1、2001“Alone,were delicious. Together,were ”Tricon Global RestaurantsTGR001_covers.9a 4/1/02 12:32 PM Page 1FINANCIAL HIGHLIGHTS(in millions,except for store and per share amounts)% B(W)Number of stores:20012000changeCompany6,4356,1235Unconsolidated affiliates2,0001,8448Franchisees19,26319,287Licensee
2、s2,7913,163(12)Total stores30,48930,417System sales$ 22,328$ 22,1591Total revenues$6,953$ 7,093(2)Ongoing operating profit$889$888Facility actions net loss (gain)$1$(176)NMUnusual items (income) expense$(3)$204NMOperating profit$891$8604Net income$492$41319Diluted earnings per common share$3.24$2.77
3、17Diluted ongoing earnings per common share$3.21$2.988Cash flows provided by:Operating activities$832$49170Refranchising proceeds$111$381(71)AVERAGE U.S. SALES PER SYSTEM UNIT(a)(in thousands)5-year20012000199919981997growth(b)KFC$ 865$ 833$ 837$ 817$ 7862%Pizza Hut7247126966456303%Taco Bell89089691
4、8931902(a) Excludes license and specialty units(b) Compounded annual growth rateWORLDWIDE SYSTEM SALES(in billions)5-year20012000199919981997growth(a)United StatesKFC$ 4.7$ 4.4$ 4.3$ 4.2$ 4.04%Pizza Hut5.05.05.04.84.71% Taco Bell4.95.15.25.04.81%Total U.S.14.614.514.514.013.52%InternationalKFC5.05.0
5、4.64.04.44%Pizza Hut2.62.62.62.52.5 Taco Bell0.10.10.10.10.1Total International7.77.77.36.67.02%Total$ 22.3$22.2$21.8$20.6$20.52%(a) Compounded annual growth rateDesign: Sequel Studio, New YorkHungry for more information? Contact: TGR001_covers.9a 4/3/02 1:30 PM Page 2TGR001_pg 1 only 4/1/02 7:45 PM
6、 Page 1Dear Partners,The usual course of action is for the chairman to start theannual letter with a statement about all the progress thecompany has made the past year. While 2001 wasdefinitely a winning year, Im going to start bymaking a point we think is even more important. DEFINING REALITY Stepp
7、ing back, evenour toughest critics would give us credit for ourmarketing and product innovation. However, I want youto know that we dont think were nearly as good as weshould be at doing what matters most in our industry: runninggreat restaurants and making our customers happy.If you were to look at
8、 our customer survey numbers, youwould see we rank in the middle to bottom tier on the basics, and last inthe attitude we convey regarding our commitment to customer satis-faction. This is unacceptable and as youll read in this report, we arebound and determined to do something about it. We beganmak
9、ing improvements in 2001 and we will not rest until we areranked number one by our customers.Despite this significant opportunity, any way you look at it,weve made a ton of progress since we became a publiccompany in October 1997. Weve more than doubled ourongoing operating earnings per share and in
10、creased ourongoing operating profit at a 7% compound growthrate. Weve grown system sales 9% and openedover 5,200 new restaurants, excluding licenserestaurants, around the world. We also accom-plished this while dramatically improving ourreturns by refranchising, or selling, about3,800 restaurants to
11、 our franchisees.In 2001, we achieved our full yearongoing operating earnings per share target byturning in $3.21 per share in a very challengingoperating environment. When you look at our financials,youll see all the numbers that should be going up are, in fact,going up, and all the numbers that sh
12、ould be going down are going2TGR001_front.9a 4/1/02 5:12 PM Page 2down. Our international development machinecontinues to hum were pleased to report we set anew record by opening 1,041 new restaurants,excluding license units, outside the United States. And,as youll see from the reports from our comp
13、any presi-dents, theres no question the U.S. brands are in muchbetter shape than a year ago. Most importantly, the newmanagement teams we put in place in 2000 have gener-ated significant same store sales momentum at both KFCand Taco Bell. As a result, Tricon shareholders enjoyed a49% increase in the
14、 price of their shares in 2001.Just think what we will do when we simply doa better job running great restaurants and making ourcustomers happy.THE JOURNEY: CUSTOMER MANIA We wantTaco Bell, Pizza Hut and KFC competing with each otherfor the number one spots for Cleanliness, Hospitality,Accuracy, Mai
15、ntenance, Product Quality and Speed what we call CHAMPS and what weve built our globaloperating platform around. And just as importantly, wewant our brands demonstrating to our customers thatno one is more passionate about satisfying their needswith what we call the “YES” attitude.So were on a journ
16、ey to make Customer Maniaa reality in every one of our over 30,000 restaurants.This year our task is to begin training our725,000 team members worldwide on how to beCustomer Maniacs by executing 100% CHAMPS with aYES! 100% of the time. We plan to execute this trainingeach quarter and keep it fresh y
17、ear after year. Our inten-tion is for our Customer Mania training to be our equiv-alent to General Electrics long term commitment andfocus on Six Sigma quality improvements. Were puttingprocess and discipline around what really matters everything related to customer satisfaction.Customer Mania is no
