1、Yum! Brands2006 Annual Customer Mania ReportYum!around theGoing forgreatnessglobe!TABLE OF CONTENTS16 Dear Partners8 Going for Greatness in China!12 Going for Greatness Around the World!16 Great Restaurants Start with Great Brands!20 KFC: Chicken Capital U.S.A.22 Taco Bell: Think Outside the Bun24 P
2、izza Hut: Americas Favorite Pizza26 Long John Silvers and A&W All American Food2729 A Great Culture Starts with Great People!: CHAMPS3032 Great Results!: Financial Review3384 FinancialsINBC Doing Great Things for Our Community!FINANCIAL HIGHLIGHTS(In millions, except for per share amounts)% B/(W)Yea
3、r-end20062005changeCompany sales$ 8,365 $ 8,225 2Franchise and license fees1,196 1,124 7Total revenues$ 9,561$ 9,3492Operating profit$ 1,262$ 1,1539Net income$ 824$7628Diluted earnings per common share$2.92$ 2.55 14Cash flows provided by operating activities$ 1,302$ 1,2385AVERAGE U.S. SALES PER SYST
4、EM UNIT(a)(In thousands)Year-end 2006 2005 2004 2003 2002 5-year growth(b)KFC$977 $ 954 $ 896 $ 898 $ 898 2%Pizza Hut794 810 794 748 748 2%Taco Bell1,176 1,168 1,069 1,005 964 6%(a) Excludes license units.(b) Compounded annual growth rate.Fueled by continued profitable international expansion, dynam
5、ic growth in China, and our strong and stable U.S. cash generation, Im pleased to report we achieved 14% Earnings Per Share (EPS) growth in 2006. Thats the fifth straight year weve exceeded our +10% annual target, proving the underlying power of our global portfolio of leading brands enables us to d
6、eliver consistent double-digit EPS growth. We also dem-onstrated our global growth by opening over 1,000 new restaurants outside of the U.S. for the sixth straight year in a row1,181 to be precise. Whats more, we are a proven global cash flow generator, provid-ing major shareholder payouts. Specific
7、ally, after investing $614 million in capital expenditures to grow our core business, we returned our free cash flow to shareholders with $1 billion in share repurchasesreducing our shares outstanding by 6%and a 1% dividend yield (a total shareholder payout of 7% when considering dividends and reduc
8、-tion in outstanding shares). Given this overall strong performance, our share price climbed 25% for the full year, and were especially gratified that our average annual return to shareholders is 15% for this decade.More importantly, we remain bullish about the future and are confident that we will
9、continue to grow our EPS at least 10% each year. We have four powerfully unique strategies that bolster the sentiment that we are Not Your Ordinary Restaurant Company. Heres how were going for greatness around the globe:Dear Partners, Our internal rallying cry is to go for greatness around the globe
10、,and while we have our challenges, I think youll see from this report that we are well on our way with a long runway ahead of us.Not Your Ordinary Restaurant Company!David C. Novak Chairman and Chief Executive Officer, Yum! Brands, Inc.With 14% Earnings Per Share (EPS) growth in 2006, weve exceeded
11、our +10% annual target for the fifth straight year, proving the underlying power of our global portfolio of leading brands delivers consistent growth!1TABLE OF CONTENTS16 Dear Partners8 Going for Greatness in China!12 Going for Greatness Around the World!16 Great Restaurants Start with Great Brands!
