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FAST FOOD INDUSTRY

Introduction

Fast food is the term given to food that can be prepared and served very quickly. While any meal

with low preparation time can be considered to be fast food, typically the term refers to food sold in a

restaurant or store with low quality preparation and served to the customer in a packaged form for

take-out/take-away.

Outlets may be stands or kiosks, which may provide no shelter or seating, or fast food restaurants

(also known as quick service restaurants). Franchise operations which are part of restaurant chains

have standardized foodstuffs shipped to each restaurant from central locations.

The capital requirements involved in opening up a fast food restaurant are relatively low. Restaurants

with much higher sit-in ratios, where customers tend to sit and have their orders brought to them in a

seemingly more upscale atmosphere may be known in some areas as fast casual restaurants.

History

The concept of ready-cooked food for sale is closely connected with urban development. In Ancient

Rome cities had street stands that sold bread and wine. A fixture of East Asian cities is the noodle

shop. Flatbread and falafel are today ubiquitous in the Middle East. Popular Indian fast food dishes

include vada pav, panipuri and dahi vada. In the French-speaking nations of West Africa, roadside

stands in and around the larger cities continue to sellas they have done for generationsa range of

ready-to-eat, char-grilled meat sticks known locally as brochettes.

The Start of Fast Food Culture

The concept of fast food pops up during 1920s.The 1950s first witnessed their rapid proliferation. Several

factors that contributed to this explosive growth in 50s were:

(1) Americas love affair with the automobiles.

(2) The construction of a major new highway system.

(3) The development of sub-urban communities.

(4) The baby boom subsequent to world war second.

Fast-food chains initially catered to automobile owners in suburbia.


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On the go

Fast food outlets are take-away or take-out providers, often with a "drive-through" service which

allows customers to order and pick up food from their cars; but most also have a seating area in

which customers can eat the food on the premises. People eat there more than five times a week and

often, one or more of those five times is at a fast food restaurant.

Nearly from its inception, fast food has been designed to be eaten "on the go", often does not require

traditional cutlery, and is eaten as a finger food. Common menu items at fast food outlets include fish

and chips, sandwiches, pitas, hamburgers, fried chicken, French fries, chicken nuggets, tacos, pizza,

hot dogs, and ice cream, although many fast food restaurants offer "slower" foods like chili, mashed

potatoes, and salads.

Variants

Although fast food often brings to mind traditional American fast food such as hamburgers and fries,

there are many other forms of fast food that enjoy widespread popularity in the West.

Chinese takeaways/takeout restaurants are particularly popular. They normally offer a wide variety of

Asian food which has normally been fried. Most options are some form of noodles, rice, or meat.

Sushi has seen rapidly rising popularity in recent times. A form of fast food created in Japan. sushi is

normally cold sticky rice served with raw fish.Pizza is a common fast food category in the United

States, with chains such as Domino's Pizza, Sbarro and Pizza Hut. Menus are more limited and

standardized than in traditional pizzerias, and pizza delivery, often with a time commitment, is

offered.

Fish and chip shops are a form of fast food popular in the United Kingdom, Australia and New

Zealand. Fish is battered and then deep fried.The Dutch have their own types of fast food. A Dutch

fast food meal often consists of a portion of French fries .

Business

In the United States alone, consumers spent about US$110 billion on fast food in 2000 (which

increased from US$6 billion in 1970). The National Restaurant Association forecasted that fast food

restaurants in the U.S. would reach US$142 billion in sales in 2006, a 5% increase over 2005. In

comparison, the full-service restaurant segment of the food industry is expected to generate $173

billion in sales.


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Jobs and labor issues

Today, more than 10 million workers are employed in the areas of food preparation and food

servicing including fast food in the world.

Employees are the backbone of the fast food industry. Proper training is crucial to the orderly and

quick service customers expect. Yet, employee turnover can be as high as 200% per year. With sucha turnover, owner-operators of franchise and non-franchise restaurants have the daunting task of

constantly training an entirely new workforce. Policies and procedures need to be explained to each

new employee.

Globalization

In 2006, the global fast food market grew by 4.8% and reached a value of 102.4 billion and a volume

of 80.3 billion transactions. In India alone the fast food industry is growing by 40% a year.

McDonald's is located in 120 countries and on 6 continents and operates over 31,000 restaurants

worldwide.

KFC is located in 25 countries. Subway has 29,186 restaurants located in 86 countries, Pizza Hut is

located in 26 countries, Taco Bell has 278 restaurants located in 12 countries besides the United

States.

Health issue

Trans fats which are commonly found in fast food have been shown in many tests to have a negative

health effect on the body.

The fast food consumption has been shown to increase calorie intake, promote weight gain, and

elevate risk for diabetes. The Centers for Disease Control and Prevention ranked obesity as the

number one health threat for Americans in 2004. It is the second leading cause of preventable death

in the United States and results in 400,000 deaths each year.


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FAST FOOD INDUSTRY IN INDIA

INDIA EMERGING MARKET FOR GLOBAL PLAYERS

The percentage share held by foodservice of total consumer expenditure on food has increased from a

very low base to stand at 2.6% in 2001. Eating at home remains very much ingrained in Indian

culture and changes in eating habits are very slow moving with barriers to eating out entrenched in

certain sectors of Indian society.. The growth in nuclear families, particularly in urban India,

exposure to global media and Western cuisine and an increasing number of women joining the

workforce have had an impact on eating out trends.

FACTS AND FIGURES

Fast food is one of the worlds largest growing food type. Indias fast food industry is growing by

40% a year and is expected to generate a billion dollars in sales by 2005.The multinational segment

of Indian fast food industry is up to Rs. 6 billion, a figure expected to zoom to Rs.70 billion by 2005.

By 2005, the value of Indian dairy products is expected to be Rs.1, 00,000 million. In last 6 years,

foreign investment in this sector stood at Rs. 3600 million which is about one-fourth of total

investment made in this sector. Because of the availability of raw material for fast food, Global

chains are flooding into the country.

