Pizza Hut 2008 Annual Report Download - page 7

I often get asked the question of how big we think we can be in
China. Our best long range forecast is over 20,000 restaurants.
The way we look at it, KFC can be every bit as big as McDonald’s
is in the U.S., ultimately reaching 15,000+ units; Pizza Hut Casual
Dining can equal the casual dining leader in the U.S., Applebee’s,
achieving 2,000+ units; Pizza Hut Home Service can match category
leading Dominos in the U.S., achieving 5,000+ units: and East
Dawning is attacking the Chinese equivalent to the hamburger
category in the U.S., so who knows how high is up?
I also often get asked the question: what can go wrong? Well, in
the past ve years, we’ve had challenges like dealing with SARS,
the threat of Avian Flu, and an ingredient supply issue with each
having signicant short term impact. In each case we bounced back
stronger than before, and in fact, have generated 23% compounded
annual prot growth rate in the China Division over the past ve
years. Now we have a slowing 6% GDP growth rate that still makes
China the fastest growing major economy in the world. My hunch is
we can denitely perform well in this kind of an environment. And
while we will most certainly have our future ups and downs, I’m
more convinced than ever that one day we will have more restaurants
and prots in China than we do in the U.S., so we wouldn’t trade
places with anyone. That’s my story and I’m sticking with it!!
CHINA DIVISION ONGOING GROWTH MODEL: 20% OPERATING PROFIT
GROWTH; +20% SYSTEM SALES GROWTH IN MAINLAND CHINA.