Tradicionalni recepti

Yum otkriva strategije rasta

Yum otkriva strategije rasta

Zvaničnici Yum -a! Brands Inc. ostao je optimističan u pogledu kratkoročnih i dugoročnih izgleda ovog giganta brzih usluga za zaradu i proširenje novih jedinica, čak i kad je morao upravljati kroz značajne vjetrove tokom trećeg tromjesečja koje je završilo 8. septembra.

Promet se usporio u Kini, a kalendarski pomak smanjio je prodaju na tržištima u razvoju kompanije, ali rast novih jedinica ubrzat će se u Kini i drugim regijama jer Yum ostaje siguran u svoje poslovne modele i bilježi rekordnu profitabilnost, rekli su rukovoditelji.

Poboljšanje marži i snažna prodaja u istim trgovinama u Sjedinjenim Državama za robne marke Taco Bell, Pizza Hut i KFC također su učinili da zvaničnici Yum-a budu optimistični za nastavak rasta profita.

Iskorištavanje Kine

Uprkos padu prometa od 1 posto u Kini u trećem tromjesečju, Yum je ipak uspio povećati prodaju istih trgovina na tom tržištu od 4.000 jedinica za 6 posto. Izvršni direktor David Novak primijetio je da se odjel suočio s teškim poređenjima u odnosu na prošlu godinu za 19 posto rasta prodaje u istim trgovinama i 27 posto rasta prometa.

Dok kineska ekonomija raste sporije od bujice u posljednjoj deceniji, dugoročni izgledi Yuma se ne mijenjaju "ni za mrvicu", rekao je.

"Iskreno, velika vijest su stare vijesti: Kinu možemo iskoristiti više od bilo koje kompanije na svijetu", rekao je Novak. "Imaćemo uspone i padove, ali uvijek će mi biti drago da se probudim svaki dan i znam da imamo poziciju koju imamo u Kini."

U stvari, Yum je rekao da je u tijeku otvaranje više od 750 restorana u Kini ove godine, označavajući drugo ubrzanje kompanije u odnosu na svoje ranije navođenje 600 otvaranja za 2012. Najmanje 150 tih novih restorana bit će Pizza Hut Casual Dining, koji sprema se da napravi svoj prvi značajan pomak u kinesku unutrašnjost.

"S obzirom na razvoj naše nove jedinice, manje ćemo se oslanjati na rast prodaje u istim trgovinama [u narednim godinama] kako bismo postigli naše ciljeve rasta dobiti od 15 posto", rekao je glavni financijski direktor Pat Grismer.

No, Novak je rekao da Yum neće rasti brže nego što bi mu profitabilnost ili osoblje dozvoljavali, navodeći kao primjer konzervativni pristup koji je Pizza Hut Casual Dining uzeo u Kini prije nekoliko godina. Profitabilnost se u Pizza Hut-u usporila, pa umjesto da napreduje u Tier-3 kroz Tier-5 gradove, brend je zaustavio ekspanziju i okrenuo se razvoju menija, dodajući nove proizvode i meni sa vrijednostima.

"Transakcije i profit prošli su kroz krov, a zatim smo se proširili", rekao je. “Uvjereni smo da posao razvijamo na pravi način. U ovu godinu smo ušli sa projekcijom od 600 otvaranja. Zašto? Zato što ne rastete brže nego što je potrebno. Ne pokušavamo biti heroji; pokušavamo izgraditi herojski posao. "

Zamah u Sjedinjenim Državama

Yum će nastojati nastaviti efikasnost lanca snabdijevanja i utjecati na prodaju u istim trgovinama što je dovelo do poboljšanja marži na nivou restorana u trećem tromjesečju za 4,6 posto, rekli su dužnosnici. Prodaja u istoj trgovini u trećem tromjesečju porasla je za 7 posto u Taco Bellu, 6 posto u Pizza Hut-u i 4 posto u KFC-u, izvijestila je kompanija.

Predsjednik Yum -a Rick Carucci nazvao je Taco Bell katalizatorom Yum -ovog ponovnog nastupa u Sjedinjenim Državama ove godine, uvelike zasnovanog na snazi ​​dva velika predstavljanja proizvoda, Doritos Locos Tacos i Cantina Bell. Ti su proizvodi činili 7 posto, odnosno 5 posto ukupne prodajne kombinacije Taco Bell -a u tromjesečju.


Pripremljene primjedbe:

Dobro jutro i dobrodošli u prvu četvrtinu 2021. Njam! Brands Incorporated konferencijski poziv o zaradi. [Upute za operatera] Imajte na umu da se ovaj događaj snima.

Sada bih htio predati konferenciju Gavinu Felderu, glavnom strateškom direktoru i privremenom šefu za odnose s investitorima. Samo naprijed.

Gavin Felder -- Glavni strateški direktor i privremeni šef odnosa s investitorima

Hvala, operater. Dobro jutro svima i hvala što ste nam se pridružili. Danas nas zovu David Gibbs, naš izvršni direktor Chris Turner, naš glavni financijski direktor i Dave Russell, naš stariji potpredsjednik i korporativni kontrolor. Nakon primjedbi Davida i Chrisa, otvorit ćemo poziv na pitanja.

Prije nego što počnemo, želio bih vas podsjetiti da ovaj konferencijski poziv uključuje izjave o budućnosti. Izjave koje se odnose na budućnost podložne su budućim događajima i neizvjesnostima zbog kojih se naši stvarni rezultati materijalno razlikuju od tih izjava. Potrudit ćemo se pružiti naše trenutno razmišljanje o utjecaju pandemije COVID-19 na naše poslovanje, ali očito je da je ova situacija potpuno bez presedana i da se razvija. Stoga sve primjedbe koje se odnose na budućnost treba razmotriti u svjetlu neizvjesnosti u pogledu težine i trajanja pandemije i varijabli na koje će to utjecati. Sve izjave koje se odnose na budućnost date su samo od datuma objavljivanja ove objave i treba ih uzeti u obzir zajedno sa upozorenjima u našoj objavi zarade i faktorima rizika koji su uključeni u naše prijave SEC-u.

Osim toga, molimo vas da pogledate naša saopštenja o zaradi i relevantne odjeljke naših podnesaka DEC-u kako biste pronašli otkrivanja i usaglašavanja finansijskih mjera van GAAP-a koje se mogu koristiti na današnjem pozivu.

U vezi s našom prezentacijom imajte na umu sljedeće: svi rezultati prodaje sistema isključuju utjecaj rasta operativne dobiti u stranoj valuti isključuju utjecaj strane valute, a posebne stavke sve dvogodišnje stope rasta prodaje u istoj trgovini izračunavaju se geometrijskom metodom . Za više informacija o našem kalendaru izvještavanja za svako tržište posjetite odjeljak Finansijski izvještaji na našoj web stranici.

Ovaj konferencijski poziv emitiramo putem naše web stranice. Ovaj poziv se također snima i bit će dostupan za reprodukciju. Imajte na umu da će, ako postavite pitanje, ono biti uključeno i u našu konferenciju uživo i u bilo koju buduću upotrebu snimka. Želimo vas obavijestiti o nadolazećem Yum -u! događaji s ulagačima i sljedeće: otkrivanja u vezi s nepodmirenim dugom u našoj strukturi kapitala ograničene grupe bit će dostavljena u vrijeme podnošenja obrasca 10-Q, rezultati drugog tromjesečja bit će objavljeni 29. jula 2021., s konferencijskim pozivom istog dana konačno ćemo u utorak, 25. maja 2021. godine biti domaćini Virtualnog KFC -ovog globalnog dana investitora, dostupnog putem webcast -a na našoj web stranici. Ostanite s nama za više detalja.

Htio bih poziv preusmjeriti na gospodina Davida Gibbsa.

David Gibbs -- Glavni izvršni direktor

Hvala, Gavine, i dobro jutro svima. Imali smo snažan početak 2021. godine sa solidnim rezultatima prodaje u istim trgovinama na dvogodišnjoj osnovi i značajnim napretkom u razvoju jedinica. Ova izvedba svjedoči o nevjerovatnoj usredotočenosti i predanosti naših restoranskih timova, korisnika franšize i vodećih u trgovinama diljem svijeta koji se uzdižu iznad izazova koje predstavlja pandemija kako bi otključali nova područja rasta, poput digitalnog i izvan prostora, stavljajući potrebe naših kupaca i lokalne zajednice na prvo mjesto. Uvijek sam vjerovao da će naš uspjeh doći oslanjanjem na našu temeljnu snagu i izgradnjom novih sposobnosti koje povećavaju našu sposobnost rasta i način na koji se naše poslovanje kretalo kroz COVID-19 samo je učvrstilo ovo uvjerenje. Ovaj način razmišljanja odražava se u okviru našeg recepta za rast i dobro, koji je uspješno čuvao našu strategiju i nastavit će služiti kao naša zvijezda Sjevernjača.