Industry Overview

The Fast Food Restaurant (FFR) industry consists of over 300,000 locations throughout the

United States. This industry is highly competitive but can lead to substantial revenues and profits.


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COMPETITION

Major FAST FOOD INDUSTRY competitors look to attain stronger market share by emphasizing

brand names, expanding internationally, and offering a diverse array of meals. Yum! Brands

main domestic and international competitors are McDonalds, Wendys/Arbys, Starbucks, and

Burger King, along with other full service restaurant alternatives. Currently, the barriers to entry

are low while globalization of companies is increasing as international countries grow. Thisinformation suggests companies with high revenue can continue growing in globalized markets

with increasing growth potential.

Market Size & Major Players

a) Dominated by McDonalds having as many as 75 outlets.

b) Dominos pizza is present in around 100 locations.

c) Pizza hut is also catching up and it has planned to establish 125 outlets at the end of 2005.d) Subways have established around 40 outlets.

e) Nirulas is established at Delhi and Noida only. However, it claims to cater 50,000 guests

every day.

The Major players in fast food are:

y MCDONALDS

y KFC

y PIZZA HUT

y DOMINOS PIZZA.

y COFFEE DAY

y BARISTA.

The main reason behind the success of the multinational chains is their expertise in product

development, sourcing practices, quality standards, service levels and standardized operating

procedures in their restaurants, a strength that they have developed over years of experience around

the world. The home grown chains have in the past few years of competition with the MNCs, learnt a

few things but there is still a lot of scope for improvement.

Indias economy is fast growing. Some predict it will be the world's largest economy by 2050. So

now's the time to look for long-term investment opportunities in this emerging market. It so happens,

some delicious investment opportunities are unfolding as India begins to embrace an American

favorite: fast food.


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A larger middle class with more disposable income is partly responsible for the increasing interest in

fast food. Sales at fast-food chains are growing at a rate of 28% in India. As a result, American fast-

food companies that are hungry for growth are gathering around the table.

y The India invasionDomino's Pizza dominates the Indian pizza market with a total share ofaround 50%. Total store count doubled in the last four years, to 335 across 79 cities. And it

appears more growth is on the menu.

Management says the saturation level is still low in existing cities. Consequently, the company

plans to open 70 new stores in existing cities in 2011. In addition, the company is looking at

further expansion into the rapidly growing, but smaller, tier II and tier III cities.

y Starbucks : Is a rising competitor as well. The company plans to open its first location later

this year. CEO Howard Schultz said India is "as large an opportunity as there exists in the

world, coupled with China." From 1998 to 2008, coffee consumption in India rose an

astounding 90%. The current caffeine craze creates a large opportunity indeed.

y Yum! Brands , the parent company of Taco Bell, KFC, and Pizza Hut. Because of its success

in China Yum! is an international fast-food phenomenon. Now the company is targeting India

with plans to quadruple its existing network of greasy food chains over the next five years, to

1,000. The growth prospects are intriguing.

y McDonald's : McDonald's plans to open 30 new India locations in 2011, marking the

beginning of a multiyear India expansion plan. In order to compete, the company is shedding

its red meat roots in favor of a more culturally appropriate menu (think veggie patties ).


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REASON FOR EMERGENCE

y Gender Roles: gender roles are now changing. Females have started working outside. So,

they have no time for their home and cooking food. Fast food is an easy way out because

these can be prepared easily.

y Customer Sophistication and Confidence: consumers are becoming more sophisticated

now. They do not want to prepare food and spend their time and energy in house hold works.

They are building their confidence more on ready to eat and easy to serve kind of foods

y Paucity of Time:people have no time for cooking. Because of emergence of working women

and also number of other entertainment items. Most of the time either people work or want to

enjoy with their family.

y Double Income Group: emergence of double income group leads to increase in disposable

income. Now people have more disposable income so they can spend easily in fast food and

other activities.

y WorkingWomen: working women have no time for cooking, and if they have then also they

dont want to cook. Because they want to come out of the traditionally defined gender roles.

They do not want to confine themselves to household work and upbringing of childrens.

y Large population: India being a second largest country in terms of population possesses

large potential market for all the products/services. This results into entry of large number of

fast food players in the country.y Relaxation in rules and regulations: with the economic liberalization of 1991, most of the

tariff and non tariff barriers from the Indian boundaries are either removed or minimized. This

helped significantly the MNCs to enter in the country.

y Menu diversification: increase in consumption of pizzas, burgers and other type of fast

foods.

Causes and consequences of fast food sales growth

With today's hectic lifestyles, time-saving products are increasingly in demand. Perhaps one of the

most obvious examples is fast food. The rate of growth in consumer expenditures on fast food has led

most other segments of the food-away-from-home market for much of the last two decades. Since

1982, the amount consumers spent at fast food outlets grew at an annual rate of 6.8 percent (through

1997), compared with 4.7 percent growth in table service restaurant expenditures. The proportion of


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away-from-home food expenditures on fast food increased from 29.3 to 34.2 percent between 1982

and 1997, while the restaurant proportion decreased from 41 to 35.7 percent (Clauson).

At roughly $109.5 billion in 1997, fast food sales are approaching the amount spent at table service

restaurants ($114.3 billion in 1997, including tips), despite fast food's much lower average cost per

meal. Between 1990 and 1997, fast food prices rose only an average of about 2 percent per year,

according to the Consumer Reports on Eating Share Trends (CREST) data, implying increasedconsumption caused the majority of expenditure growth.

Demand for Convenience Drives Expenditures

People want quick and convenient meals; they do not want to spend a lot of time preparing meals,

traveling to pick up meals, or waiting for meals in restaurants. As a result, consumers rely on fast

food. Knowing this, fast food providers are coming up with new ways to market their products that

save time for consumers. For example, McDonald's currently has outlets inside nearly 700 (out of

2,374) Wal-Mart stores across the United States, and almost 200 outlets in Chevron and Amoco

service stations. These arrangements are becoming more common in the fast food industry.

Consumers can combine meal-time with time engaged in other activities, such as shopping, work, or

travel. This idea shapes the growth strategies of most firms in the industry.

