1、bigwinningYum!around theglobe!Alone Were Delicious. Together Were Yum!Yum! Brands 2007 Annual Customer Mania Report? ? ?We trust in positive intentions and believe everyone has the potential to makea difference. We actively seek diversity in others to expand our thinking andmake the best decision. W
2、e coach and support every individual to grow totheir full capability.?Customers rule. Every customer sees it, feels it and knows it in every restaurant.We make sure we have great RGMs who build great teams. 100% CHAMPS witha Yes Attitude is the expectation.?We begin by asking ourselves, “What can I
3、do NOW to get breakthrough resultsin my piece of Yum?!” Our intentionality drives step change thinking. We imaginehow big something can be and work future-back, going full out with positive energyand personal accountability to make it happen.?We grow by being avid learners, pursuing knowledge and be
4、st practices insideand outside our company. We seek truth over harmony every step of the way.We consistently drive outstanding execution by scaling our learnings intoprocess and tools around what matters most. Breakthroughs come whenwe get people with knowledge thinking creatively.?We team together
5、to drive action versus activity. We discuss the undiscussable,always promoting healthy debate and healthy decisions. Our relationships allowus to ask the earth of each other. We make specific verbal contracts to get bigthings done with urgency and excellence.?We attract and retain the best people an
6、d inspire greatness by being worldfamous for recognition. We love celebrating the achievement of others andhave lots of fun doing it!?Financial Highlights(In millions, except for per share amounts)% B/(W)Year-end20072006changeCompany sales$ 9,100$ 8,3659Franchise and license fees1,3161,19610Total re
7、venues$10,416$ 9,5619Operating profit$ 1,357$ 1,2628Net income$909$82410Diluted earnings per common share$1.68$1.4615Cash flows provided by operating activities$ 1,567$ 1,29921AVERAGE U.S. SALES PER SYSTEM UNIT(a)(In thousands)Year-end200720062005200420035-year growth(b)KFC$994$977$954$896$8982%Pizz
8、a Hut8257948107947482%Taco Bell1,1201,1761,1681,0691,0053%(a) Excludes license units.(b) Compounded annual growth rate.ContentsDear Partners .18Winning Big in China!.1013Winning Big Around the Globe!.1417Going for Breakthrough in the U.S.1821Taco Bell .2223KFC . 2425Pizza Hut. 2627Long John Silvers
9、andA&W All American Food. 28Winning Big With Customer Maniacs!. 29CHAMPS. 3031Biggest Movement to End World Hunger.3233Winning Big With Great Results! .3436Financials .37881DAVID C. NOVAKCHAIRMAN AND CHIEF EXECUTIVE OFFICERYUM! BRANDS, INC.Dear Partners,I think youd agree theresnothing more satisfyi
10、ng thanbeing on a winning team,and I think youll see from thisreport that we are absolutelyfocused on gaining thesatisfaction of winning bigaround the globe. In fact, aswe move into our seconddecade as a public company,we have never been morecertain and more excitedabout the growth wehave within our
11、 grasp inall corners of the world.2#1.Build LeadingBrands AcrossChina in EverySignificantCategory.We already haveestablished enormouslypopular brands andundeniable competitiveadvantage in thefast food and casualdining categories.I know youd also agree theres nothing like a track record of success to
12、 give you the con-fidence you can keep on winning. Thats why Im especially pleased to report we achieved15% Earnings Per Share (EPS) growth for 2007, powered by simply sensational growth inChina, continued profitable international expansion, and strong, stable U.S. cash genera-tion. Thats the sixth
13、straight year weve exceeded our +10% annual EPS target, provingthe underlying power of our global portfolio of leading brands enables us to deliver consis-tent double-digit EPS growth. In so doing, we grew worldwide same store sales 3% andstrengthened our claim as the number one retail developer of
14、new units outside the UnitedStates by opening 1,358 stores, the seventh straight year weve opened up more than 1,000new restaurants. With such powerful results, we generated record cash from operationsof over $1.5 billion and returned an all time high of nearly $1.7 billion to our shareholdersthroug
15、h share repurchases and dividends. Additionally, we announced in October our planto substantially increase the amount of share buybacks over the next two years, repurchas-ing a total of up to $4 billion of the companys outstanding common stock. Given this overallperformance, our share price climbed
16、over 30% for the full year on top of 25% growth in2006. We are especially gratified that our average annual total return to shareholders is18% since our spin-off.But of course, all of this is yesterdays newspaper. Continuing to win big in this tough, com-petitive environment means we must attack our
17、 opportunities with even more purpose andurgency. Let me assure you we are doing just that. We have four powerful growth opportuni-ties that we believe make us not only “Not Your Ordinary Restaurant Company,” but the mostuniquely positioned retailer in the world.Heres how werewinning big:We are clea
18、rly making outstanding progress executing our breakthrough strategy ofbuilding a powerful portfolio of brands in the worlds fastest growing economy, with1.3 billion people. With KFC and Pizza Hut, we already have established enormouslypopular brands and undeniable competitive advantage in the fast f
19、ood and casual diningcategories. The numbers tell the story: KFC has 2,140 quick-service restaurants in mainlandChina, more than McDonalds, our nearest competitor. Pizza Hut has 351 casual diningrestaurants with no other significant Western casual dining chain in mainland China.Like I reported last
20、year, the key to our success is that we have an outstanding local teamthat has worked together for over ten years to build these brands the right way from scratch.Our China leaders started with the vision to become not only the best restaurant companyin China, but the best restaurant company? ? ? ?.
