Pizza Hut 2004 Annual Report Download - page 5
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Please find page 5 of the 2004 Pizza Hut annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Toattackthisopportunity,wearemakingtargetedinvest-
mentstodevelopnewmarkets,withthegoaltoeventually
gettoscaleinIndia,Brazil,Russia,France,Germanyand
Holland. We are especially pleased with our progress
in India and France. Pizza Hut is the number one most
trustedbrandinIndiawithalmost100unitsandweare
nowdevelopingKFCwithanofferingthatincludesavege-
tarianmenu.
KFCinFranceisgeneratinghugesalesvolumeandgood
unit economics so we are beginning to expand. While
we’vemadesomeprogress,wearestrugglingwithourunit
economicsinGermanyandHolland.
Developing new markets is tough because building
consumerawarenessandacceptancetakestime.Justas
importantly,ittakestimetobuildlocaloperatingcapability.
Ourapproachistocontinuetobepatientandevermindful
ofoverallprofitabilityandreturns.Thepotentialisobvious
andwearedeterminedtobuildourinternationalbusiness
therightway.
InternationalDivisionKeyMeasures:+10–15%operating
profit growth; +5% system sales growth; +700 new
units/year.
#3BETHEBESTATPROVIDING
BRANDEDRESTAURANTCHOICE
ANDMULTIBRANDINGGREAT
BRANDS
Thefoundationofourcompanyiscategory-leadingU.S.
brandswithproprietaryproductsandoperatingsystems
thatare highlysuccessful on a stand alone basis.Our
strategyistomakeourbrandsmoreandmorepowerful
each year by building even more relevance, energy and
differentiationforourcustomers.Letmepostyouonour
U.S.progress.
TacoBellgenerated5%samestoresalesgrowth,hitthe
$1million mark again for average unit volumes and is
nowthesecondmostprofitableQuickServiceRestaurant
brand.We’reespeciallypleasedthatTacoBellisbecoming
amodelforconsistency,growingitssamestoresalesat
least2%thepastthreeyears.Thisresultiscomingfrom
afocus on “exceptionalexecution of thebasics” which
isdrivingcontinuousimprovementinbothoperationsand
marketing.TacoBellhasmadedramaticimprovementin
speedofserviceandcleanliness.AndTacoBell’s“Think
Outside the Bun” marketing campaign which features a
steadystreamofproductandvaluenewscontinuestobuild
whatwecall“bigbrandmomentum”withourcustomers.
PizzaHutalsohadstrongsamestoresalesperformance,
+5%.PizzaHutdidthisbystayingonestepaheadofour
competition, introducing innovative new pizzas like The
4forALL®, The Full House XL Pizza™ and limited time
only offerings like Buffalo Chicken Pizza. The brand’s
“Gather‘RoundtheGoodStuff”advertisingcampaignis
buildingrealtractionwiththeheartofthepizzacategory
byfocusingonthefamilyandtheprimarydecisionmaker,
Mom.Andimportantly,PizzaHutisalsosteadilyimproving
itsoperations,targetingimprovingdeliveryphoneservice
anddine-intableservice.
OursinglebiggestdisappointmentintheU.S.wasnegative
2%samestoresalesatKFC.Itwouldbeeasytoblame
increasing competition from McDonald’s and Wendy’s
since both had national introductions of chicken strips
representing20,000units.Butweknowwecangrowthis
brandbysimplydoingamuchbetterjobofmarketingand
operationsexecution.OnebigadvantagewehaveatYum!
istheabilitytospreadbestpractices.Asaresult,ournew
managementteamisnowimplementingtheproductinno-
vationandoperatingprocessesusedsuccessfullyatboth
TacoBellandPizzaHut.KFCalsointroducedanewmenu
boardthatlaysthefoundationforupcomingproductand
valueinnovation.Muchneedstobedone,butweexpectto
turnthecornerthisyear.
Our other setback in the U.S. performance was unusu-
ally high commodity inflation resulting in approximately
$70millioninunplannedfoodandpapercosts.Weexpect
this inflation to moderate somewhat this year and to
improveourU.S.profits.
U.S.BrandKeyMeasures:+5–7%operatingprofitgrowth;
+1–2%blendedsamestoresalesgrowth.
Ontheinternationalfront
wehaveanundeniable
competitiveadvantageand
growthopportunitywith
twoglobalbrands,KFC
andPizzaHut!
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