It is expected that, for the first time, the number of fast food establishments has surpassed the number

of table service restaurants. The rapid rate at which the fast food industry continues to add outlets is

as much a reflection of consumer demand for convenience as it is a reflection of demand for fast food

itself. Expanding the number of outlets increases accessibility, thus making it more convenient forconsumers to purchase fast food. Especially in recent years, much of the expansion has been in the

form of "satellite" outlets, similar to the McDonald's outlets mentioned above. These tend to be

smaller in size, with little or no seating capacity, and are often in nontraditional locations, such as

office buildings, department stores, airports, and gasoline stations; locations chosen specifically to

maximize convenience and consumer accessibility.

In the fast food pizza segment, delivery dominates, with firms like Dominos, Papa Johns, and many

independents focusing almost exclusively on delivery sales. Pizza Hut began delivery service in1986, and today 34 percent of the units are devoted exclusively to delivery (offering no on-premise

dining capacity). Systemwide, off-premise dining accounts for almost 60 percent of Pizza Hut's sales,

and 63 percent of all establishments offer delivery service. Table 2 reports the percentage of off-

premise sales for some of the largest firms in the industry


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Factors Affecting the Growth of Fast Food Companies

Countless factors may affect the success of a fast food restaurant. Everything from the specific type

of establishment to the size of the building and local community demographics can have a dramatic

effect on a fast food establishment. Significant research and effort may be required to strengthen the

business and increase profits.

Types

Many different types of fast food establishments exist, each one with al niche in the marketplace.

These restaurants cater to the public's desire for different types of food. The most common type of

fast food restaurants serve beef burgers and french fries. Other establishments serve only fish,

chicken, or similarly popular meals. Still, other niche restaurants cater to those who want only one

type of food in varying degrees of presentation.Geography

The proximity of one fast food restaurant to others may have an effect on its success. If another

establishment that serves identical meals is within a close range, the result will be increased

competition and potentially lower gross sales. A restaurant that is near a similar one must attempt to

draw customers from the competition with promises of additional benefits, features and lower prices.

Obviously the highest chances of success exist when there are no other fast food restaurants close

by.Size

A fast food restaurant's size may have significant effect on its success. Larger buildings can serve

more customers at one time. Providing customers with appropriate seating in a comfortable

environment increases the likelihood that they will stay for longer periods during meals, thereby

increasing the chances that additional products, like desserts, may be purchased. Additionally, larger

buildings allow for a more significant surface area for outdoor advertising. Signs, banners, and other

creative marketing methods can be applied to the exterior of the building, resulting in dramatically

higher exposure to passersby.Considerations

Demographics may be the most significant factors affecting the success of a fast food restaurant.

Restaurant owners should examine the ratios of male to female, average income, education levels,

and other essential characteristics of the people living nearby. Advertising and marketing can be

tailored to take advantage of the demographics information. Demographic information can be used

effectively in drawing the local residents to the fast food restaurant.


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CHALLENGES FOR THE INDUSTRY

ySocial and cultural implications of Indians switching to western breakfast food:

Generally, Hindus avoid all foods that are believed to inhibit physical and spiritual

development. Eating meat is not explicitly prohibited, but many Hindus are

vegetarian because they adhere to the concept of ahimsa. Those seeking spiritual

unity may avoid garlic and onions. The concept of purity influences Hindu food

practices. Products from cows (e.g., milk, yogurt, ghee-clarified butter) are

considered pure. Pure foods can improve the purity of impure foods when they are

prepared together. Some foods, such as beef or alcohol, are innately polluted and can

never be made pure. But now, Indians are switching to fast food that contain all those

things that are considered impure or against there beliefs. Some traditional and

fundamentalist are against this transformation of food habit and number of times they

provoke their counterparts to revolt against such foods. And that is what happened

when McDonalds decided to enter the complexity of Indian business landscape,

counting only on its fastfood global formula, without any apparent previous

cultural training.

yEmphasis on the usage of bio-degradable products: Glasses, silverware, plates and

cloth napkins are never provided with fast food. Instead, paper plates and napkins, polyurethane containers, plastic cups and tableware, drinking cartons or PET

(polyethylene terephthalate) bottles are used, and these are all disposable. Many of

these items are tossed in the garbage instead of being recycled, or even worse, merely

thrown on the ground. This burdens nature unnecessarily and squanders raw

materials. In order to reduce soil and water pollution, government now emphasis

more on the usage of bio-degradable products.

yRetrenchment of employees: Most of new industries will be capital intensive and

may drive local competitors, which have more workers, out of business.

yProfit repatriation: Repatriation of profits is another area of concern for Indian

economy. As when multinational enters the any countries, people and government

hope that it will increase the employment rate and result in economic growth.


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However, with the multinational operation, host country experiences these benefits

for a short time period. In long run neither employment increases (because of capital

intensive nature of MNCs) nor it increases the GDP or GNP because whatever

MNCs earn they repatriate that profit back to their home country.

PROBLEMS OF INDUSTRY

Environmental friendly products cost high: government is legislating laws in order

to keep check on the fast food industry and it is emphasizing more on the usage of bio-

degradable and environment friendly products. But associated with this issue is the

problem that fast food player faces - the cost associated with the environment friendly

product. They cost much higher than the normal products that companies uses for

packaging or wrapping their products.

Balance between societal expectation and companies economic objectives: To

balance a societys expectation regarding environment with the economic burden of

protecting the environment. Thus, one can see that one side pushes for higher

standards and other side tries to beat the standard back, thereby making it a arm

wrestling and mind boggling exercise.

Health related issues: obesity:

I. Studies have shown that a typical fast food has very high density and food with

high density causes people to eat more then they usually need.

II. Low calories food: Emphasis is now more on low calorie food. In this line

McDonald has a plan to introduce all white meat chicken Mcnuugget with less

fat and fewer calories.


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TRENDS IN INDIAN MARKET

Marketing to children's: fast food outlets in India target childrens as their major

customers. They introduce varieties of things that will attract the childrens attention

and by targeting childrens they automatically target their parents because Childrens

are always accompanied by their parents.