Najvažniji dijelovi našeg recepta jedinstvena su snaga kompanije, posebno naši kultni brendovi, naša neprevaziđena globalna razmjera, naša raznolika mreža visoko sposobnih i dobro kapitaliziranih korisnika franšize te naša neusporediva kultura i talent. Danas ćemo razgovarati o performansama u prvom kvartalu kroz prizmu ovog okvira i pokretače rasta koji ga podržavaju. I mi ćemo istaknuti specifična područja u koja smo uveli nove sposobnosti dok gledamo u budućnost. Pokriću dva pokretača rasta, naime Relevantne, Lake i Distinctive marke ili R.E.D. ukratko, kultura i talent bez premca. Tada će Chris podijeliti više detalja o našim rezultatima u prvom tromjesečju, našim neprevaziđenim operativnim sposobnostima i pokretačima rasta hrabrog restorana te našoj snažnoj likvidnosti i bilansnoj poziciji.

Počeću sa nekoliko istaknutih stvari u prvom kvartalu. U prvom kvartalu, Njam! sistemska prodaja porasla je 11%, potaknuta rastom prodaje u istoj trgovini od 9% i dodavanjem 435 neto novih jedinica tokom tromjesečja. Ono što je važno, prodaja istih trgovina porasla je 2% na dvogodišnjoj osnovi, što uključuje utjecaj da se gotovo 900 ili oko 2% naših trgovina privremeno zatvori zbog COVID-a do kraja prvog tromjesečja 2021. To je bilo potaknuto snažnom prodajom performanse u Sjevernoj Americi, Velikoj Britaniji, Australiji i Japanu s nekim pomakom od ograničenja trgovine povezanih s COVID-om u dijelovima Azije i Europe. Značajno je da su sva četiri naša branda imala sedmični rekord u prodaji po restoranu u SAD-u, barem jednom u tromjesečju, i jako sam ohrabren što je na dvogodišnjoj osnovi naša ukupna prodaja u istoj trgovini u SAD-u porasla za 10% . Ono što je važno, svaki od naših brendova doživio je pozitivan dvogodišnji rast prodaje u istim trgovinama na globalnoj osnovi u otvorenim i radnim trgovinama tokom prvog tromjesečja. Ovo je odličan pokazatelj snage i širine našeg oporavka.

Ključna točka fokusiranja naših timova bilo je kontinuirano ubrzavanje naših digitalnih i tehnoloških inicijativa širom svijeta, a sve usmjereno na pružanje klijentima novih i besprijekornih načina pristupa našim robnim markama. Isporuka je bio značajan dio strategije i sada imamo više od 39.000 restorana koji nude dostavu, što predstavlja povećanje od 16% u odnosu na prethodnu godinu, vođeno proširenim partnerstvom agregatora i nastavljenim ulaganjima u vlastite robne marke. Imali smo još jedan rekordni kvartal prodaje digitalnih sistema sa preko 5 milijardi dolara, što je povećanje od 45% u odnosu na prethodnu godinu.

Sada, razgovarajmo o naša četiri brenda, počevši od KFC divizije, koja čini približno 48% naše divizijske operativne dobiti. Prodaja u prvom tromjesečju porasla je 11%, vođena 8% rastom prodaje u istoj trgovini i 4% rastom jedinice. Za ovaj odjel, prodaja u istim tromjesečjima u prvom tromjesečju bila je jednaka na dvogodišnjoj osnovi, što uključuje utjecaj da se oko 1% naših trgovina privremeno zatvori do kraja prvog tromjesečja 2021. Globalno, KFC-ov digitalni miks prodaje dostigao je rekord od 43% tokom tromjesečja, vođeno brzim širenjem isporuke, klikni i prikupi i uvođenjem novih opcija naručivanja kanala.

U KFC International, prodaja u istim trgovinama porasla je 7% tokom tromjesečja. Prodaja u istim trgovinama pala je za 2% na dvogodišnjoj osnovi, što uključuje utjecaj privremenog zatvaranja oko 2% naših trgovina od kraja prvog tromjesečja '21. I dalje vidimo snagu u Velikoj Britaniji, Australiji, Kanadi i Japanu tokom tromjesečja i vidjeli smo ohrabrujuće rezultate na Bliskom istoku, Meksiku i Africi. Svako od ovih tržišta ostvarilo je znatno više od svojih nivoa prodaje u 2019. zahvaljujući svojim mogućnostima izvan prostora, digitalnoj snazi ​​i impresivnim lansiranjima proizvoda poput Share Box-a u Japanu i Chicken Nights promocije u Meksiku.

Zatim smo u KFC-u SAD nastavili bilježiti pozitivnu prodaju u istim trgovinama s rastom od 14% u prvom tromjesečju. Ono što je važno, prodaja istih trgovina porasla je za 11% na dvogodišnjoj osnovi, zahvaljujući napornom radu tima na izgradnji dodatnih prodajnih kanala i rastu osnovne djelatnosti uz dodavanje hiperrelevantnih inovacija proizvoda, poput novog sendviča od piletine. Naš sendvič ima dvostruko veći učinak od prethodnih lansiranja sendviča u SAD -u, a svi početni pokazatelji ukazuju na to da je vrlo postepen, kupci vole proizvod i češće mu se vraćaju. Zapravo, kako smo ušli u drugi kvartal, potražnja za novim sendvičem bila je toliko snažna da je, zajedno s općim zaoštravanjem ponude domaćeg piletine, naš glavni izazov bio držati korak s tom potražnjom.

Prelazimo na Pizza Hut, koji čini otprilike 17% [fonetski] našeg operativnog profita. Odjel je izvijestio o rastu prodaje sustava u prvom tromjesečju od 7% potaknut 12% rastom prodaje u istoj trgovini i padom jedinice od 4%. Globalna prodaja istih trgovina u prvom kvartalu pala je za 1% na dvogodišnjoj osnovi, što uključuje utjecaj da se oko 3% naših trgovina privremeno zatvori do kraja prvog tromjesečja 2021. Sveukupno, prodaja istih trgovina Pizza Hut International porasla je 8% . Prodaja istih trgovina pala je za 7% na dvogodišnjoj osnovi, što uključuje utjecaj privremenog zatvaranja 3% naših trgovina od kraja prvog tromjesečja 2021. Važno je da je kanal izvan poslovnih prostora ostvario rast prodaje od 10% u istoj trgovini za kvartal. Slično KFC-u, naša razvijena tržišta s visokim mogućnostima izvan prostora, digitalnom snagom i vrijednim proizvoda za vijesti nastavila su se dobro ponašati.

Pizza Hut US imao je još jedan zvjezdani kvartal, koji je ostvario 23% rasta prodaje u istoj trgovini u kanalu izvan poslovnih prostora sa 16% ukupnog rasta prodaje u istoj trgovini. Ukupna prodaja u istim trgovinama porasla je za 8% na dvogodišnjoj osnovi, što uključuje utjecaj da se 3% naših trgovina privremeno zatvori do kraja prvog tromjesečja 2021., a pogođeno je kombinacijom uvjerljive vrijednosti s ponudom alata za okus od 10 USD i inovacija vodeća u kategoriji lansiranjem jedinstvene pizze u stilu Detroita i ponovnim pokretanjem naše kultne pizza s punjenjem od kora.

Što se tiče Taco Bell-a, koji čini približno 36% naše operativne dobiti po dionicama, prodaja sistema u prvom tromjesečju porasla je 11%, vođena rastom prodaje u istoj trgovini od 9% i rastom jedinice od 1%. Za diviziju, prodaja u istim trgovinama u prvom kvartalu porasla je 10% na dvogodišnjoj osnovi. Četvrtina je počela povratkom Nacho Friesa, ovog puta ponuđenog u Nacho Fries Boxu od 5 USD. Također smo predstavili naše prvo lansiranje digitalnih proizvoda s kutijom od 5 USD za izgradnju vlastite žudnje koja je dostupna isključivo u aplikaciji Taco Bell ili na webu, što je dovelo do značajnog povećanja članstva lojalnosti tijekom tromjesečja.

