Pizza Hut 2008 Annual Report Download - page 8

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drive aggressive international eXpansion & bUild
strong brands everyWHere.
Yum! Restaurants International (YRI), which operates in over 110 countries and
territories outside of China and the U.S., had its best year yet in 2008. YRI delivered
same store sales growth of 4%, system sales growth of 10% and operating prot
growth of 10%, resulting in record operating prot of over a half billion dollars. We
have a high return franchising model with over 90% of our new restaurants being built
by franchisees thus generating over $650 million in franchise fees, requiring minimal
capital on our part. To date, we have not seen a slowdown in the development pace.
And while KFC and Pizza Hut are already global brands, we have barely scratched the
surface of our potential to reach a combined population of ve billion people.
We opened a record 924 new traditional restaurants across six continents in 2008.
That’s the eighth straight year we’ve opened more than 700 new restaurants at YRI,
a big number in relation to any international business. Our ever increasing scale fuels
growth as more restaurants and more sales lead to more marketing and an even
stronger organization. This global infrastructure, coupled with our over 700 dedicated
franchisees, is our single biggest competitive advantage at YRI. For this we are
largely indebted to PepsiCo who, prior to our spin-off in 1997, invested 40 years and
billions of dollars to establish the global network we’ve turned into a nearly 13,000
unit powerhouse. The reality is it would take the same time and commitment for
our competition to reach our size and scale, and frankly, we don’t expect most U.S.
competitors to have signicant international businesses for a long time to come.
We’re focused on protably driving international expansion in three global arenas–
franchise only markets, established company owned markets, and emerging,
underdeveloped markets with huge populations.
When you look at our core franchise and company business in total for the year,
I’m especially pleased with the consistent growth we are seeing from our great
franchise business units. YRI continued to generate strong system sales growth,
excluding foreign currency translation of 8% for the full year. I would especially like to
congratulate the following teams for outstanding system sales growth performance:
Asia (excluding China Division) +8%, Continental Europe +11%, Middle East +24%
and Latin America +12%.
In our emerging markets like India, Russia and Vietnam, we can leverage our core
strategic advantage and capability to develop global markets. For instance, last year
I had the opportunity to visit Vietnam, where there are 85 million people. We are in
our early days there, but we are making great progress with 56 KFC restaurants open
to date and a plan this year to open up additional Pizza Huts as well.
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