Pizza Hut 2009 Annual Report Download - page 7

Yum! Restaurants International, which operates in over 110 countries and territories
outside the US and China, continues to deliver on this strategy as it delivered 5%
system sales and prot growth both excluding foreign currency translation which
negatively impacted our reported prots by 11 percentage points in 2009. We treasure
this division’s high return franchising model with over 90% of our new restaurants built
by franchisees who generate over $650 million in franchise fees, requiring minimal
capital on our part. Driven by this franchisee development machine, we opened nearly
900 new restaurants in over 75 countries. That’s the tenth straight year we have
opened more than 700 new units and our pipeline remains strong as we go into 2010.
Just like in China, our infrastructure represents a stand-out competitive advantage.
Here, I always tip my hat to the foresight of PepsiCo which, prior to our spin-off,
invested nearly 40 years and billions of dollars to establish the global network we’ve
turned into a 13,000 unit powerhouse. The reality is it would take the same time and
commitment for others to reach our size and scale, and frankly, we don’t expect most
US competitors to have signicant international businesses for a long time. As it stands,
unlike the US where streets are lined with competition, we only face McDonald’s and
Domino’s as major global competitors.
Meanwhile, we are off and running, widening our competitive advantage, getting
stronger and more diversied every year. What excites me most is that there’s no doubt
our calculated investments in high potential markets are denitely paying off. Five years
ago we were just starting to make headway in France. Today France has the highest
average unit volumes in the world and now the rest of Continental Europe has a proven
model to follow. Five years ago, we were nowhere in Russia. Today we have over 150
co-branded KFCs with our unique partnership with the leading Russian chicken chain,
Rostik’s, giving us the kind of scale it took us ten years to build in China. Five years ago,
KFC was just a dream in India. Today, we have 72 units, strong sales, good margins
and are on the verge of rapid expansion. Five years ago all we could talk about was
our checkered history with KFC in Brazil. Today, we have an outstanding local franchise
partner committed to growing the business. Five years ago, South Africa was our only
prospect in Africa. Today we are building on our rapidly growing South African 600 unit
infrastructure and just opened up in Nigeria with more countries in the wings. Five
years ago, we just received our license to operate in Vietnam, a country I was surprised
to learn has 80 million people. Today we have over 80 franchise units. Five years ago,
we were talking about Taco Bell’s potential as a global brand. Today, I’m pleased to
say that we have entered 5 new countries in the past two years, with India opening its
rst Taco Bell in early 2010. Even more importantly, I’ve had the great privilege to see
our teams in action and there is no question under the outstanding leadership of our
YRI president, Graham Allan, our local people capability is dramatically stronger in our
international markets.
I share all this with you to convey just how far we have come. YRI made $491 million
in operating prot in 2009 and together with China, accounts for over 60% of our
operating prots compared to just 20% when we started our company. According to
Business Week, we are one of only ve companies in the world to have two of the top
global brands with KFC and Pizza Hut. With the benet of increasing global prosperity,
the development of massive, under-penetrated markets, and aggressive franchisee-led
growth, you can see why we genuinely believe YRI is our division with the greatest long-
term potential. With only 13,000 units, we have barely scratched the surface reaching
a combined population of 5 billion people.
#2
Drive
Aggressive
international
Expansion &
Build Strong
Brands
Everywhere.
900
New Restaurants
in 2009 outside of
China and the US
International Division
Ongoing Growth Model: 10%
Operating Prot Growth
5