18、t just a catchy slogan.Were making it a way of life from here on out.TEACHING LIFE SKILLS Were teaching ourfront line team members the life skills that will makethem successful in whatever they decide to do skillslike how to listen to the voice of the customer, how to beempathetic to customer needs,
19、 how to exceed expecta-tions within reason, and how to recover when we makea mistake because mistakes do happen. Were empow-ering our team members to solve customer issues on thespot without turning to their restaurant managers. Andwe believe, by staying after this day after day, year afteryear, we
20、will ultimately become the very best in ourbusiness at providing consistently good service.This Customer Mania focus will allow us tocapitalize on the two major growth opportunities thatmake Tricon a great long term investment: drivingaverage unit volumes and opening new restaurants ofour leading br
21、ands BOTH internationally and in theUnited States. Let me dimensionalize these opportuni-ties that have us so excited about our future.DRIVING GLOBAL EXPANSION We are confi-dent we can continue to drive international expansionbecause we clearly have the operational scale andpeople capability to exec
22、ute. These are always thebiggest challenges to building a business outside theUnited States. In fact, Tricon and McDonalds are theonly true global restaurant companies with any signifi-cant size. Through a lot of hard work and years ofinvestment, we now have a very experienced team oftalented intern
23、ational executives and 560 franchisees.This team is generating over $300 million dollars inongoing operating profit in over 100 countries and terri-tories. The first stop on the journey to YUM!starts with training our 725,000 teammembers worldwide to be CustomerManiacs by executing 100% CHAMPSwith a
24、 YES! attitude. 3TGR001_front.9a 4/1/02 5:14 PM Page 3Consider this. Back in1992, McDonalds had a little over4,000 international restaurants today, they havenearly 16,000! When you look at Tricon today, we haveover 10,000 international restaurants with two globalbrands more than 6,000 KFCs and over
25、4,000 PizzaHuts. Were committed to doubling our business in thenext eight to ten years by growing at a clip of 1,000+new restaurants a year. Were focusing our operationsin 7 countries which accounted for over 70% of ourongoing operating profit in 2001 and we also have ourfranchise and joint-venture
26、partners driving growth byopening nearly 70% of our new restaurants.China is our shining star withapproximately 550 KFCs and 65 PizzaHuts. We now have restaurants inevery province but Tibet, so we are inposition to serve 1.3 billion cus-tomers. KFC is ranked the number onebrand by Chinese customers,
27、 ahead ofNike, Coke, Pepsi and McDonalds. Oneday I am certain we will have more KFCsin China than we do in the U.S. Theopportunities we have in Mexico, Korea,the United Kingdom and continental Europe are alsoobvious and within our capability. You can expect us togrow our international profits in the
28、 mid teen rates foryears to come. ACCELERATING U.S. GROWTH We will alsoaccelerate U.S. growth. This is a tougher task becausethe U.S. market is more mature and more competitive.But we know we have underutilized restaurant assetsand are underpenetrated. Our U.S. average unit volumes are only abouthal
29、f of McDonalds and believe me, we are not capacityconstrained. Theres no question we arecapable of generating significantly highersales out of our 20,000 existing restaurants in the U.S.Whats more, our individual brands only haveabout half of the number of restaurants McDonaldshas in the United Stat
30、es. Burger King also has 8,000units with $1.1 million average unit volumes. Incomparison, Taco Bell and KFC have over 5,000 restau-rants, excluding license units. We believe we canachieve at least Burger King distribution levels for bothTaco Bell and KFC.Growing the core business is Job #1 for anyco
31、mpany and its Job #1 for us. Over thepast 10 years weve averaged about2% same store sales growth, andwe think we can take our sales tohigher levels with the one-twopunch of improved restaurantoperations and continued marketingand product innovation. Our U.S.companies are singlemindedly organized tog
32、et this job done.MULTIBRANDING: ABREAKTHROUGH STRATEGYMore recently, we have identified a breakthroughstrategy that will transform our U.S. business and driveaverage unit volumeswe call it multibranding. One reason McDonalds has $1.6 million averageunit volumes is they offer the consumer more choice
33、s. Infact, they offer seven different food types everythingfrom burgers, chicken, fish, and shakes to breakfast. This drives sales by broadening consumer appeal.However, our Tricon brands focus on onecategory. Pizza Hut has pizza in its name. KFC meansKentucky Fried Chicken. Taco Bell means Mexican.