12、20 KFC: Chicken Capital U.S.A.22 Taco Bell: Think Outside the Bun24 Pizza Hut: Americas Favorite Pizza26 Long John Silvers and A&W All American Food2729 A Great Culture Starts with Great People!: CHAMPS3032 Great Results!: Financial Review3384 FinancialsINBC Doing Great Things for Our Community!FINA
13、NCIAL HIGHLIGHTS(In millions, except for per share amounts)% B/(W)Year-end20062005changeCompany sales$ 8,365 $ 8,225 2Franchise and license fees1,196 1,124 7Total revenues$ 9,561$ 9,3492Operating profit$ 1,262$ 1,1539Net income$ 824$7628Diluted earnings per common share$2.92$ 2.55 14Cash flows provi
14、ded by operating activities$ 1,302$ 1,2385AVERAGE U.S. SALES PER SYSTEM UNIT(a)(In thousands)Year-end 2006 2005 2004 2003 2002 5-year growth(b)KFC$977 $ 954 $ 896 $ 898 $ 898 2%Pizza Hut794 810 794 748 748 2%Taco Bell1,176 1,168 1,069 1,005 964 6%(a) Excludes license units.(b) Compounded annual grow
15、th rate.Fueled by continued profitable international expansion, dynamic growth in China, and our strong and stable U.S. cash generation, Im pleased to report we achieved 14% Earnings Per Share (EPS) growth in 2006. Thats the fifth straight year weve exceeded our +10% annual target, proving the under
16、lying power of our global portfolio of leading brands enables us to deliver consistent double-digit EPS growth. We also dem-onstrated our global growth by opening over 1,000 new restaurants outside of the U.S. for the sixth straight year in a row1,181 to be precise. Whats more, we are a proven globa
17、l cash flow generator, provid-ing major shareholder payouts. Specifically, after investing $614 million in capital expenditures to grow our core business, we returned our free cash flow to shareholders with $1 billion in share repurchasesreducing our shares outstanding by 6%and a 1% dividend yield (
18、a total shareholder payout of 7% when considering dividends and reduc-tion in outstanding shares). Given this overall strong performance, our share price climbed 25% for the full year, and were especially gratified that our average annual return to shareholders is 15% for this decade.More importantl
19、y, we remain bullish about the future and are confident that we will continue to grow our EPS at least 10% each year. We have four powerfully unique strategies that bolster the sentiment that we are Not Your Ordinary Restaurant Company. Heres how were going for greatness around the globe:Dear Partne
20、rs, Our internal rallying cry is to go for greatness around the globe,and while we have our challenges, I think youll see from this report that we are well on our way with a long runway ahead of us.Not Your Ordinary Restaurant Company!David C. Novak Chairman and Chief Executive Officer, Yum! Brands,
21、 Inc.With 14% Earnings Per Share (EPS) growth in 2006, weve exceeded our +10% annual target for the fifth straight year, proving the underlying power of our global portfolio of leading brands delivers consistent growth!1business, with +20% store level margins and a cash pay-back on investments of le
22、ss than two years. We uniquely own our food distribution system that gives us coverage in every major Chinese province. This has allowed us to expand KFC across 402 cities, and bring Pizza Hut to 62 cities. We also have one of the largest real estate teams of any retailer in the world that opened 36
23、4 new restaurants in 2006. And we continue to grow our people capability ahead of the business by recruiting and retaining talent with highly sought, well-paying jobs.The investment in infrastructure has given us an incredible head start to tap an unprecedented opportunity. I liken it to the days wh
24、en Colonel Sanders, Glen Bell, Dan Carney and Ray Kroc started KFC, Taco Bell, Pizza Hut and McDonalds, creating category leading brands in the U.S. that today reg-ularly serve 300 million consumers at over 30,000 U.S. restaurants. The Chinese middle class already represents the size of the entire U
25、.S. population, with 300 million urban customers who can afford our food. Make no mis-take, we are the pioneers on the ground floor of a booming category in a growing mega market and we fully expect to capitalize on the total opportunity.Thats why our goal is to build dominant restaurant brands in e
26、very significant category. So in addition to KFC and Pizza Hut casual dining, weve recently developed and are successfully expanding Pizza Hut Home Service. Weve also created our own quick service restaurant chain, East Dawning, tailored to the local favorites of the Chinese customer. We are offerin
27、g affordable great-tasting Chinese food in appealing facilities that separate us from local competition. Our team is convinced that we will make East Dawning a success and believe long-term it could be our highest potential concept becauseguess what? Chinese people like to eat Chinese food! Since Im
28、 always asked how big we think we can be in China, Ill give you my crystal ball answer: Were in the first inning of a nine-inning baseball game. We clearly have a long runway and excluding last years extra 53rd week. This resulted in YRI achieving record operating profit of $407 million.YRI operates
29、 in over 100 countries and territories outside of China and the U.S., and we have averaged about 4% net new unit development annually. The great thing about YRI is that 85% of the business is owned and operated by franchisees who are generating almost $500 million in franchise fees, requiring very l
30、ittle capital on our part, and opening up 90% of the new restaurants.As with China, YRI has a huge upside in terms of inter-national expansion. KFC and Pizza Hut already are global brands. Yet we only have 6,600 KFC and 4,700 Pizza Hut restaurants in countries that have a combined population of four
31、 billion peopleso obviously thats got long-term global growth written all over it.Theres no question YRI is a diverse, high-return business. Witness the fact that we opened 785 new traditional res-taurants across six continents last year. Thats the seventh straight year of this level of new unit gro
32、wth. Were focused on profitably driving international expansion in three global arenasfranchise-only markets, established company-operations markets, and emerging, underdeveloped mar-kets with huge populations.When you examine our franchise business, these restau-rants generated franchise fee growth
33、 of 11% in 2006, in local currency and excluding the 53rd week. I want to especially recognize some great franchise business units for their exceptional system sales growth in 2006: Asia +10%, Caribbean/Latin America +13%, Middle East/Northern Africa +19%, and South Africa +25%.The single biggest co
34、mpetitive advantage we have at YRI is that we already have our global infrastructure in place with over 750 dedicated franchisees. Our only major competitor is McDonalds. And when you think about the future, this gives us a great head start because it takes an enormous amount of time and money to re
35、ally establish our brands on an international basis. In fact, other major for growth in mainland China. We believe KFC can be every bit as big in China as McDonalds is in the U.S., achieving 15,000+ units; Pizza Hut Casual dining can equal the casual dining leader in the U.S., Applebees, achieving 2
36、,000+ units; Pizza Hut Home Service can equal category-leader Dominos in the U.S., achieving 5,000+ units; and East Dawning is tap-ping into the Chinese equivalent of the hamburger category. So who knows how high is up? In total, we believe we have the potential for over 20,000 units down the road.