I na kraju, naš najnoviji brend, Habit Burger Grill, ostvario je 13% isti rast prodaje u trgovini i 6% rast jedinica tokom tromjesečja. Prodaja u istim trgovinama u prvom tromjesečju porasla je 3% na dvogodišnjoj osnovi, što uključuje utjecaj otprilike 2% naših trgovina koje su bile privremeno zatvorene do kraja prvog tromjesečja 2021. Predstavili smo našu novu Patty Melt i pomogli smo rastu prodaje smanjenjem vladinih ograničenja i vladinim poticajima. Ohrabrujuće je da se digitalna prodaja nastavlja miješati iznad 40% čak i kad su se blagovaonice ponovno otvorile i vidjeli smo stalno poboljšanje kanala za objedovanje tijekom cijelog tromjesečja.

Pređite na Recept za rast, počevši od R.E.D. robne marke. Posjedovanje četiri robne marke u više od 50.000 restorana pruža nam zavidnu platformu za razumijevanje ponašanja potrošača u svakom kutku svijeta i za korištenje tog razumijevanja za bilježenje budućeg rasta naše prodaje preko noći i naših marki s vremenom. U nekim slučajevima to znači jačanje naše sposobnosti bržeg rasta prodaje i dovođenje snažnih raznolikih tehnoloških talenata. Imajući ovo na umu, bili smo uzbuđeni što smo zaključili dvije strateške akvizicije tokom tromjesečja, a to su Kvantum Inc. i Tictuk Technologies. Kvantum je istinski inovator u marketinškoj optimizaciji s dokazanim rezultatima koji dodaju značajnu vrijednost u omogućavanju odluka zasnovanih na podacima da povećaju prihod od oglašavanja i povećanje prodaje. Vidjeli smo materijalna poboljšanja u efikasnosti marketinške potrošnje i rastu prodaje u istim trgovinama u našim poslovnicama Pizza Hut UK izvan Pizza Hut-a i Pizza Hut Taiwan, kao rezultat korištenja njihovog kompleta alata. Krajem prošle godine, i Taco Bell US i KFC US angažirali su Kvantumove usluge za marketinški kalendar i optimizaciju miksa.

Tictuk predstavlja uzbudljivu priliku za proširenje pristupa pružanjem neometanog naručivanja putem teksta, društvenih medija i drugih kanala za razgovor u doslovno samo nekoliko klikova. Razvili smo njihovu platformu u približno 900 restorana KFC, Pizza Hut i Taco Bell u 35 zemalja izvan SAD -a i bili smo oduševljeni agilnošću i opsesivnošću kupaca Tictuk tima. Zapravo, imamo nekoliko primjera kupaca koji dovršavaju narudžbe na platformi Tictuk za manje od 10 sekundi, što je zaista besprijekorno iskustvo. Osim poboljšanja sposobnosti, ono što me najviše uzbuđuje kod ovih akvizicija su visokokvalitetni timovi usklađeni s kulturom koje smo uveli u našu globalnu organizaciju. Ovo je savršeno mjesto za našu kulturu i talenat za rast bez premca.

S obzirom na okruženje u kojem smo radili, morali smo pronaći nove načine povezivanja s ljudima širom našeg ogromnog globalnog poslovanja. Jedan od načina na koji smo to učinili je putem virtualnih posjeta tržištu gdje virtualno prolazimo kroz restoran i povezujemo se s članovima tima. Voditeljski tim i ja prisustvovali smo četiri virtualne posjete tržištu tokom tromjesečja u Pizza Hut Japanu, KFC Asia, Taco Bell US na Times Squareu i KFC Africa. Svi smo napustili te sastanke poletni i ponosni na to kako su naši brendovi zastupljeni u cijelom svijetu i na nevjerojatne ljude koji to omogućuju.

Ovdje također želim istaknuti dvije ključne radnje koje poduzimamo kako bismo oživjeli naš Recept za rast i dobro. Što se tiče jednakosti i uključivanja u SAD -u, poduzimamo opipljive akcije kako bismo predstavili različite zajednice u kojima djelujemo povećavajući zaposlenike i voditelje Black -a i Latinx -a u našim poslovima upravljanja korporacijama i restoranima. Kao dio ovih napora, ponosni smo na partnerstvo s OneTen -om, koalicijom vodećih kompanija koje se okupljaju kako bi unaprijedile, zaposlile i unaprijedile 1 milion crnaca u Americi u narednih 10 godina. Ove radnje unapređuju našu globalnu inicijativu za otključavanje u SAD -u i radujemo se radu zajedno sa zajednicom kompanija u OneTenu, kao i našim primateljima franšize na unapređenju kapitala i mogućnosti.

Konačno, kao dio naše šire strategije za rješavanje klimatskih promjena, ranije ove sedmice najavili smo obećanje da ćemo do 2050. postići neto nultu emisiju stakleničkih plinova sa naučno utemeljenim ciljem da smanjimo emisije za gotovo 50% u našem lancu opskrbe i restoranima do 2030 u partnerstvu s našim primateljima franšize, dobavljačima i proizvođačima. Ovo je izuzetno važno pitanje za nas, naše klijente i druge dionike, i ponosan sam na naš kontinuirani napredak u ovom prostoru.

Za kraj, ohrabren sam zamahom u našem poslu dok izvršavamo naš Recept za rast i dobro da se postavimo za sljedeće poglavlje rasta. Iako COVID nastavlja utjecati na mnoga geografska područja i učiniti naš ukupni put oporavka neujednačenim, vjerujem da smo s našim kultnim robnim markama, talentima svjetske klase, inkluzivnom kulturom i zdravim sistemom franšize spremni ući u post-COVID svijet još jači.

S tim, Chris, tebi.

Chris Turner -- Glavni finansijski direktor

Hvala ti, David, i dobro jutro svima. Danas ću razgovarati o rezultatima našeg prvog tromjesečja, našim neprevaziđenim poslovnim sposobnostima i hrabrim pokretačima rasta restorana te našoj snažnoj likvidnosti i bilansnoj poziciji.

Za početak, razgovarajmo o prvom tromjesečju. Kao što je David spomenuo, sveukupno Njam! sistemska prodaja porasla je 11%, vođena 9% rastom prodaje u istoj trgovini i 1% rastom jedinice. Na dvogodišnjoj osnovi, prodaja u istim trgovinama porasla je 2%, što uključuje negativan utjecaj da je oko 2% naših trgovina privremeno zatvoreno zbog COVID-a do kraja prvog tromjesečja 2021. EPS, isključujući posebne stavke, iznosio je 1,07 USD, predstavlja povećanje od 67% u odnosu na ex Special EPS od

Učesnici poziva:

Gavin Felder -- Glavni strateški direktor i privremeni šef odnosa s investitorima

David Gibbs -- Glavni izvršni direktor

Chris Turner -- Glavni finansijski direktor

David Palmer -- Evercore ISI - Analitičar

John Glass -- Morgan Stanley - analitičar

Dennis Geiger -- UBS - Analitičar

David Tarantino -- Robert W. Baird & amp Co. - Analitičar

John Ivankoe -- J.P. Morgan - analitičar

Jon Tower -- Wells Fargo Securities - analitičar

Brian Bittner -- Oppenheimer & amp Co. - Analitičar

Sara Senatore -- Sanford C. Bernstein & amp Co. - Analitičar

.64 u prvom kvartalu 2020.

Osnovna operativna dobit porasla je 33% u prvom tromjesečju. Ovaj učinak može se pripisati sjajnom rastu prodaje u istoj trgovini na nekoliko razvijenih tržišta u KFC-u, kombinaciji snažnog rasta prodaje i rasta marže restorana u Taco Bell-u i godišnjoj dobrobiti povezanoj s rezervama za potraživanja korisnika franšize.

Sada ću dati dodatnu boju na nekoliko stavki. Počevši od Taco Bell -a, imali smo još jedan impresivan kvartal profitabilnosti gdje je marža restorana u kompanijama iznosila 24,1%, što predstavlja povećanje od 1,7% u odnosu na prethodnu godinu. Kao što smo spomenuli u prethodnim pozivima na zaradu, očekujemo da će se ove marže vratiti bliže istorijskim nivoima kasnije ove godine jer se prosjeci provjera normalizuju, povećava se broj ljudi u blagovaonicama i zbog toga prilagođavamo nivo osoblja u našim restoranima.