Low level customer commitment: Because of the large number of food retail outlets

and also because of the tendency of customer to switch from one product to other,

this industry faces low level customer commitment.

Value added technology services: There is continuous improvement in the

technology as far as fast food market in India is considered. The reason behind that is

food is a perishable item and in order to ensure that it remain fresh for a longer period

of time. Earlier, Indian people prefer eating at home but now with the change in trend

there is also need for improvement and up gradation of technology in food sector.

Attracting different segments of the market: Fast food outlets are introducing

varieties of products in order to cater the demands of each and every segment of themarket. They are introducing all categories of product so that people of all age, sex,

class, income group etc can come and become a customer of their food line.

The success of fast foods arose from the changes in our living conditions:

1. Many women or both parents now work

2. There are increased numbers of single-parent households

3. Long distances to school and work are common

4. Usually, lunch times are short

5. There's often not enough time or opportunity to shop carefully for groceries, or

to cook and eat with one's family. Especially on weekdays, fast food outside

the home is the only solution.


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INTRODUCTION

Based in Louisville, Kentucky, it is the world's largest fast food restaurant company in terms of

system unitsnearly 38,000 restaurants around the world in more than 110 countries and territories.

In 2010, Yum!'s global sales totaled more than US$11 billion.

In October 1997, Yum! Brands was spun off from PepsiCo as Tricon Global Restaurants, Inc. They

established a singular goal : To be the best in the world at building great brands and running great

restaurants.

Yum! was created on October 7, 1997, as Tricon Global Restaurants, Inc. an independent company,

as a result of a spin-out from PepsiCo, which owned and franchised the KFC, Pizza Hut and Taco

Bell brands worldwide. Because of the company's previous relationship with Pepsi, Yum! Brands has

a lifetime contract with PepsiCo, with notable exceptions being the contract of A&W Restaurants

with Dr Pepper Snapple Group to be the exclusive restaurant provider of A&W Root Beer, and the

contracts of franchisees such as HMSHost and college-operated locations with Coca-Cola which

override Yum's lifetime PepsiCo contract, along with some scattered KFC franchises across the

United States which continue to maintain Coke fountain rights.

The Yum! system includes three operating segments: U.S., International (Yum! Restaurants

International) and China Division. Outside the United States in 2010, the Yum! system opened

approximately four new restaurants each day of the year, making it a leader in international retail

development.


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HISTORY

Yum! Brands Inc. operates the Taco Bell, Pizza Hut, KFC, Long John Silver's, and A&W chains. The

company is the largest quick-service restaurant concern in the world in terms of units with

approximately 33,000 locations in over 100 countries across the globe. Taco Bell, Pizza Hut, and

KFC were part of PepsiCo Inc.'s restaurant group until 1997, when they were spun off as Tricon

Global Restaurants Inc. Tricon changed its name to Yum! in 2002, the same year that Long John

Silver's and A&W were added to its holdings.

In March 2002, Tricon announced the acquisition of Lexington, Kentucky-based Yorkshire Global

Restaurants, owner of the Long John Silver's and A&W All-American Food chains and its intention

to change the company's name to Yum! Brands, Inc. On May 16, 2002, the name change became

effective after a vote during the company's annual shareholders meeting, and on June 17, 2002, Yum!

executed a two-for-one stock split. Shortly afterwards, due to Yum!'s lifetime contract with Pepsi,

Long John Silver's and A&W Restaurants (both of which previously served Coca-Cola) switched to

Pepsi products once their franchise contracts expired, with A&W retaining A&W Root Beer from a

separate deal with Dr Pepper Snapple Group.

In 2003, Yum! launched WingStreet as a hybrid combo unit with an existing Pizza Hut franchise.The Pasta Bravo concept was acquired in 2003 from Pasta Bravo, Inc. of Aliso Viejo, Calif for $5

million to pair with Pizza Hut. An East Dawning test cafeteria-style restaurant was opened in

Shanghai in 2004. After failing, Yum! Brands chose the KFC business model (KFC is the most

successful Western chain in China) and found greater success.

As of year-end 2010, more than 20 East Dawning restaurants were in operation. In 2007 and 2008, a

thousand WingStreet stores a year were opened. On October 19, 2009, Company president Scott

Bergren publicized WingStreet's national launch.


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Key Dates:

1952: Harland Sanders establishes his first franchise.

1958: Pizza Hut is founded by brothers Dan and Frank Carney.

1962: The first Taco Bell location opens.

1977: PepsiCo purchases Pizza Hut.

1978: PepsiCo acquires the Taco Bell chain.

1986: Kentucky Fried Chicken is added to PepsiCo's arsenal.

1997: PepsiCo spins off its restaurant holdings as Tricon Global Restaurants Inc.

2002: Tricon changes its name to Yum! Brands Inc.; the company acquires Long John Silver's and

A&W All American Food Restaurants.

Company History:

Success at Pizza Hut Leads to a PepsiCo Purchase

Pizza Hut Inc. was established in 1958 by brothers Dan and Frank Carney in their hometown of

Wichita, Kansas. When a friend suggested opening a pizza parlor. They agreed that the idea could

prove successful, and they borrowed $600 and rented a small building at 503 South Bluff indowntown Wichita and purchasing secondhand equipment to make pizzas, the Carneys and Bender

opened the first Pizza Hut restaurant; on opening night, they gave pizza away to encourage

community interest. A year later, in 1959, Pizza Hut was incorporated in Kansas, and Dick Hassur

opened the first franchise unit in Topeka, Kansas.