21、 Theres no doubt in mymind we are doing just that. Just ask any analyst, investor or consumer who has visited ourChinese restaurants, and Im betting they will tell you we are building best in class brandsand operations. Whats more, we are highly profitable, generating $375 million in operatingprofit
22、. Thats an amazing 30% growth in 2007 and a five year average annual growth rateof over 25%. China is our highest returning international business with a cash paybackon investments of less than two years which is why we are investing our own capital to beprimarily company owned and operated. As we h
23、ave built the business, weve put in placea world class infrastructure to give us a long-term competitive advantage. We uniquely ownour own food distribution system that has allowed us to expand KFC into 406 cities and3Our China Divisiongenerated $375million in operatingprofitthatsamazing 30%growth i
24、n 2007!make Pizza Hut available in 77 cities. We have one of the largest real estate and construc-tion teams of any retailer in the world that opened 471 traditional restaurants in 2007 as wecontinue to grow our people capability ahead of the business by recruiting and retainingtalent with highly so
25、ught after, well-paying jobs.I always liken our China opportunity to the days when Colonel Sanders, Glen Bell, DanCarney and Ray Kroc started KFC, Taco Bell, Pizza Hut and McDonalds, creatingcategory-leading brands in the U.S. that today regularly serve 300 million consumers atover 30,000 U.S. resta
26、urants. Consider these two factoids: 1) recent government studiessuggest that the middle class in mainland China now numbers over 250 million people, theequivalent to the entire U.S. population in 1990, at which time the U.S. QSR industry wasalready very well established; and 2) there are 547 millio
27、n cell phone subscribers in China,which underscores how rapidly the consumer base is embracing new technology and con-cepts. Clearly, just like the founders of the brands I just mentioned, we are the pioneers onthe ground floor of a booming category in a growing mega market. We fully expect to winbi
28、g by capitalizing on the total opportunity.To us, winning big in China means building leading brands in every significant category. Soin addition to KFC and Pizza Hut casual dining, we are now successfully developing PizzaHut Home Service which already has 23 units in Shanghai and is now beginning n
29、ationalexpansion to meet the growing demand for convenient meals at home given the rise ofdual income households. Weve also generated a lot of local consumer excitement bycreating our own quick-service restaurant chain, East Dawning, tailored to the local favoritesof the Chinese customer. Obviously,
30、 Chinese peoples favorite food is Chinese cuisine, sowe are offering delicious, affordable, convenient Chinese food in appealing facilities thatdifferentiate us from local competition. We continue to enhance the concept and are makingdramatic progress improving our unit economics, especially with sa
31、les increases from thelaunch of television advertising. Our team is confident that we will make East Dawning a suc-cess and believe it could be our highest potential concept given the obvious broad appeal ofChinese food in China. Believe me, the concept is getting better and better every time I seei
32、t in my frequent visits to China and Im a believer!I often get asked the question of how big we think we can be in mainland China. Our bestlong-range forecast is over 20,000 restaurants. The way we look at it, KFC can be everybit as big as McDonalds is in the U.S., ultimately reaching 15,000+ units;
33、 Pizza Hut CasualDining can equal the casual dining leader in the U.S., Applebees, achieving 2,000+ units;Pizza Hut Home Service can match category-leading Dominos in the U.S., achieving5,000+ units; and East Dawning is attacking the Chinese equivalent of the U.S. hamburgercategoryso who knows how h
34、igh is up? The unarguable conclusion based on theopportunity we see on hand is that we are in the first inning of a nine inning ball game.We have a great lead, and plan on winning big!I also often get asked: what can go wrong? Well, in the past five years, weve had chal-lenges like dealing with SARS
35、, the threat of Avian Flu, and an ingredient supply issue, witheach having significant short-term negative impacts. In each case we bounced back strongerthan before. One thing Im sure of is we will certainly have our challenges ahead, but Imgenerated 12% same store sales growth. We have also develop