Tokom prvog kvartala nastavili smo sa naplatom dospjelih iznosa u KFC International i Pizza Hut US. Ovi povrati rezultirali su neto dobitkom od 6 miliona dolara operativne dobiti povezane s lošim dugom tokom tromjesečja, što predstavlja 34 miliona dolara u odnosu na prošlu godinu u odnosu na rast operativne dobiti jer smo u prvom tromjesečju 2020. zaostali za 28 miliona dolara rashoda. 12 miliona dolara dugogodišnjeg troška lošeg duga, imali smo velike kvartalne promjene prošle godine zbog COVID-a. Kao takvi, očekujemo da će rast operativne dobiti iz godine u godinu i dalje biti pod utjecajem jer smo u drugom kvartalu propustili trošak lošeg duga od 13 miliona dolara, a oporavak lošeg duga od 21 i 8 miliona dolara u trećem i četvrtom kvartalu. Iako je teško prognozirati, u ovom trenutku ne očekujemo da će loši dug značajno utjecati na godišnji rast operativne dobiti na godišnjoj osnovi.

Ono što je najvažnije, naši primatelji franšize općenito su na solidnom financijskom tlu unatoč neizvjesnostima uzrokovanim COVID -om. Nedavno smo završili restrukturiranje našeg najvećeg korisnika franšize u Pizza Hut -u, NPC, što je dovelo do toga da se Flynn Restaurant Group pridruži porodici Pizza Hut. Vjerujemo da su naši primatelji franšize u dobroj poziciji da postanu partneri s nama u nastojanju da ubrzamo izlazak iz COVID -a.

Opći i administrativni troškovi iznosili su 206 miliona dolara. Još uvijek predviđamo da će cjelogodišnje G & ampA 2021. godine biti ponderisane kao što je to bilo historijski. Procjenjujemo da će naši konsolidirani troškovi G & ampA-e biti nešto manji od 1 milijarde USD za cijelu godinu 2021. Naša opredijeljenost da budemo efikasna kompanija u razvoju koja koristi fiksne troškove i koristi našu jedinstvenu ljestvicu ostaje nepromijenjena i očekujemo da će se naš omjer G & ampA pomaknuti unatrag prema našem povijesnom cilju jer se nastavlja održivi rast.

Troškovi kamata iznosili su približno 131 milion dolara, što je povećanje od 11%u odnosu na prvi kvartal 2020., uzrokovano otpisima istorijskih troškova izdavanja duga i drugih jednokratnih troškova finansiranja povezanih sa refinansiranjem u prvom kvartalu.

Kapitalni rashodi, bez prihoda od refranšizinga, iznosili su 25 miliona dolara za kvartal. Kao što smo spomenuli u našem zadnjem pozivu na zaradu, vjerujemo da otprilike 250 miliona dolara bruto kapitalnih sredstava godišnje na odgovarajući način uravnotežuje inherentne potrebe poslovanja s mogućnostima ulaganja u tehnološke inicijative i strateški razvoj dionica. Još uvijek očekujemo najmanje 50 miliona dolara godišnjeg prihoda od refranšizinga, koji će finansirati strateška ulaganja u prodavnice kapitala. Podsjećamo, 2021. godine mogli bismo biti nešto veći od bruto kapitalnih ulaganja od 250 miliona dolara kako bismo nadoknadili potrošnju na popravke, održavanje i preuređenje odgođene zbog COVID -a, kao i selektivni strateški razvoj u SAD -u, prvenstveno za Habit Burger Grill , za koje se prihodi od refranšinga možda neće u potpunosti ostvariti ove godine.

Sada, na naš neusporedivi pokretač rasta operativnih sposobnosti. S obzirom na to da veliki dio naše prodaje sada ide putem kanala izvan poslovnih prostora, naši operativni timovi bili su laserski fokusirani na pružanje brzog i ugodnog iskustva kupcima. Kao rezultat toga, KFC US je poboljšao brzinu vožnje za skoro 15 sekundi u tromjesečju u odnosu na prošlu godinu. Taco Bell US isporučio je svoju najbržu prosječnu brzinu vožnje u osam godina, dok je služio zapanjujućih 17 miliona automobila više u odnosu na isti kvartal prošle godine. Ono što je važno, jedna trećina ovih dodatnih servisiranih automobila bili su digitalni nalozi, koji obično nose veću čekovnu vrijednost, a da ne spominjemo optimizirano korisničko iskustvo.

Osim toga, nastavljamo s opipljivim napretkom u povećanju naše interno izgrađene tehnološke platforme. Tijekom tromjesečja smo implementirali rješenje za naručivanje preuzimanja i dostave u svim američkim restoranima KFC-a, uključujući lansiranje naše prve KFC aplikacije prilagođene korisniku. Rani znakovi su vrlo ohrabrujući i to nam daje samopouzdanje dok nastojimo dodatno optimizirati i povećati platformu.

Sada prelazimo na Bold Restaurant Development. Tokom prvog tromjesečja otvorili smo 660 restorana i zatvorili 225, što je rezultiralo sa 435 neto novih jedinica. Najvažnije, KFC je ostvario rast jedinice od 4% sa snagom u Kini, Indiji, Rusiji i na Tajlandu. U Pizza Hut-u smo imali zadovoljstvo dodati 71 neto novu jedinicu, što odražava pozitivnu putanju nakon dislokacija i zatvaranja vezanih za COVID prošle godine. Još imamo još posla i bit će nereda povezanih s neizvjesnošću COVID -a i našim stalnim prelaskom na modernije imanje, ali ohrabreni smo snažnom ekonomikom jedinica na mnogim tržištima i našom otpornom globalnom bazom franšiza.

S ponosom objavljujemo da smo nedugo nakon završetka tromjesečja otvorili naše prvo Taco Bell u Maleziji. Ne samo da je ovo 31. međunarodno tržište na koje je Taco Bell ušao, već je to bio i prvi ulazak na tržište na kojem su se gotovo svi programi obuke i lansiranja provodili. Pravi proboj nevjerojatnog Taco Bell Asia tima. Sveukupno gledano, zadovoljni smo zamahom krajem 2020. i početkom 2021. godine, što povećava naše uvjerenje da se možemo prije ili kasnije vratiti na godišnji rast jedinice od 4%. 2021. optimistični smo da ćemo postići rast od najmanje 3% jedinice.

Sada, za ažuriranje našeg bilansa stanja i pozicije likvidnosti, kao i najnovija razmišljanja o strukturi kapitala i prioritetima za alokaciju kapitala. Prvo, završili smo prvi kvartal sa gotovinom i gotovinskim ekvivalentima od približno 560 miliona dolara, isključujući ograničenu gotovinu. Konsolidirana neto poluga bila je 4,9 puta, što nas vraća na naš cilj od približno 5 puta. Drugo, otkupili smo 2,6 miliona dionica, ukupno 275 miliona dolara po prosječnoj cijeni po dionici od 106 dolara.

Treće, izvršili smo niz transakcija koje su povećale otpornost našeg poslovanja uz uravnoteženje likvidnosti, fleksibilnosti i troškova. Tokom tromjesečja smo izmijenili i produžili kreditnu sposobnost i refinansirali naše oročene kredite. Cijenili smo i novi Yum! Brands, Inc., obveznica holding kompanije, koja je zatvorena 1. aprila, nakon kraja tromjesečja. Prihodi od ove nove obveznice, koja nosi kupon od 4,625% i dospijeće 2032. godine, bit će korišteni za otplatu 1,05 milijardi USD sa 5,25% restriktivnih zapisa Grupe koji dospijevaju 2026. godine, a koje namjeravamo povući kasnije u drugom tromjesečju. Sve zajedno, transakcije su bile neutralne prema poluzi i što nam je važno, omogućile su nam da povećamo likvidnost, smanjimo kamate u budućnosti i produžimo rokove dospijeća. Kao i uvijek, nastavit ćemo tražiti mogućnosti za daljnju optimizaciju naše strukture kapitala ovisno o tržišnim i poslovnim uvjetima.

Na kraju, naši kapitalni prioriteti ostaju nepromijenjeni, ulažemo u poslovanje, održavamo zdravu bilancu stanja, plaćamo konkurentnu dividendu i vraćamo preostale viškove novčanih tokova dioničarima putem otkupa.

Time smo, operater, spremni za sva pitanja.


Yum pojačava transformaciju novim tehnološkim pogodbama. Kako će oni utjecati na marketing?

Širi trendovi u kategoriji QSR i promjena navika konzumacije medija mogli bi najaviti veći fokus na marketing performansi, smatraju stručnjaci.

Promjene se događaju u Yum Brands -u jer su vlasnici KFC -a, Taco Bell -a i Pizza Hut -a uspjeli u strategiji transformacije koja je postala sve hitnija zbog potreba izazvanih pandemijom koronavirusa.

