Pizza Hut 2013 Annual Report Download - page 14

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So to sum things up, we’re uniquely positioned for a strong bounce-back year in
2014, primarily driven by our expected same-store sales recovery at KFC in China. This sales
recovery, our new unit development and the actions we’ve taken to strengthen our global
business give us confidence in our ability to deliver at least 20% EPS growth in 2014.
Importantly, we believe we’re stronger and better positioned than ever
to deliver on the three things that drive shareholder value in retail:
DRIVING NEW UNIT DEVELOPMENT
Our new unit opportunity in China and other emerging markets remains the best in
retail and our opportunity to expand is huge. We have three iconic brands consumers
love and more than 40,000 restaurants in 128 countries and territories. We’re
especially strong in high-growth emerging markets with more than 14,000 units and
more than 50% of our operating profit in 2013 coming from the emerging world.
While we have 58 restaurants per million people in the U.S. today, we have only 2
restaurants per million in the emerging markets. That is a long runway for growth and
gives us tremendous confidence in our ability to continue our aggressive expansion for
years to come.
GROWING SAME-STORE SALES
Our more than 40,000 restaurants have significant capacity to drive even higher
same-store sales growth and profitability around the world. We’re growing our brands
with a powerful combination of innovative new sales layers, expanded day parts, menu
variety, strong value offers and by opening new channels with digital. Harnessing the
power of digital technology, we’re expanding the use of online and mobile ordering
platforms across our Pizza Hut and KFC delivery businesses worldwide. We’re also on
track to launch a new mobile ordering app for our Taco Bell U.S. business in 2014.
GENERATING HIGH RETURNS
Finally, our returns on invested capital have consistently been among the best in
the retail industry. Our growth is franchise-led, with franchisees investing virtually
all the capital to own and operate what is now 78% of our restaurants. In 2013, this
model generated nearly $2 billion in franchise fees, which combined with the profit
from our company-operated restaurants, enabled us to invest over $1 billion in capital
expenditures for the future growth of the business. And for the ninth consecutive
year, we increased our dividend payment by at least 10% while returning almost $1.4
billion in cash to shareholders in the form of dividends and share repurchases. It takes
a company with considerable economic strength and growth potential to do that,
particularly in a down year.