Yum! Brands Build Dominant China Brands - IIS Windows...
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Yum! Brands Yum! Brands Sam Su President Yum! China Build Dominant China Brands
Transcript of Yum! Brands Build Dominant China Brands - IIS Windows...
Yum! BrandsYum! Brands
Sam Su President Yum! China
Build DominantChina Brands
Yum! Key StrategiesYum! Key Strategies
Drive High ROIC &Strong Shareholder
Payout
Drive High ROIC &Strong Shareholder
Payout
ImproveU.S. Brand Positions
& Returns
ImproveU.S. Brand Positions
& Returns
Drive PROFITABLEInternational
Expansion
Drive PROFITABLEInternational
Expansion
Build DominantCHINABrands
Build DominantBuild DominantCHINACHINABrandsBrands
Building Yum! ChinaBuilding Yum! China
KFC — 1987
Pizza Hut Casual Dining — 1990
Pizza Hut Home Service — 2001
East Dawning — 2005
Yum! ChinaYum! China
2006, an outstanding yearKFC stronger than everPizza Hut Casual Dining momentum, rapid growth continuesHuge progress on Pizza Hut Home Service business model
Our capabilities continue to strengthen across many facets
Target 20,000+ Yum! Restaurants
Yum! China — Strong Growth Track RecordYum! China — Strong Growth Track Record
New System Restaurant Openings Operating Profit($million)
128167
266302 297
357
409 400+
’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 F
Note: Operating profit in 2005 and 2006 includes option expense impact;China Division includes People's Republic of China, Thailand, KFC Taiwan
+22% 3-Yr CAGR
3956 63
120
161
205 211
290
’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 F
Key Decisions Stand Out in China’s SuccessKey Decisions Stand Out in China’s Success
Unique approach to brand building
Grew people capability ahead of the business
Invested early in distribution and supply chain
Extended brand building to hundreds of cities
To become the best restaurant company
not only in China, but also in the world.
To become To become the best restaurant company the best restaurant company
not only in China, but also not only in China, but also in the world.in the world.
China Teams Know Brand BuildingChina Teams Know Brand Building
. . . within ChinaUnique Brands
KFC
Pizza Hut Casual Dining
Pizza Hut Home
Service
East Dawning
Part of everyday life
Window to the West
First mover
Best Chinese QSR
#1 QSR, huge returns
Home grown CDR
New delivery model
Never done before
. . . within Yum!
KFC — #1 QSR in Mainland China KFC — #1 QSR in Mainland China
“Life Is Tastier with KFC”
AUV = $1.1 million
380+ Cities
380+ Cities
Building a Big Brand at KFCBuilding a Big Brand at KFC
Rooted in China
Broad-AppealMenu
In-StoreExperience
CommunityInvolvement
KFC, the Clear Leader . . .KFC, the Clear Leader . . .
Data source: BIT, Aug. 2006N=1,900 in 47 cities
FOOD
Providing variety
Interesting new products
Food choice
Good taste
KFC wins . . .
IMAGERY
Welcomed by Chinese consumers
Deeply rooted in China society
Trusted brand
Progressive
KFC wins . . .
Top-2 Box“Strong and Mostly Agree”
1,695 Restaurantsin Mainland China
1,695 Restaurantsin Mainland China
KFC Brand Leadership GrowingKFC Brand Leadership Growing
976
565
1,695
775
’03 Q3 '06
Mainland China Restaurants
KFC Has Capability to Become Even BiggerKFC Has Capability to Become Even Bigger
Further distance our lead over any competitor
Our R&D and supplier network is strong
World class restaurant teams
Chicken leadership well secured
Go beyond chicken to meet consumer need for variety
From traditional fast food to “new fast food”
Pizza Hut Casual Dining — #1 Casual Dining Pizza Hut Casual Dining — #1 Casual Dining
“Happy Moments at Pizza Hut”
AUV = $1.2 million
50+ Cities50+ Cities
Pizza Hut . . . Differentiated ExperiencePizza Hut . . . Differentiated Experience
More than Pizza
Unique WesternMenu
CompleteExperience
InspiringCommunication
Casual Dining
Explosive Growth for Pizza Hut Casual DiningExplosive Growth for Pizza Hut Casual Dining
95119
155
204
260+
’02 ’03 ’04 ’05 ’06 F
Dine-In Restaurants
29% CAGR in Units
Tier 2 & 3 cities,same success as in
Tier 1
Tier 2 & 3 cities,same success as in
Tier 1
Tier 1 Cities: 122 Units
Tier 2 Cities: 98 Units
Tier 3 Cities: 35 Units
Bold Goal: Build Pizza Hut Casual Dining to Even Bigger BrandBold Goal: Build Pizza Hut Casual Dining to Even Bigger Brand
Broaden brand appeal
More than Pizza expert
Continuously enhance customer dining experience
Accelerate unit expansion
Further strengthen our competitive position
Pizza Hut Home Service . . . Next Growth Concept Pizza Hut Home Service . . . Next Growth Concept
Successful launch in Shanghai
Beginning roll-out to new cities
Pizza Hut Home Service . . . Next Growth ConceptPizza Hut Home Service . . . Next Growth Concept
Fast 5-StarService
Home Meal-Replacement
Menu
Functional
Value
One national phone #
Fast-bake dough
Full menu: Pasta, appetizer, soup, salad & dessert
Expert call-center staff
Neat & clean delivery staff
What it means . . .