U prošlom tromjesečju kompanija je ostvarila dvije akvizicije-jedinicu za umjetnu inteligenciju (AI) marketinške firme Kvantum i programera za razgovornu trgovinu Tictuk Technologies-koje govore o želji da se više poslovanja usmjeri na e-trgovinu i podatke i analitiku. Ti poslovi, u kombinaciji s nedavnim prometom liderstva, sugeriraju da bi restoran mogao ponovo osmisliti aspekte svog marketinga u skladu s novom digitalnom vizijom. Digitalna prodaja u Yum portfelju dosegla je rekordnih 17 milijardi dolara 2020. godine, što je povećanje od 45% u odnosu na prošlu godinu.

"Ključna tačka fokusiranja naših timova bilo je kontinuirano ubrzavanje naših digitalnih i tehnoloških inicijativa širom svijeta, a sve usmjereno na pružanje klijentima novih i besprijekornih načina za pristup našim robnim markama", rekao je izvršni direktor Yum -a David Gibbs u razgovoru koji je prvo razgovarao -kvartalni rezultati prošlog mjeseca. "U nekim slučajevima to znači jačanje naše sposobnosti bržeg rasta prodaje i dovođenje snažnih raznolikih tehnoloških talenata."

Iako su rukovodioci očigledno uzbuđeni što će integrirati Tictuk i Kvantum u dio Yum -ovog višegodišnjeg Recipea za rast, druga područja poslovanja doživljavaju nestabilnost. U travnju, KFC je izgubio američkog šefa marketinga Andreu Zahumensky, koja je pomogla produžiti kreativnu revitalizaciju lanca pržene piletine i aktivno traži zamjenu. Pizza Hut, koji je često zaostajao u kompaniji prije COVID-19, vidio je CMO-a Georgea Felixa kako odlazi u Tinder samo nekoliko sedmica ranije usred remonta marketinškog tima jedinice. Lindsay Morgan, ranije direktorica brend komunikacija, sada je CMO.

Još je prerano za procjenu punog utjecaja nedavnih Yum -ovih M & ampA manevara i odstupanja vodstva na marketing. No, stručnjaci su ukazali na veće trendove u kategoriji brzih usluga i promjenu navika u potrošnji medija-uključujući usvajanje digitalnog i mobilnog naručivanja i ubrzanje rezanja kabela-koji oslikavaju budućnost u kojoj bi kompanije poput Yuma mogle usmjeriti više resursa na marketing performansi u odnosu na prskanje trikovi za izgradnju marke. Na primjer, dogovor s Kvantumom ima za cilj pomoći Yumu u donošenju pametnijih i učinkovitijih odluka vezanih za medijsko planiranje, brzo praćenje marketinške strategije vođene podacima.

Na upit za komentar o tome kako bi akvizicije Kvantuma i Tictuka mogle utjecati na marketinške timove i potrošnju medija, glasnogovornik je usmjerio Marketing Dive na transkript poziva o zaradi.

"Svi trendovi se jasno okreću prema medijima zasnovanim na internetu i pametnim telefonima. Tamo novac ide, a to potrošači koriste", rekao je Robert Kwortnik, vanredni profesor marketinga usluga na Cornell-ovom Poslovnom fakultetu SC Johnson. "Velike kampanje zasnovane na brendovima, s gornjim tokom prodaje, ne izgleda da nestaju. Ali ako se pomak u digitalnim očnim jabučicama kreće prema medijima temeljenim na aplikacijama, onda marketing performansi ima puno više smisla."

Transformacija uzima oblik

Prije pandemije, Yum je ključno zaposlio, dovodeći Walmart CIO Claya Johnsona na mjesto glavnog službenika za digitalnu tehnologiju koji je nadzirao njegovu transformaciju. A 2018. godine Pizza Hut je kupio softversku platformu za naručivanje na mreži QuikOrder. Koncentriraniji napredak u tehnologiji mogao bi se posmatrati dugo vremena.

"Iskreno, iznenađen sam da se to nije dogodilo malo prije", rekao je Kwortnik. "Yum je oduvijek bio na čelu uvida potrošača. Oni učinkovito koriste uvide potrošača, ne samo za razvoj proizvoda, već i u razmišljanju o tome kako odlaze na tržište, posebno sa svojim oglasnim porukama."

Domino's, one of Pizza Hut's top rivals, stands as a leader in the category thanks to early bets on internal digital and mobile ordering capabilities. Domino's for years has promoted itself as a tech company that happens to sell pizza , but similar modes of thinking have grown common as restaurants contend with COVID-19 restrictions that have driven up demand for contactless sales channels and store concepts that come with safety protocols baked in.

"Domino's remains the gold standard for digital innovation and experience in the restaurants industry," Chelsea Gross, a director analyst at Gartner, said in emailed comments. "While Yum Brands continues to chase Domino's in regards to digital experience, I would argue that Yum would be more successful in developing both their owned, direct delivery as well as their partner delivery services with the recent acquisitions."

On the data and analytics front, Yum plans to use Kvantum's machine learning and econometric modeling solutions to measure campaign effectiveness across owned, paid and earned media channels. On the Q1 call with investors, Gibbs said Yum is already seeing "material improvements" in marketing spending efficiency and same-store sales in markets testing the solution, including Pizza Hut's U.K. and Taiwan divisions. KFC and Taco Bell started using some of Kvantum's offerings in the U.S. at the end of last year.

Tictuk works on integrations for social media and messaging channels, such as WhatsApp, Facebook Messenger, SMS and email, that allow consumers to interact with brands and take actions like placing an order. Tictuk's platform was previously available at about 900 KFC, Taco Bell and Pizza Hut locations outside of the U.S., but Yum plans to scale the offering globally to seize on climbing interest in mobile and digital.

"Those acquisitions are definitely accelerators . If they move the needle there, it will likely build confidence to continue to invest and maybe even acquire more skills."

Neither the Kvantum or Tictuk deal are massive: The companies together account for roughly 40 employees, according to their LinkedIn pages.

"[We're] buying these companies in order to improve our capability and provide services to our franchisees at the lowest possible costs that are really unique proprietary capabilities that we would have. They're not designed to drive a profit for Yum," Chief Financial Officer Chris Turner told analysts. "We think we've really got a great model here when we do these smaller acquisitions, but we can scale them across the world."

Yet, the deals still underpin where Yum is turning its focus as it builds a growth engine beyond the pandemic — one that could include additional M&A, experts suggested.

"Those acquisitions are definitely accelerators," said David Novak, senior partner at brand transformation consultancy Prophet. "It's a pocket of very focused skills that will add value, in the very least, to show where they can go next. If they move the needle there, it will likely build confidence to continue to invest and maybe even acquire more skills."

Striking a balance

While the Kvantum and Tictuk deals may not be the type to break the bank, integration may prove a challenge. McDonald's in 2019 bought the AI firm Dynamic Yield for more than $300 million to support its digital transformation. A Wall Street Journal report from February indicated Dynamic Yield's offerings have frustrated franchisees while failing to realize some bottom-line goals. McDonald's is reportedly mulling selling off parts of the enterprise, the Journal said. That might serve as a cautionary tale for Yum and its marketing teams.

"Friction between traditional marketing teams and new, digital acquisitions is common," Gartner's Gross said. "Digital transformation should support, not contradict, marketing team goals."

Recent CMO departures at Yum are a separate issue, but similarly spell changes for its marketing. Under Zahumensky's tenure, KFC became known for its outlandish creative plays, like an anime dating sim and Lifetime original short film starring brand mascot Colonel Sanders.

"[If] the shift in digital eyeballs is moving toward the app-based media, then performance marketing makes a heck of a lot more sense."

Associate professor, SC Johnson College of Business

Off-the-wall brand-building activations will remain a part of the playbook, experts said, but their share of the marketing mix could change.

"It could get down to, for a CMO, where their wheelhouse is — if they're more out of the advertising and creative space where that's their expertise versus the tech insights space, which is inarguably a different skill set," Kwortnik said.

Kvantum's specialty in AI at the same time heralds more automation for Yum's marketing as the industry at large moves toward a more programmatic mindset. The company is trying to balance that shift with human-led insights. The Kvantum unit will be paired closely with Collider Lab, a consumer insights and marketing strategy consultancy Yum purchased in 2015.

"You still need traditional consumer insight, whether it's focus-grouped stuff or survey-based," Kwortnik said. "If you can bundle and bring some of that intelligence in-house, I think that's a pretty worthwhile investment for a big brand.

"There is this risk of chasing the shiny new thing . especially [with] AI," he added.

What's next

Beyond helping to scale up tech infrastructure, Yum's new assets could be applied in a number of other areas over the long term. Loyalty has become a bigger priority for Taco Bell and Pizza Hut, with the former launching a new program last year.