37、Of course, as my father has pointed out to me many times, potential means you havent done it yet, but thats what has us so excited. Its out there for us to go do!With all the optimism in China, the other question I get is “What can go wrong?” Well, in the past three years, we have weathered SARS, th
38、e avian flu, and an ingredi-ent supply issue, with each having significant negative impacts. Of course, events like these are always a possi-bility. One thing Im sure of is we will undoubtedly have our ups and downs, but as I said last year, and Ill say it again, there is no doubt in my mind that on
39、e day we will have more restaurants and more profits in China than we do in the U.S. We will continue to push the pedal to the metal in this great country.CHINA DIVISION KEY MEASURES: +20% OPERATING PROFITGROWTH; +18% SYSTEM SALES GROWTH; 400 NEW UNITS/YEAR.Drive Profitable International Expansion!Y
40、um! Restaurants International (YRI) had one of its best years ever in 2006, delivering system sales growth of +9% and operating profit growth of +12%, both in local currency #2China is our highest return international equity business with +20% store level margins!Build Dominant China Brands in Every
41、 Major Category!With KFC and Pizza Hut, we already have the dominant brands in their respective categories in the fastest growing economy in the world, with 1.3 billion people.To prove the point, KFC has 1,822 quick service res-taurants compared to 784 for McDonalds, our nearest competitor. Pizza Hu
42、t has 254 casual dining restaurants and there is no other substantial casual dining chain in mainland China.The major factor for our success is that we have an out-standing local team that has worked together for over 10 years to build these brands the right way from scratch. The team started with t
43、he vision to become not only the best restaurant company in China, but the best restaurant com-pany in the entire world. Im proud to say that we are doing just that. I know this sounds like hyperbole, but you have to see it to believe it. Just ask any analyst, investor or con-sumer who has visited o
44、ur Chinese restaurants, and they will tell you we are building best-in-class brands and operations. Whats more, its our highest return international equity Some day, we believe well have more restaurants and profits in China than in the U.S.#1YRI is a diverse, high-return business, opening 785 new t
45、raditional restaurants across six continents last year.1,822784McDonaldsKFCUnits in Mainland ChinaGreatRestaurants!23business, with +20% store level margins and a cash pay-back on investments of less than two years. We uniquely own our food distribution system that gives us coverage in every major C
46、hinese province. This has allowed us to expand KFC across 402 cities, and bring Pizza Hut to 62 cities. We also have one of the largest real estate teams of any retailer in the world that opened 364 new restaurants in 2006. And we continue to grow our people capability ahead of the business by recru
47、iting and retaining talent with highly sought, well-paying jobs.The investment in infrastructure has given us an incredible head start to tap an unprecedented opportunity. I liken it to the days when Colonel Sanders, Glen Bell, Dan Carney and Ray Kroc started KFC, Taco Bell, Pizza Hut and McDonalds,
48、 creating category leading brands in the U.S. that today reg-ularly serve 300 million consumers at over 30,000 U.S. restaurants. The Chinese middle class already represents the size of the entire U.S. population, with 300 million urban customers who can afford our food. Make no mis-take, we are the
49、pioneers on the ground floor of a booming category in a growing mega market and we fully expect to capitalize on the total opportunity.Thats why our goal is to build dominant restaurant brands in every significant category. So in addition to KFC and Pizza Hut casual dining, weve recently developed a
50、nd are successfully expanding Pizza Hut Home Service. Weve also created our own quick service restaurant chain, East Dawning, tailored to the local favorites of the Chinese customer. We are offering affordable great-tasting Chinese food in appealing facilities that separate us from local competition