By 1971, Pizza Hut had become the world's largest pizza chain, according to sales and number of

restaurants--then just more than 1,000 in all. A year later, the chain gained a listing on the New York

Stock Exchange. Pizza Hut also achieved, for the first time, a one million dollar sales week in the

U.S. market. At the end of 1972, Pizza Hut made its long-anticipated offer of 410,000 shares of

common stock to the public. The company expanded by purchasing three restaurant divisions: Taco

Kid, Next Door, and the Flaming Steer. In addition, Pizza Hut acquired Franchise Services, Inc., a

restaurant supply company, and J & G Food Company, Inc., a food and supplies distributor. The

company also added a second distribution center, in Peoria, Illinois. In 1973, Pizza Hut expanded

further by opening outlets in Japan and Great Britain. Three years later, the chain had more than 100


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restaurants outside the United States and two thousand units in its franchise network. The company's

2,000th restaurant was opened in Independence, Missouri. By now, Pizza Hut had caught the eye of

PepsiCo Inc., the global soft drink and food conglomerate. In 1977, Pizza Hut became a cornerstone's

in PepsiCo's restaurant division.

PepsiCo Adds Taco Bell to Its Arsenal

The Taco Bell brand was launched in 1962 by Glen Bell, a World War II veteran who had worked in

the restaurant industry since 1946, when he opened his first hot dog stand in San Bernardino,

California. His idea for franchising a Mexican-themed restaurant proved successful, and by 1970

Taco Bell had become a $6 million operation, producing annual profits of approximately $150,000.

The fast food chain's success soon drew the attention of PepsiCo Inc., the snack food and soft drinks

giant, which was seeking to diversify into the restaurant business. By this time, Pizza Hut had

launched its Mexican food concept to challenge Taco Bell. The launch failed, however, and Pizza

Hut soon had to write off its investment. PepsiCo then altered its strategy in order to buy Taco Bell

outright. In February 1978, a deal was struck in which the Mexican fast food chain was purchased for

just under $125 million in stock. PepsiCo's strategy in acquiring Taco Bell was simple: the fast food

chain dominated the Mexican food market, so PepsiCo was buying market share. For PepsiCo, the

challenge was to make Taco Bell less a regional ethnic food phenomenon and more a national fast

food chain. The PepsiCo strategy emphasized that Taco Bell outlets would sport spartan simplicity in

decor and menu, with a concentration on predictable quality, affordable prices, and clean and

convenient surroundings. Taco Bell also moved swiftly to redesign the company logo. Taco Bell

grew rapidly during the early 1980s. By 1983, when John E. Martin took over as president, the chain

had 1,600 outlets in 47 U.S. states, producing a total of $918 million in sales. The average Taco Bell

franchise claimed sales of $680,000 that year, a significant increase over the franchise average of

$325,000 in sales only three years earlier.

The KFC Deal

Founded in 1952 by Harland Sanders, Kentucky Fried Chicken(the company's name was changed to

KFC Corp. in 1991)was added to PepsiCo's holdings in 1986 in a $840 million deal. The company

had spent much of the decade securing profits and expanding, and PepsiCo believed it would be a

successful addition to its burgeoning restaurant portfolio.

While KFC's international division saw significant growth during the 1990s, domestic sales were

sluggish due to intense competition and failed product launches. To top it off, relations between its


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parent company and franchisees had deteriorated, and PepsiCo was not seeing the return on assets

that it saw with its beverages and snack food divisions. As such, PepsiCo decided to exit the

restaurant business all together.

Spin Off in 1997 Creates Tricon Global Restaurants

In the late 1990s, PepsiCo drew together its restaurant businesses, including Pizza Hut, Taco Bell,

and KFC. All operations were now overseen by a single senior manager, and most back office

operations, including payroll, data processing, and accounts payable, were combined. In January

1997, the company announced plans to spin off this restaurant division, creating an independent

publicly traded company called Tricon Global Restaurants, Inc. The formal plan, approved by the

PepsiCo board of directors in August 1997, stipulated that each PepsiCo shareholder would receive

one share of Tricon stock for every ten shares of PepsiCo stock owned. The plan also required Tricon

to pay a one-time distribution of $4.5 billion at the time of the spinoff. The deal was approved by the

Securities and Exchange Commission and completed on October 6, 1997.The company also looked

to strengthen its relations with its franchise locations. In the case of Taco Bell, the company began

selling off company-owned stores to its franchisees. Pizza Hut also received a major face lift in the

wake of the spin off. Hundreds of locations were sold back to franchisees and over 700 locations

were shuttered. Company headquarters were moved to Dallas, Texas

A Leader in the Fast Food Industry: 1990s and Beyond

As Tricon management worked to position itself as the leading operator in quick-service industry, it

faced several challenges. Ameriserve Food Distribution Inc., its main supplier, declared bankruptcy

in January 2000. The problem was soon resolved, however, when McLane Company Inc. agreed to

buy the faltering company in November 2000. Tricon was also pushed to shelve its successful

advertising campaign featuring a talking Chihuahua in 1999 after Taco Bell franchisees demanded

that future commercials tout the company's fresh food. Prompted by faltering sales, the firm launched

its "Think Outside the Bun" slogan in an attempt to lure customers to its new, fresher products. At thesame time, two men filed suit against chain claiming the firm stole their advertising idea for the

talking Chihuahua. In 2003, a federal jury awarded $30.1 million to the two men. Taco Bell planned

to appeal the verdict.


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During 2002, Tricon added Long John Silver's Restaurants Inc. and A&W Restaurants Inc. to its

holdings in a $320 million deal with Yorkshire Global Restaurants Inc. The company changed its

name to Yum! Brands Inc. that year, reflecting the company's shift to a multi-branding strategy.

Nearly 2,000 company restaurants were multi-branded units, offering customers a choice of either

Taco Bell and KFC or Taco Bell and Pizza Hut at one location. With the purchase of Long John

Silver's and A&W, YUM! planned to aggressively pursue additional multi-branding strategies. In

2003, the company acquired the rights to the Pasta Bravo brand and planned to pair it with Pizza Hut.

YUM! also focused on international expansion, eyeing China, the United Kingdom, Mexico, and

Korea as key growth markets. KFC had become China's leading brand, opening the country's first

drive-thru in Beijing in 2002. Overall, there were 800 KFCs and 100 Pizza Huts in China, and during

2003 Taco Bell made its debut. A&W also experienced a first--it went international with the

establishment of a restaurant in Hanover, Germany.