"There aren't that many companies that have that level of scale across a couple of different specialty categories like they do."

The broader retail category also might serve as an indicator of where Yum is heading. Kroger, the grocer that acquired the majority of data analysis firm DunhumbyUSA in 2015 , has steadily been building out a retail media network to service other advertisers. As the death of the cookie makes first-party data more valuable, other brands, including Walmart and Target, are doubling down on their own bets in digital advertising.

Restaurants wield data in specialized segments like time of day and foot traffic patterns that are valuable to outside brands. It's not out of the question that media networks could be in the cards for a company like Yum, according to Novak, even though restaurants do not currently have as significant a presence in that space.

"They probably could put something together that competes with where Target's going," Novak said. "There aren't that many companies that have that level of scale across a couple of different specialty categories like they do."

Nearer term, differentiating on convenience and speed will be even more critical for the QSR sector with a post-pandemic reopening starting to take shape. The health crisis reset expectations for restaurants, and many consumers — particularly younger cohorts — may hold onto the digital and mobile habits they adopted due to the pandemic. Engaging people on those channels will require a different mindset, including when it comes to marketing.

"They get sticky to an app that they like and become familiar with. If you're not prominently distributing through that delivery app, it's just another channel," Kwortnik said. "That's more of a push [marketing] strategy: Not just getting people to come to the brick-and-mortar stores, but finding a way to push the market through these other channels that, really, QSRs never had to rely on before."


Tracy Skeans Promoted to Chief Operating Officer at Yum! Brands

Louisville, KY, February 2, 2021 – Yum! Brands, Inc. (NYSE: YUM) today announced the promotion of Tracy Skeans to Chief Operating Officer. Skeans, who has been with the Company for 20 years, has served as Chief Transformation and People Officer since 2016. Skeans’ promotion to COO formalizes the expanded role she is already playing to drive cross-brand collaboration on operational execution, people capability and customer experience imperatives that will fuel same-store sales and net-new unit growth. Skeans will retain her current responsibilities as Chief People Officer and continue reporting to Yum! Brands Chief Executive Officer David Gibbs.

“Tracy and I share a people-first vision and passion for elevating the customer and employee experience, which makes her the perfect choice for Chief Operating Officer in our next phase of growth,” said Gibbs. “Tracy has been an invaluable strategic partner to me and our global leadership team as we have navigated through some of the most pivotal milestones in our history, including our transformation to a pure play franchisor in 2019 and more recently the COVID-19 pandemic. Her breadth of experience and strong track record of results through people and executional excellence give the Yum! Brands Board of Directors and me great confidence that she will help us deliver strong performance across our brands and global franchise system in this fast-changing environment.”

“Yum!’s future growth and social impact rely on our ability to collaborate and execute strategies and ideas at scale across our iconic brands and global franchisee base,” said Skeans. “I’m excited to take on this expanded role partnering with David and our global leadership team, as we continue to invest in our people and customer experience, alongside critical areas that will drive future growth and improve franchise unit economics – including technology, innovation and restaurant development.”

Yum! Brands CEO David Gibbs will continue leading the Company’s overarching strategies and maintain his focus on driving global growth and sales and profitability at all Yum! franchise businesses worldwide. In addition to Skeans, Yum! Brands’ functional and brand division leaders will continue reporting to Gibbs, and brand restaurant operations will continue to report to each brand respectively.

Skeans has an impressive tenure of business leadership since joining the Company in 2000, and has expertise driving results at the powerful intersection of talent, culture, finance and strategy. Under her leadership as Chief Transformation and People Officer, in 2020 Yum! integrated The Habit Burger Grill and Heartstyles, a team member leadership development program designed to transform the employee and customer experience, and championed the Company’s Unlocking Opportunity Initiative. Throughout the COVID-19 pandemic, Skeans’ cross-functional and operations leadership was critical in mobilizing Yum! and its brands to protect the health, safety and engagement of corporate and restaurant teams. In 2016, Skeans played a central leadership role in the Yum China spinoff and Yum! Brands’ multi-year transformation strategy to accelerate the Company’s growth by moving to a heavily franchised and more profitable business model – a strategy that was successfully completed in 2019.

Prior to that, she served as President of Pizza Hut International, which at the time was a business of more than 5,900 restaurants across more than 85 countries. In 2013, as Chief People Officer, Pizza Hut, Skeans was one of the key architects of the strategy and structure to separate Yum! Restaurants International into the global brand divisions of KFC and Pizza Hut. Before leading HR, Skeans spent the first half of her career in Finance roles including strategic planning, asset development and accounting at Pizza Hut. In addition to her role at Yum!, Skeans serves on the board of directors for the Brown-Forman Corporation and the Women’s Foodservice Forum.

About Yum! Brands, Inc.
Yum! Brands, Inc., based in Louisville, Kentucky, has over 50,000 restaurants in more than 150 countries and territories, making it a leader in global retail development primarily operating the Company’s brands – KFC, Pizza Hut and Taco Bell – global leaders of the chicken, pizza and Mexican-style food categories. The Company’s family of brands also includes The Habit Burger Grill, a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. Yum! Brands was included on the 2021 Bloomberg Gender-Equality Index and in 2020, Yum! Brands was named to the Dow Jones Sustainability Index North America and was ranked among the top 100 Best Corporate Citizens by 3BL Media

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KFC’s Explosive Growth in China

Homogenization has made it easy for fast-food joints to circle the globe, spitting out carbon copies of themselves, their burgers, and their fries along the way. But in the most populous country in the world, a fast-food giant stepped off the conveyor belt and found unprecedented success by being different, not by being the same.

In the Harvard Business School case "Yum! China," professor David E. Bell and Agribusiness Program director and senior researcher Mary Shelman examine how Yum! Brands, the parent company of KFC and Pizza Hut, outperformed McDonald's and became the largest restaurant company in mainland China.

The case describes how Yum! China succeeded and expanded by staying local on many levels. It keeps close ties to the Chinese government, hires local management, sources food from within the country, and changes the menu to suit Chinese tastes and style of eating.

A Matter Of Scale

One key issue the case examines is "how to implement the rollout of a fast-food chain involving so many stores across such a vast—and regionally different—country," says Bell, who teaches the case in the School's annual Agribusiness Seminar.

Both KFC and Pizza Hut restaurants in China differ markedly in many ways from their Western counterparts. And while Pizza Hut has done very well for itself with nearly 500 restaurants in 120 cities (as of December 2010), KFC's performance has been finger-lickin' incredible. Since the first piece of fried chicken (available in dark meat only, to the disappointment of many an American tourist) was served at a Beijing KFC in 1987, the number of KFCs in China has grown to over 3,000, in 650 cities, with one new restaurant opened a day.

"If I could have written any case in the world, this would have been the one I would have picked," says Shelman, a Kentucky native with more than a passing interest in Colonel Sanders. "Not only is this the story of a successful entry into China by a Western company, this case provides a glimpse of how quickly Chinese diets are changing as incomes improve. Because China is so big this has a huge impact on the rest of the global food system. What happens in China, what Chinese people eat, impacts what you and I pay for food."

What happened in China with Yum! Brands, and with KFC in particular, had a lot to do with China division chairman and CEO Sam Su. "He really flexed the model," says Shelman. This was in part due to KFC being owned by PepsiCo when it first came to China. PepsiCo was not a fast-food company, so Su was given more managerial freedom.

Along with being lucky, Su is smart, driven, and visionary—a classic entrepreneur. But he's also humble. "There's no room for ego," Su explained in the case. "China doesn't have the same culture of individualism that is present in the United States."

Su's strategy was that KFC "would not be seen as a foreign presence but as part of the local community… Our opportunity was to take the best ideas from the US fast-food model and adapt them to serve the needs of the Chinese consumer."

Initially this involved hiring the right people. For Su this meant Chinese managers who read and spoke the language, who understood the restaurant business and the Chinese consumer, but who also had experience in the Western way of doing business. "It was a foot in both worlds," Shelman says. "They knew firsthand the Western model but they also understood the challenges of operating in this Chinese, very traditional, very evolving market."

The people Su brought on board were also close in a way Shelman found surprising when she spent time with them when researching the case.

"There was huge camaraderie evident in the way that the top management team interacted with each other … they bantered back and forth and poked fun at each other," Shelman says. "They'd be walking down the hall jostling, pushing, laughing. This is a group that has worked together a long time—unusual in a country where experienced management talent is at a premium ."