Positive Consumer Trends in Home-Service CategoryPositive Consumer Trends in Home-Service Category
Delivery market growing fast
Category supported by growing affordability and life-style
change
Consumers busier, more time starved
Parents, young adults fastest growing segments
Not much competition
Confident Pizza Hut Home Service Will Grow BIGConfident Pizza Hut Home Service Will Grow BIG
Bold Goal: Build brand into dominant “home meal solution”provider
Our strategic focus: Perfect the business model, prepare for expansion
Lift brand awareness dramatically
Better differentiate from Pizza Hut Casual Dining
Ramp up expansion to new cities
Roll-out dough commissary
Neither Satisfied Nor Finished Neither Satisfied Nor Finished
East Dawning
East Dawning — The Choice of Chinese QSREast Dawning — The Choice of Chinese QSR
A Promising future . . .
Higher frequency
KFC graduate
Balanced in nature
East Dawning
Ready for Next Generation of BrandsReady for Next Generation of Brands
Development teams already on the ground
Leveraging the same extensive city database
Pizza Hut Home Delivery poised for growthReplicate Shanghai success in new cities
Potential payoff big when East Dawning ready
Logistics a Capability that Enables Rapid GrowthLogistics a Capability that Enables Rapid Growth
Sustainable Competitive AdvantagesSustainable Competitive Advantages
Outstanding tenured team — on the ground in Shanghai
$100+ million G&A commitment
Brand positioning & menu vision
Nationwide distribution system — Yum! controls
Unit economics clearly support expansion
Largest retail development capability
Yum! ChinaYum! ChinaYum! China
We Are As Confident As Ever of Our FutureWe Are As Confident As Ever of Our Future
Three category-leading brands for expansion
Improved product depth and marketing
Best-in-class logistics capability
Great returns from smaller cities
Proven team capability to build multiple leading brands
1,700
Yum! China Target 20,000+Yum! China Target 20,000+
225
30
KFCMainland China
McDonald’sU.S.
Applebee’sU.S.
Pizza HutCasual Dining
Pizza HutHome Delivery
Domino’sU.S.
15,00015,000
4
SIGNIFICANT POTENTIALSIGNIFICANT POTENTIAL
East Dawning
2,0002,000
5,0005,000
5,100
14,000 1,800
APPENDIXAPPENDIX
Yum! BrandsYum! Brands
Build DominantChina Brands
China Division Rapid GrowthChina Division Rapid Growth
400+
5
30+
10+
50+
305+
’06 F
409357297302266TOTAL DIVISION
311——ED/TBG
3123284092Thailand/Taiwan
99531Pizza Hut Home Service
5140303322Pizza Hut Casual Dining
315284233226151KFC
’05’04’03’02’01
New Restaurant Openings
Note: Traditional restaurants
KFC Today a Mix of Company, JVs, and FranchiseesKFC Today a Mix of Company, JVs, and Franchisees
4%35%61%100%% of Total
636011,0311,695KFC Restaurants
FranchiseJoint VentureCompanyTotalAs of Q3 2006
Mainland China
Yum! China Division — 2007 Capital PlanYum! China Division — 2007 Capital Plan
1013Corp/Other
200164SUBTOTAL
215184TOTAL
57Maintenance
104Brand Projects
70206018Upgrades
324170299142New Company Restaurants
Restaurants$ MillionRestaurants$ Million
’07 Plan’06 F
Note: 2007 Plan rounded to $5 million