34、 Andevery time weve tried to move into new categories,4In 2001, we set a record by opening 1,041 restaurants, excludinglicense units, outside of the U.S. Far left,were celebrating the opening of our 500th(we opened our 600th in 2002) in China,and left, our 70th KFC in Beijing. Werecommitted todoubli
35、ng our internationalbusiness in the next eight toten years by growing at aclip of 1,000+ unitsa year.TGR001_front.9a 4/1/02 5:17 PM Page 4it fails because we stand for just one thing.Lets face it, no one is waiting with bated breath for aTaco Bell burger or Pizza Hut breakfast. But consumersdo want
36、more choice, and what weve proven is thatconsumers love the idea of accessing two brands in thesame restaurant multibranding.Combinations like KFC-Taco Bell and Taco Bell-Pizza Hut enable us to add $100,000 to $400,000 perunit in annual sales driving a quantum improvementin unit economics. Right now
37、 5% of our assets, over1,500 worldwide restaurants, are multibranded, gener-ating nearly $1.5 billion in annual system sales. Given these outstanding results, in addition toTricon brands, our vision is to look for other multibrandpartners and create our own multibrand concepts. Our goal is to ultima
38、tely offer two brands in theoverwhelming majority of our restaurant locations.Thats why KFC has developed a new concept calledWingWorks, featuring a wide assortment of flavoredchicken wings. And thats why we have securedlicensing agreements with A&W and Long John Silversin 2000 and Backyard Burgers
39、in 2001. Because of the significant sales increases we aregenerating with multibranding, we are remodeling ourexisting asset base and achieving great returns. Weare also opening high-return new restaurants in tradeareas that used to be too expensive or did not haveenough population to allow us to go
40、 tomarket with one brand.We intend for multibranding tounlock significant shareholder value foryears to come, providing a competitiveadvantage that is truly changing theshape of our company. OUR VISION TRICONGLOBAL TO YUM! BRANDS It seems like just yesterdaywhen we began with three leading brands, o
41、r “icons”.We named the company “Tricon” to reflect that. Now,our business has evolved as we multibrand and exploreother branded partnerships to drive multibrandingleadership. To this end, on the day this Annual Report isgoing to the printer, we have announced that we havesigned a definitive agreemen
42、t to acquire Long JohnSilvers and A&W All-American Food Restaurants, whichare owned by Yorkshire Global Restaurants. This agree-ment is subject to regulatory approval and othercustomary closing conditions, and is expected to close bythe end of May.Long John Silvers, with 1,200 U.S. and 25 inter-nati
43、onal restaurants, is the quick service restaurantseafood leader. A&W, with 780 U.S. and 190 interna-tional restaurants, is an all-American brand with a greatheritage. It offers pure-beef hamburgers and hot dogs,along with its signature root beer float. Together, thesebrands bring nearly $1.1 billion
44、 in system sales.This acquisition is based on proven Long JohnSilvers and A&W multibrand test results with both KFCand Taco Bell. Our customers love thecombinations and more choices. As aresult, we have achieved significantincreases in average unit volumes and profits.Were convinced this acquisition
45、 strengthensour business in everyway possible, conser-vatively more thandoubling the multi-branding opportunitieswe have in the U.S.5Tricon U.S. AverageUnit Volumes vs. McDonaldsKFCPizza HutTaco BellMcDonalds$865$724$890$1,647We are the worlds largest multibranderwith over 1,500 co-branded restauran
46、tsworldwide that generate nearly $1.5billion in annual system sales. TGR001_front.9a 4/1/02 5:20 PM Page 5Given this exciting news, were asking ourshareholders to rename your company Yum! Brands,Inc. The name better reflects our future direction andreinforces our New York Stock Exchange ticker symbo
47、levery time you see it. Even more importantly, the namehighlights the fun of our recognition culture and alsoreinforces our Customer Mania passion to put a Yum onour customers faces all around the world.I hope Ive given you a sense of the opportuni-ties we have in both the United States and internat
48、ionalmarkets. As a shareholder, I want you to know the fivekey measures we look at to gauge our performance:HOW YOU SHOULD MEASURE US1) International Expansionwe want toadd at least 1,000 new units andgrow our capability each year.2) U.S. Blended Same Store SalesGrowthwe want to grow oursame store s
49、ales at least 2% peryear. Looking at our brand sales on ablended basis recognizes we are aportfolio and have the power ofdiversification.3) Multibranding Expansionwe want to add at least350 units per year in the U.S.4) Franchise Feeswe generate over $800 million infranchise fees with minimal capital
50、 investment. Weexpect to grow fees 4%-6% each year.5) Return on Investment Capitalat 18%, we are aleader in the quick service restaurant industry. Weexpect to at least maintain our returns by driving atleast 15% margins on the stores we own andexceeding our cost of capital with our investment. We in