It turns out that unusual employee interactions, at least in comparison with Western business decorum, are the norm at Yum! Brands, something Shelman experienced when she accompanied then-COO Mark Chu to one of KFC's Shanghai locations. "You walk into a restaurant and not only do [the employees] recognize him, but they love him as well."

And so the employer-employee relationship has more a feel of family. "In the United States, if you don't show up at work, what happens? You get fired," says Shelman. "In China, where many of the company's 250,000 employees are college students working their first job, it's like, 'Oh we understand that sometimes you feel like skipping class. If you decide to skip work—please call in and let us know, so we can make sure your job is covered.'"

Trained labor, it turns out, is a very valuable asset even in a land of 1.3 billion-plus people.

"Chu's acceptance and appreciation for these young employees is exceptional for Western companies to see," says Shelman. Younger employees, for example, are encouraged to socialize over company-provided video games on their breaks. This practice serves several purposes: It eases the minds of parents anxious about sending their children out into the world, provides crucial social skills for young adults who grew up in single-child households, creates lifelong Yum! Brands customers, and develops a culture of customer service in a country where there was none.

The restaurant management program is similarly focused. "You're a college graduate," says Shelman. "You're recruited for that position. You're very carefully developed to be able to do all these different jobs in the restaurant. And it's perceived as something that you would do your entire life."

Along with training and retaining quality employees, another key factor in KFC's success was Su's early decision to downsize his own career. Originally hired to cover the northern Asia-Pacific region, he departed from the usual managerial growth path of taking on larger geographic assignments and instead argued that he should focus exclusively on China. Early on, he decided that Yum! should develop a national footprint—supported by a company-owned distribution system since third-party suppliers didn't exist—instead of growing in geographic chunks through franchising.

Su sourced products from within China whenever possible. This was no easy feat early on as the supply chain for chicken, for example, included multiple vendors providing a handful of birds each. Food safety is a big concern for Chinese consumers, and it was Su's decision to build the supply chain from the ground to help ensure quality. "We work with our suppliers to build their capabilities. We stress the importance of knowledge transfer, and even arrange for them to go overseas to learn," Su said in the case.

The Chinese Way

"One of the lessons I take away from this case is that to do China, you have to do China," says Shelman. "It's a large, complex, and dynamic market that deserves single-minded attention." That attitude extends from the boardroom of Yum! Brands to the menus in KFC restaurants. A small number of items would be familiar to Western visitors—mashed potatoes, corn on the cob, fried bone-in chicken—but most would not. The Chinese KFC menu may include fried dough sticks, egg tarts (which Shelman raves are "to die for"), shrimp burgers, and soymilk drinks, as well as foods tailored to the tastes of specific regions within China.

The large selection of menu items is meant to appeal to the Chinese style of eating, in which groups of people share several dishes. But it's also part of the "New Fast Food" initiative Su developed in 2005 in response to concerns about the role of fast-food restaurants in the obesity epidemic—concerns that he shares and takes responsibility for. "We have been too greedy, too shortsighted," Su said, referring to the traditional high- volume, low-choice fast-food model.

Su believes that offering a wider variety of foods will help patrons make healthier choices. The KFCs in China have also limited the amount of money saved on combo meals, and have completely eliminated supersized items. Exercise is actively promoted inside the chain as of 2010 the youth programs and competition it sponsored had over 260,000 participants in 438 cities.

KFC succeeded in China both because it was not McDonald's and because in many ways it decided it wouldn't be KFC either—which brings up another key question. "With the benefit of 20/20 hindsight…how do you avoid the mistakes of the American fast-food model?" asks Bell. "Put another way, if McDonald's and KFC were to start over in the United States knowing what they know now, how would their model differ?"


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Why Domino's Spent Millions to Fix Its Pizza

There is a great entrepreneurial story behind Domino's Pizza (NYSE:DPZ) . The company was founded in 1960 by two brothers who borrowed $900 to pay for their first store and used a Volkswagen Beetle to deliver their first pizzas. Today there are more than nine thousand stores around the world, with more than four thousand of them located abroad. Since 2008, Domino's Pizza has experienced massive international store growth, beating the growth rate of competitors Yum! Brands (NYSE:YUM) -- which owns Pizza Hut -- and Papa John's Pizza (NASDAQ:PZZA) .

However, Domino's future in 2010 looked quite bleak. Strong competition, harsh criticism over the taste of its pizzas, and low consumer satisfaction levels were playing against the company's revenue. That's when management decided to adopt a surprising market strategy: admit that its product was awful. The company spent millions in creating a new pizza from the crust up, expanding its menu offering, and advertising the process. The results have been amazing.

Between 2000 and 2013, America's customer satisfaction index score for Domino's Pizza increased from 69% to 81%. More importantly, the company's revenue has also improved significantly. How exactly did Domino's Pizza manage to turnaround its business, though, and what are the company's plans to keep delivering growth revenue in the future?

Source: Domino's Pizza Investor Relations.

A massive business transformation
Domino's amazing turnaround was a result of extensive efforts to improve the company's processes and menu offerings by introducing new recipes, using mobile technology to attract new customers, and improving supply chain management. As a result, the company not only improved its top line performance but also became the fourth largest e-tailer in the U.S.

Domino's main competitive advantage has always been the ability to deliver pizza quickly. In order to implement fast service, however, the company had to rely heavily on frozen, pre-made ingredients. This allowed employees to assemble pizza in record times, but it also had a negative effect on quality. Because of poor quality control, most customers started to recognized Pizza Hut as the best-tasting pizza and relied on Domino's only for quick delivery.

The first task for J.Patrick Doyle, who became the CEO of Domino's in 2010, was to change the company's core pizza recipe. Domino's tested dozens of cheeses and sauces before determining the final ingredients of its new pizza. It carried out blind taste tests with 1,800 random pizza consumers, coming out on top and beating both Pizza Hut and Papa John's by a wide margin.

To market its new pizza, the company implemented an honest marketing campaign that apologized for its old pizzas. To attract new customers, the company developed mobile apps with great user experience, allowing customers to design their own pizzas. To protect its core competence, management began revamping the company's online tracking system to minimize delivery time. The results were astonishing: at the end of the first quarter of 2010, the company posted a 14.3% increase in revenue. Furthermore, since these changes were implemented the company's stock has risen a whopping 400%.

It's all about competitive advantages
Domino's Pizza strategy worked because it focused on building new competitive advantages without losing old ones like its fast delivery service. This strategy allowed the company to deliver great results despite increasing competition.

Notice that the world's third-largest pizza company, Papa John's, is trying to capture market share from Domino's and Pizza Hut by differentiating its pizza with natural ingredients and by offering diversity in its topping options. With 80% of its locations in North America, the company has plenty of growth opportunities available in emerging markets where it is planning aggressive expansion. This expansion is being facilitated by reducing the investment needed to open a franchise restaurant to roughly $200,000.

On the other hand, Yum! Brands recently experienced a tough quarter due to poor sales in China. The company's top line performance and customer confidence were particularly affected by a breakout of avian flu and bad publicity on poultry issues.

My Foolish take
Although the environment remains competitive, Domino's long-term focus on building competitive advantages has allowed the company to develop an economic moat. It not only offers an interesting value proposition, but also has plenty of growth opportunities available since its presence in international markets is still very limited. This is especially the case if compared with Yum! Brands.


Tony Lowings Promoted to KFC Division CEO, Effective January 1, 2019

LOUISVILLE, Ky.--( BUSINESS WIRE )--Yum! Brands, Inc. (NYSE: YUM) today announced the promotion of Tony Lowings, 60, to KFC Division Chief Executive Officer, reporting to Yum! Brands Chief Executive Officer, Greg Creed, effective January 1, 2019. Lowings, a 24-year veteran of the Company, who currently serves as KFC Division President and Chief Operating Officer, will succeed Roger Eaton who is retiring at the end of 2018.

In this new role, Lowings will assume global responsibility for driving the brand strategy and performance of KFC. KFC is the world’s most popular chicken restaurant brand with more than $24 billion in global system sales and more than 21,000 restaurants in over 130 countries and territories as of year-end 2017. General Managers of KFC around the world (including KFC U.S.) as well as leaders of KFC’s global functions, will report to Lowings effective January 1.

“ Tony Lowings is an outstanding leader with deep knowledge of our business and a strong track record of growing KFC’s presence and strengthening the brand’s competitive position with our franchise partners in markets around the world,” said Creed. “ As a proven and highly respected strategic brand builder, high impact operations leader and people grower, Tony is the perfect person to continue elevating KFC into a distinctive, relevant and easy global brand that people trust and champion. I’m extremely confident Tony and his management team will establish a seamless transition and continue to successfully execute KFC’s long-term global growth strategies in partnership with our franchisees.”

