Pizza Hut 2013 Annual Report Download - page 11

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At Yum! Restaurants International, the business delivered another solid
year of profit growth led by high-growth emerging markets in regions like
Russia, Southeast Asia, Africa and Latin America.
In fact, we entered four new emerging market countries this past year:
Tanzania, Ukraine, Argentina and even Mongolia. And with each new
restaurant opening, people lined up out the door to experience our
brands. It’s clear our brands are loved around the world.
Having said this, given the economic and political volatility in some
emerging countries, we know there will be ups and downs. We remain
extremely bullish on our long-term prospects in emerging markets as
the consuming class rapidly expands. Remember, emerging market
economies are expected to grow at almost three times the rate of
developed market economies for the foreseeable future. So Yum!’s
strongest businesses are located where the highest growth in the world
is expected to occur. This bodes well for Yum! Brands.
Importantly, the bulk of our emerging markets’ business will continue to
be capitalized by franchisees. We now have about 1,000 international
franchisees who are passionate about our brands. As evidence, YRI
opened a record 1,055 new restaurants last year, 936 of which were
developed by franchisees. Looking ahead, our international franchisee
development pipeline is robust as we expect to open at least 1,000 new
international units in 2014 outside of China and India. This franchise-led
growth is great news for our shareholders as the capital-free franchise
business is about as high a return business as you can possibly have.
We’ve also made targeted investments in emerging markets to accelerate
growth. We acquired about 100 restaurants from a franchisee in Turkey
and expect to increase our pace of development in this country going
forward. We opened our first company-operated Pizza Hut in Russia, and
look to do the same in South Africa. We also opened a company-operated
KFC in Brazil. While it’s still early, we believe these types of investments
set us up to achieve higher growth and higher returns in the years ahead.
YUM! RESTAURANTS
INTERNATIONAL
NEW RESTAURANTS
IN 2013
EMERGING MARKETS
ENTERED IN 2013
1,055
4NEW
Yum! is the clear restaurant leader
in emerging markets, and we continued
to build upon this position in 2013.
9