36、ed target manufacturingcapability for our proprietary dessert line of egg tarts and pizza dough making. And we4YRI is a diverse,high-returnbusiness, openinga record 852new traditional res-taurants acrosssix continentslast year!more convinced than ever that one day we will have more restaurants and p
37、rofits in Chinathan we do in the U.S., so we are glad that weve made an investment into a long-termcompetitive advantage thats getting stronger. Thats my story and Im sticking to it!CHINA DIVISION KEY MEASURES: 20% OPERATING PROFIT GROWTH; +20% SYSTEM SALESGROWTH IN MAINLAND CHINA; AT LEAST 425 NEW
38、UNITS PER YEAR IN MAINLAND CHINA.Yum! Restaurants International (YRI), which operates in over 100 countries and ter-ritories outside of China and the U.S., had its best year yet in 2007. YRI delivered samestore sales growth of 6%, system sales growth of 15% and operating profit growth of 18%,resulti
39、ng in record operating profit of $480 million. Here we have a high return franchisingmodel with 87% of the business being owned and operated by franchisees who are alsoopening up over 90% of the new restaurants and generating $568 million in franchise fees,requiring minimal capital on our part. Like
40、 China, YRI is a tremendous growth vehicle, butwe believe it may have even more potential. While KFC and Pizza Hut are already globalbrands, with a total of 11,686 restaurants, we have barely scratched the surface reachinga combined population of 5 billion people.Whats more, we are getting stronger
41、and more diversified each year. We opened a record852 new traditional restaurants across six continents last year. Thats the eighth straightyear weve opened more than 700 units. Our ever increasing scale fuels growth as morerestaurants and more sales leads to more marketing and an even stronger orga
42、nization.In fact, our system spent approximately $650 million in marketing last year while YRI spent$375 million in G&A. This global infrastructure, coupled with our over 750 dedicatedfranchisees, is our single biggest competitive advantage at YRI. For this we are largelyindebted to PepsiCo who, pri
43、or to our spin-off in 1997, invested 40 years and billionsof dollars to establish the global network weve turned into a 12,000 unit powerhouse.The reality is it would take the same time and commitment for our competition to reachour size and scale, and frankly, we dont expect most U.S. competitors t
44、o have significantinternational businesses for a long time to come.Were focused on profitably driving international expansion in three global arenasfranchise only markets, established company operations markets, and emerging,underdeveloped markets with huge populations.When you look at our core fran
45、chise and company business in total for the year, Imespecially pleased with the consistently strong results we had across the board, withonly a very few soft spots.Our franchise restaurants generated franchisee fee growth of 15% in 2007 and Imespecially pleased with the consistent growth we are seei
46、ng from our great franchisebusiness units. Id like to give a special congratulation to our teams in Asia 19%, CaribbeanLatin America 12%, Middle East Northern Africa 32% and South Africa 32%.In our company ownership markets, our Australian and Mexico businesses had excellentyears on top of strong ye
47、ar ago performance, which is the kind of consistency we are striv-ing for. We were also pleased to see our KFC U.K. business turn around with exceptionalsame store sales growth in a challenging market. If youll recall, we purchased the remaining50% interest in 544 Pizza Hut Restaurants in the U.K. f
48、rom Whitbread, PLC which had beenan underperforming market. While the team has set a clear direction for a turnaround, the#2.DriveAggressiveInternationalExpansion andBuild StrongBrandsEverywhere.Yum! RestaurantsInternational generatedrecord operating profit of$480 million in 2007.51,000,000+great cu
49、stomermaniacs aroundthe globeput a smileon customersfaces every day!business continues to struggle and while we are confident of achieving long-term success,the fact is our plans have not yet paid off. South Korea is another underperforming country,and we have put in new management to give the busin
50、ess a fresh set of eyes and the rightnew initiatives.For the longer term, we are clearly mindful of the need to develop new growth opportunities,and thats why we are aggressively developing emerging markets with huge populations.Take India for example, a country with over a billion people, 60% under
