Pizza Hut 2013 Annual Report Download - page 6

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Our focus now is to bring more innovation and energetic news to our
customers. In fact, we have an aggressive and comprehensive plan to
restage the KFC brand in the second quarter, which includes breakthrough
innovations in our products, menu management, marketing calendar,
advertising and the digital customer experience. Overall at KFC China, we
know we still have work to do but we’re confident we are making progress
rebuilding trust with consumers and improving same-store sales.
PIZZA HUT CASUAL DINING CHINA
For Pizza Hut Casual Dining, 2013 was a strong year as we grew same-store
sales by 4% and opened 247 new restaurants, surpassing the 1,000 unit
milestone. With over 1,000 units in 277 cities, we are clearly the number
one western casual dining chain, with a 6:1 lead over our nearest competitor.
Pizza Hut Casual Dining is arguably one of the greatest success stories
in our industry. In the last three years, we have more than doubled our
store count, grown average unit volumes by 30% and achieved home-run
economics with restaurant margins above 20%.
Pizza Hut Casual Dining goes well beyond pizza as almost two-thirds
of sales are non-pizza items. We also continue to leverage our assets
throughout the day and have expanded our breakfast offering into over
120 restaurants. This is a huge opportunity for us as our long-term goal is
to create and own the midscale casual dining breakfast occasion in China
on a scale that matches what exists in the U.S. today. In fact, we will be
expanding breakfast into an additional 200 units in 2014.
All this is leading to an amazingly
strong economic model that
generates two-year cash paybacks
on new unit openings, so it’s full
speed ahead for our Pizza Hut
Casual Dining new unit development
and expanding into lower-tier cities.
PIZZA HUT HOME SERVICE CHINA
Now, the other thing that’s exciting about China is our Pizza Hut Home
Service business, or home delivery. Pizza Hut Home Service now has over
200 units in 25 cities and is the only “All Meal” replacement delivery brand
in China. Forty percent of our menu consists of Chinese food. So not only
are we delivering pizza, but we’re also delivering a full array of Chinese
menu options. We now have a proven economic model which positions
us to begin to scale this brand rapidly across the country.
4
PIZZA HUT
CASUAL DINING
UNITS IN
277 CITIES
AVERAGE UNIT
VOLUME GROWTH
1,000
30%