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Yum! Vision & Strategy

Yum! Brands is committed to continuing the success realized during our first ten years. Our success

has only just begun as we look forward to the future, one which promises a long runway for growth,

especially on an international level.

Yum! is building a vibrant global business by focusing on four key growth strategies:

y Drive aggressive international expansion and build strong brands everywhere.

y Build leading brands across China in every significant category.

y Dramatically improve U.S. brand positions, consistency and returns.

y Drive industry leading, long-term shaeholder and franchisee value.

Yum maintains a consistent commitment to deliver at least 10% EPS growth annually. With nearly

38,000 restaurants in over 110 countries and territories, Yum! Brands' international growth sees no

signs of stopping as it continue to enter international markets, introducing people around the world to

itss winning brands.


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PRODUCT PROFILE

Yum! Brands, Inc., based in Louisville, Ky., is the world's largest restaurant company in terms of

system restaurants with nearly 38,000 restaurants in over 110 countries and territories and more than

1 million associates. Yum! is ranked #214 on the Fortune 500 List and generated more than $11

billion in revenue in 2010. The Company's brands - KFC, Pizza Hut and Taco Bell are the global

leaders of the chicken, pizza and Mexican-style food categories.

The Yum! system includes three operating segments: U.S., International (Yum! Restaurants

International) and China Division. Outside the United States in 2010, the Yum! system opened

approximately four new restaurants each day of the year, making it a leader in international retail

development.

At Yum! four key business strategies are as follows:

Build leading brands across China in every significant category

Drive aggressive international expansion and build strong brands everywhere

Dramatically improve U.S. brand positions, consistency and returns Drive industry-leading, long-term shareholder and franchisee value

The key franchises owned by Yum include :

KFC Corporation, based in Louisville, Kentucky, is one of the few

brands in America that can boast about having a rich, 57-year

history of success and innovation. In fact, KFC is the world's most

popular chicken restaurant chain, specializing in Original Recipe,

Extra Crisp, Colonel's Crispy Strip and Honey BBQ Wing, with

home-style sides and freshly made chicken sandwiches. Since its

founding by Colonel Harland Sanders in 1952, KFC has been

serving customers delicious, already prepared complete family

meals at affordable prices. There are over 15,000 KFC outlets in

105 countries and territories around the world.


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A&W Restaurants, A&W All American Food,

based in Louisville, Kentucky, is the longest-running

QSR franchise chain in America, serving hometown

favorites to friends and families for over 90 years. Since

1919, A&W All-American Food has offered its iconic,

frosty mug root beer float with All-American pure-beef

hamburgers and hot dogs. There are approximately 359

A&W All-American Food outlets in the U.S., more than

267 in 11 other countries, and 623 additional points of distribution in multibrand restaurants.

Long John Silver's, Inc., based in Louisville, Kentucky, is

the world's most popular FAST FOOD INDUSTRY seafood

chain, specializing in delicious, signature batter-dipped fish,

chicken, shrimp and hushpuppies. Since 1969, the company

has been bringing families together with traditional seafood

items, new products such as Buttered Lobster Bites, and

Freshside Grille offerings, which include Pacific Grilled

Salmon, Grilled Tilapia, and Shrimp Scampi. Today, there

are more than 1,000 Long John Silver's restaurants

worldwide, and over 700 additional points of distribution in

multibrand restaurants.

Pizza Hut, Inc., based in Dallas, Texas, is the world's

largest pizza restaurant company, specializing in Pan Pizza,

Thin 'N Crispy Pizza, Hand-Tossed Style Pizza and

Stuffed Crust Pizza. With more than 7,500 restaurants in

the United States and over 5,600 restaurants in 97 countries

and territories around the world, Pizza Hut is known as

America's Favorite Pizza. And soon the company will be

America's Favorite Chicken Wing and America's Favorite


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Pasta providers. WingStreet, a subsidiary of Yum! Brands, Inc. and the largest delivery wing chain

with more than 2,200 locations, is constantly expanding its presence within Pizza Hut restaurants

across the U.S. with its delicious wings and blue-ribbon winning sauces. In addition, Pizza Hut has

created a whole new Quick Service Restaurant (FAST FOOD INDUSTRY) category restaurant-

quality Home Meal Replacement pasta with the launch of Tuscani Pasta earlier this year.

Taco Bell Corp., based in Irvine, California, is the nation's

leading Mexican-style FAST FOOD INDUSTRY chain

serving tacos, burritos, signature quesadillas, Border

Bowls, nachos and other specialty items. Today, Taco Bell

serves more than 35 million consumers each week in

approximately 5,600 restaurants in the U.S. Since its

founding by Glen Bell in 1962, the company's countless

innovations have changed the very nature of the FAST

FOOD INDUSTRY industry. From revolutionizing new

kitchen preparation systems and supply chain management

processes to establishing its Value Leadership, Taco Bell has

kept alive Glen's pioneering spirit. "Think Outside the

Bun" is more than a company tagline; it's a way of life at Taco Bell.

The WingStreet brand was created in 2003 as a delivery-

based wing chain and continues to expand its presence

within Pizza Hut restaurants across the country. The

company currently has more than 2,200 locations in the

United States, Australia and Canada. WingStreet offers

eight intense flavors of sauce in three wing varieties: bone-

in, bone-out or traditional style. Additionally, customers can

order WingStreet Taters, cheese sticks and apple pies, as

well as Pizza Hut pizza. WingStreet, the world's largest

delivery wing chain is a subsidiary of Yum! Brands, Inc.


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Yum! Organisation StructureBoard Composition & Independence

The Board of Directors is led by Yum! Brands CEO and Chairman, David Novak. Among the 13

directors on the Board, 10 are independent directors (based on New York Stock Exchange rules for

director independence). The three non-independent directors are David Novak, CEO and Chairman;

Jing-Shyh S. (Sam) Su, President of Yum! Brands China Division; and Jackie Trujillo, Chairman

Emeritus of the Board of Harman Management Corporation, one of KFCs largest franchisees.