Lowings has held a variety of leadership positions at Yum! Brands across finance, operations and general management in several international business units. Prior to becoming President and COO of KFC Division earlier this year, Lowings was Managing Director of Asia-Pacific, a high-growth region for the brand representing 23 markets and comprising more than 50 percent of all KFC Division restaurants. During this time, Lowings provided coaching and support to the KFC business units in India, Thailand, Australia, New Zealand and the Asia franchise business unit. He previously served as Managing Director of KFC SOPAC (Australia and New Zealand) where he was instrumental in growing the business and establishing KFC as one of the region’s most distinctive and unique brands. Lowings’ career at the Company includes roles as Chief Operations Officer of Yum! Restaurants International, Managing Director of Latin America and the Caribbean for KFC, Pizza Hut and Taco Bell and General Manager of KFC and Pizza Hut in Australia and New Zealand.

“ I’m thrilled and incredibly privileged to continue working with our committed KFC leaders and amazing franchise partners to further strengthen and accelerate the development of our powerhouse global brand,” Lowings said. “ KFC is an iconic, well-loved brand with millions of fans and I couldn’t be more excited about its future.”

Roger Eaton has been with Yum! Brands and KFC for more than 20 years, leading the KFC brand globally since 2014. Throughout his successful career with the Company, he has held a number of leadership positions including Chief Operations Officer of Yum! Brands, Chief Executive Officer of KFC U.S., Chief Operating and Development Officer of Yum! Brands and Senior Vice President/Managing Director of Yum! Restaurants International South Pacific (SOPAC), among others.

“ I want to thank Roger Eaton, a dear colleague and friend to many, for his tremendous service, dedication and significant contributions to our business over the past two decades,” said Creed. “ Roger’s imprint on our culture, people and the KFC brand is vast and his legacy is lasting. While we will miss Roger, he’s earned this next phase of life and we wish him well as he spends time with his wife Debbie and children Pierce and Georgie.”

KFC, a subsidiary of Yum! Brands, Inc. (NYSE: YUM.), is a global chicken restaurant brand with a rich, decades-long history of success and innovation. It all started with one cook, Colonel Harland Sanders, who created a finger lickin’ good recipe more than 75 years ago, a list of secret herbs and spices scratched out on the back of the door to his kitchen. Today KFC still follows Colonel Sanders’ formula for success, with real cooks breading and freshly preparing delicious chicken by hand in more than 21,000 restaurants in over 130 countries and territories around the world.

Yum! Brands, Inc., based in Louisville, Kentucky, has over 45,000 restaurants in more than 140 countries and territories and is one of the Aon Hewitt Top Companies for Leaders in North America. In 2018, Yum! Brands was recognized as part of the inaugural Bloomberg Gender-Equality Index, named to the Dow Jones Sustainability North America Index and ranked among the top 100 Best Corporate Citizens by Corporate Responsibility Magazine. The company’s restaurant brands – KFC, Pizza Hut and Taco Bell – are global leaders of the chicken, pizza and Mexican-style food categories. Worldwide, the Yum! Brands system opens over seven new restaurants per day on average, making it a leader in global retail development.


UNLOCKING POTENTIALFOR YUM!

was a truly historic year for Yum!. We successfully completed our three-year transformation and delivered on all of our bold commitments. Plus, we surpassed two milestones that are a testament to Yum!’s incredible scale as we eclipsed $50 billion in system sales and marked the opening of our 50,000th restaurant. None of this would have been possible without our unrivaled culture and talent and over 2,000 franchisees who run 98% of our restaurants globally and employ more than 1.5 million restaurant team members. Because of our journey to become more focused, franchised and efficient, we are well-positioned to accelerate growth and improve franchise unit economics over the long term.

Naš new Recipe for Growth and Good će Unlock our Potential and reflects the importance of collaboration as we continue to build the world’s most loved, trusted and fastest-growing brands.

Our Recipe for Growth, using our four key growth drivers, is the foundation upon which our sustainable, long-term results are being built. These growth capabilities, outlined below, are the key drivers of samestore sales and net-new unit growth and serve as our guiding principles in all business decisions.

  1. Unrivaled Culture and Talent. We will leverage culture and people capability to fuel brand performance and franchisee success.
  2. Unmatched Franchise Operating Capability. We will recruit and equip the best restaurant operators in the world to deliver great customer experiences.
  3. Relevant, Easy and Distinctive Brands. We will innovate and elevate iconic restaurant brands people trust and champion.
  4. Bold Restaurant Development. We will drive market and franchise unit expansion with strong economics and value.

Our Recipe for Good is focused on leading with socially responsible and sustainable stewardship of our food, planet and people.

  1. Hrana: Serve delicious food people trust.
  2. Planet: Grow sustainably.
  3. Ljudi: Unlock potential in people and communities.

I firmly believe our culture is a competitive advantage for Yum! With culture as the driving force behind our results, I’m pleased to share the following highlights from 2019:

  • Our worldwide system sales grew 9%, led by 10% growth at KFC, 9% at Taco Bell and 8% at Pizza Hut.
  • Our same-store sales grew 3%, led by 5% growth at Taco Bell and followed by 4% at KFC with Pizza Hut even for the year.
  • We achieved net-new unit growth of 4%, including 2,040 net-new units, which represents a 70% increase versus 2016 when we began our transformation. We opened, on average, 9 gross restaurants per day in 2019.
  • We ended the year with over 50,000 global restaurants in approximately 287 brand-country combinations.
  • Mi smo 98% franchised, with 913 company units as of the end of 2019.
  • Our core operating profit grew 12%.
  • We returned $1.3 billion of capital to shareholders through share repurchases and dividends.
  • KFC is &ldquoAlways Original&rdquo. KFC continued to bolster its brand positioning and beloved core menu items with innovative new products. We remain dedicated to making the brand R.E.D. &ndash relevant, easy and distinctive &ndash by investing in innovation, technology and enhanced asset formats. KFC now delivers from 15,000-plus restaurants across more than 90 countries.
  • Pizza Hut continued its commitment to ensure that every customer has a Hot, Fast and Reliable experience around the world by making improvements in food quality, speed of service and loyalty programs as well as upgrading its technology for online ordering and delivery.
  • Taco Bell truly is a Category of One for Everyone. 2019 was the brand’s eighth consecutive year of positive same-store sales growth, a testament to the strength of the leadership team and its partnerships with franchisees. In addition to a relentless commitment to value and innovation for which Taco Bell is known, I am particularly excited that 2019 marked the completion of the nationwide kiosk rollout to nearly 6,500 restaurants and that Taco Bell delivery is available in over 5,100 restaurants across the U.S. through our strategic partnership with Grubhub.

In closing, 2019 marked the successful conclusion of our massive transformation, and we began 2020 with the exciting news that we are adding The Habit Burger Grill to the Yum! porodica. This deal should enable us to offer an exciting new investment opportunity to our existing franchisees and expand an award-winning, trend-forward brand through the power of Yum!’s unmatched scale.

That said, the COVID-19 (coronavirus) pandemic continues to rapidly evolve, and our No. 1 priority is the health and safety of our employees, franchisees and customers. We are closely monitoring the situation and the ever-changing intelligence from public health, travel and national security authorities in countries where we operate to ensure we protect our people, customers and brands. With our franchisees, we have industry-leading action plans, standards and policies in the restaurants to prevent and limit the spread of COVID-19. As the world’s largest restaurant company, our customers span ages, backgrounds and borders, and we remain committed to serving them in a way that protects their health and safety. Times like these are a reminder that we are all globally connected and each have a role to play in helping others. At Yum!, we are committed to doing just that.


Global Citizenship & Sustainability Strategy

Yum! Brands is committed to delivering on our promises to our most important stakeholders &mdash enhancing the customer experience, improving restaurant and franchise profitability, increasing employee engagement and rewarding investors and shareholders.

Our Citizenship & Sustainability priorities will concentrate on advancing progress and results in the most critical parts of our business: feeding people and being transparent about what&rsquos in our food, choosing responsible suppliers, operating our restaurants efficiently, hiring and developing the best talent in an inclusive workplace, and giving back to our communities.

As a globally franchised business, Yum! views franchisees as essential partners in the execution of our Citizenship & Sustainability priorities concerning our food, planet and people.

As a global restaurant company, we are well-positioned to address numerous United Nations Sustainable Development Goals, such as Zero Hunger, Decent Work and Economic Growth, Responsible Consumption and Production, and Climate Action.


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