcome
two obstacles: non-fried options and value. In the non-fried arena, we’re laying the
foundation for a second quarter 2009 launch of Kentucky Grilled Chicken by investing
in new ovens with the unanimous support of our franchisees. The grilled product has
undergone the longest test in KFC history and consumer reaction to the product is
great. They love the taste and the fact that we are addressing the pent up desire
for a non-fried product from KFC.
KFC also introduced a new value menu in early 2009, along with an
advertising campaign showcasing the brand’s “Fresh Tastes Best”
campaign. This campaign focuses on KFC restaurants having a trained
cook on hand to bread all Original Recipe chicken on the bone fresh daily.
I should mention, too, how proud I am that our U.S. brands will be the
rst chains in the industry to post product calorie information on their
respective menu boards in company-owned restaurants nationwide by
January 1, 2011. All meals can be part of a balanced diet and we recognize
our responsibility to continue to educate consumers about their choices.
Finally, we are driving even more urgency around our operations and executing
to our standards. We know we can run much better restaurants and provide much
more consistent quality and service that our customers expect.
U.S. BRAND ONGOING GROWTH MODEL: 5% OPERATING PROFIT GROWTH;
2-3% SAME STORE SALES GROWTH.