The Board of Directors has established four committees.

yAudit Committee

yCompensation Committee

yNominating and Governance Committee

yExecutive/Finance Committee

Only independent directors serve on the Audit, Compensation, and Nominating and Governance

Committees in accordance with our Corporate Governance Principles. The Executive/Finance

Committee includes CEO and Chairman David Novak, along with independent directors J. David

Grissom and Kenneth G. Langone.

To ensure continued strong performance, the Board has instituted an annual, self-evaluation process

led by the Nominating and Governance Committee. This assessment focuses on the Boards

contribution to the Company and emphasizes those areas in which a better contribution could be

made. In addition, their audit, Compensation and Nominating and Governance Committees conduct

similar self evaluations on an annual basis.


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CEO - DAVID C. KOVAC

Director since 1997 | Chairman of the Board, Chief Executive Officer and President, Yum!

Brands, Inc.

David C. Novak became Chairman of the Board on January 1, 2001, and Chief Executive Officer ofYum! on January 1, 2000. He also serves as President of Yum!, a position he has held since October

21, 1997. He previously served as Group President and Chief Executive Officer, KFC and Pizza Hut

from August 1996 to July 1997, at which time he became acting Vice Chairman of Yum!. He also

held senior management positions at Pepsi-Cola Company, including Chief Operating Officer, and

Executive Vice President of Marketing and Sales.

Novak shapes the company's overall strategic direction, including four key growth strategies: 1) build

leading brands across China in every significant category; 2) drive aggressive international expansion

and build strong brands everywhere; 3) dramatically improve U.S. brand positions, consistency and

returns; and 4) drive industry-leading, long-term shareholder and franchisee value. Additionally, he

devotes much of his time each year to personally train leadership skills to the company's management

and franchisees, emphasizing teamwork and a belief in people that rewards and recognizes customer-

focused behavior.

Novak is a director of JPMorgan & Chase Co., the Yum! Brands Foundation and The Friends of the

World Food Program. Additionally, he is a member of The Business Council and The American

Society for Corporate Executives, while also devoting considerable personal support to the United

Nations World Food Programme and Dare to Care Food Bank hunger relief. He is also the recipient

of the national 2008 Woodrow Wilson Award for Corporate Citizenship.


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Yum! InternationalYum! Restaurants International (YRI), based in Dallas, Texas, is a powerful global growth engine for

Yum! Brands, with more than 14,330 restaurants outside the U.S. and China Division in over 110

countries (Q1 2011).

One of its four key business strategies is to drive profitable international growth. YRI's demonstrated

track record of growth and expansion of the KFC and Pizza Hut brands around the world has been a

large part of our success. YRI is a diverse, high-return business, with $589 million in operating

profits in 2010 and 884 new restaurant openings in over 75 countries. 2010 was YRI's tenth year of

opening more than 700 new restaurants outside of the U.S. and China.

It has strong local teams around the world, operate in more than 110 countries and territories with

established supply chains and have more than 700 international franchisees. Its franchise and joint-

venture partners are driving growth by opening a vast majority of our new international restaurants.

Its international business is one of the key factors that make us truly unique in the restaurant industry.

For example, our KFC business in France enjoys the highest unit volumes of any KFC business in the

world. For a fifth year, Pizza Hut has been ranked as the #1 most trusted food-service brand in India

in a consumer survey in The Economic Times. Yum! is also at the beginning of taking Taco Bell

global and plans to make a serious investment behind launching Taco Bell internationally.

International growth

The growth of Yum! Brands throughout the United States has slowed from its previous rapid

expansion because the chain has saturated most of the domestic market. The future growth of Yum!

Brands is targeted mainly at other countries; China in particular has a large population and is

enjoying increases in income.

In January 2011, Yum! announced its intentions to divest itself of its Long John Silver's and A&W

brands to focus on its core brands of KFC, Pizza Hut and Taco Bell. For the decade leading up to the

company's announcement, major growth had relied on international expansion. With little presence

outside the US and Canada, the two chains no longer fit in the company's long-term growth plans.

The foreign expansionparticularly that of Taco Bell, KFC and Pizza Hutwas cited in the firm's

January 18, 2011 announcement of its intention to sell the A&W and Long John Silver's chains. Both


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of those chains also suffered from poor sales, and had fewer locations compared to the other chains in

the Yum! Brands portfolio.

Public Policies and Government Affairs

Health and Nutrition

Yum has implemented a set of global nutrition guidelines that defines our proactive efforts to

improve the nutrition profile of the foods they offer, while continuing to provide great taste, value,

and convenience across their markets. They are also committed to educating our consumers and

encouraging them to adopt balanced, healthy lifestyles. They support policies that limit restrictions

on consumer choice and we work with governments, industry associations, and others to promote an

environment that fosters freedom of choice and innovation.

Yums U.S. divisions of KFC, Taco Bell, Pizza Hut, Long John Silvers and A&W became the first

national restaurant chains to begin voluntarily placing individual serving size calorie information on

their respective menu boards in company-owned restaurants nationwide by January 1, 2011.

Franchisees are encouraged to provide the same information on their menu boards. They also called

on the U.S. Congress to enact federal pre-emptive legislation that would create uniform menu board

guidelines for all who sell prepared food, providing a consistent way to educate the public about the

nutritional value of the food they eat.

Tax Policy

Yum! Works to maintain tax policies at the international, federal and state levels that foster

competitiveness, productivity and fairness, while ensuring an appropriate tax level for the

corporation.

Trade Policy

Yum supports trade policies, including bilateral and multilateral trade agreements, which allow for

the free movement of commodities among international markets to provide access to the highest

quality ingredients at the lowest price.


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Trade Association Memberships

Trade associations enable Yum Brands to join together with other companies in our industry to

address common interests and issues in the public policy arena. Their trade and member-based

associations act as a public advocate with the press and elected officials, develop research on relevant

issues, and coordinate joint efforts to address issues and opportunities within the restaurant, retail and

food industries. Our current memberships include:

American Potato Trade Alliance (APTA)

Association of National Advertisers (ANA)

Business for Social Responsibility (BSR)

China Advertising Association (Yum! China)

China Association of Enterprises with Foreign Investment (CAEFI) China Chain Stores and Franchise Association (Yum! China)

China Cuisine Association (Yum! China)

China Food Safety Association (Yum! China)

Conference for Food Protection (CFP)

European Modern Restaurant Association (EMRA)

Food Packaging Association (FPA)

International Franchise Association (IFA)

International Poultry Council (IPC) Kentucky Clean Fuels Coalition (KCFC)

National Chicken Council (NCC)

National Council of Chain Restaurants (NCCR)

National Restaurant Association (NRA)

National Retail Federation (NRF)

National Fisheries Institute (NFI)

Sustainable Packaging Coalition (SPC)

U.S. ASEAN Business Council

U.S. Chamber of Commerce

U.S. Dairy Export Council

U.S. Green Building Council

U.S.-India Business Council

U.S. Poultry & Egg Export Council


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Market ShareYum faces stiff competition in the overall fast food industry, as McDonald's holds a dominating 17%

share of the market with Wendy's and Burger King holding shares of approximately 2.14% each. In

recent years Wendy's has been lagging behind McDonald's and Burger King in same store sales

growth, an indicator of how established franchises are faring. In addition to traditional hamburger-

based fast food restaurants, Yum must compete with chains such as Subway, Jack In The Box Inc.

and Dominos Inc.

Below is a bar graph indicating the total revenue of the major players in the Fast Food Industry. It

features their revenues in U.S. Dollars.


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Yum! Brands Business ModelIn 2010 Yum achieved 17 percent Earnings Per Share growth, excluding special items,

marking the ninth consecutive year in which it exceeded its annual EPS target of at least 10 percent

growth. It continues to strengthen its claim as one of the leading retail developers of units outside the

United States as it opened nearly 1,400 new restaurants, the tenth straight year they've opened more

than 1,000 new units.

Evolution to International


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Number of Units

Yum! Brands is the world's largest restaurant company with over 38,000 restaurants in over 110

countries and territories and more than 1 million associates.Its global business consists of three

segments, or reporting groups - the United States, the International Division (known as Yum!

Restaurants International or YRI), and the China Division (known as Yum! China Division or Yum!

Restaurants China). YRI is segmented into 14 business units, including: Africa; Asia; Canada;

Caribbean and Latin America; Europe; France; Germany/Netherlands; India, Korea; Middle East,

North Africa, Pakistan and Turkey; South Pacific; Thailand; United Kingdom - KFC; and United

Kingdom - Pizza Hut. Yum! China includes mainland China and KFC Taiwan.

United States

KFC 5,162Pizza Hut - 7,566Taco Bell - 5,604Long John Silver's - 989A&W - 344Total Number of Units - 19,665

International Division

KFC 8,230Pizza Hut - 5,153Taco Bell 251

Long John Silver's - 35A&W - 293


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Total Number of Units - 13,962

China Division

KFC 2,872Pizza Hut - 562Total Number of Units - 3,453


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YumsSuccess

y Global Leaders: The company brands, KFC, Pizza Hut, and Taco Bell are the global leaders of

chicken, pizza, and Mexican-style food categories.

y Diversified brands put Yum! on top: Yum! Brands offers six different styles of fast food that

cater to virtually all consumer taste buds. This diversification set Yum! apart from competitors

such as McDonalds, Chipotle, and Wendys.

y China market poised for growth: We expect Yum! Brands to have a 14% increase in growth in

2011, while gaining more market share in the international market.

y Consistent Growth: With 17% EPS growth, 2010 marks Yum! Brands ninth consecutive year

of EPS growth over 13%, consistently beating their target 10% EPS growth.

y Rapid International Expansion: During 2010, Yum! Brands opened roughly four new

restaurants per day outside the United States.

One Year Stock Performance Vs. S&P 500

Industry Analysis


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Yum! BrandsIn India

Yum Brands Inc. is geared up for a major expansion in India, where the restaurant chain hopes to

position KFC and Taco Bell as youthful, hip brands in a nation of young consumers. India is a key

growth market for Yum! Brands due to its extremely young and large population of 1.1 billion

people, growing middle class and emerging economy. Over the past 12 years, Yum! has become

the largest and fastest growing restaurant company in India by successfully developing a strong

infrastructure, highlyskilled workforce focused on providing outstanding customer service and

innovative, localized menus offering value options. By 2015, the Company expects to have at

least 1,000 restaurants in India, up from 230 restaurants as of yearend 2009.The move comes as

the Louisville, Ky., chain is struggling in the U.S. and sales in China, where Yum has expanded

for 22 years, are slowing.

The restaurant industry has intensified its focus on overseas markets in the last decade as the U.S.

has become saturated with fast-food chains. Emerging markets are becoming more important for

global chains as the recession has taken its toll on restaurants here. NPD Group on Monday

predicted that U.S. restaurant industry sales will remain weak through the first half of 2010.

Yum's India push will put it in a race for the appetites of consumers in one of the world's mostpopulous countries. Yum currently lags its big U.S. rivals. It operates 72 KFCs in India, compared

to McDonald's Corp.'s 170 outlets. It has 158 Pizza Huts there while Domino's Pizza Inc. has 274

stores. Yum plans a total of 1,000 restaurants in India by 2015, generating about $1 billion in

annual revenue."Our goal is to get India on the same growth trajectory we've had in China,"

where Yum now operates 3,500 restaurants, Yum chief executive David Novak said in an

interview. China will deliver a third of Yum's projected $1.54 billion in operating profit this year.

Yum already has invested $100 million in restaurant development in India and plans to invest up

to $120 million more in the next five years. Yum's India business isn't yet profitable. "We hope to

break even by 2011 and be profitable thereafter," said Graham Allan, president of Yum's

international division. "India is still a small piece ofthe pie, but our hope is to turn it into a major

contributor to sales and profits,"he said. Sixty percent of Yum's profits now come from overseas

markets.


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The company will opened its first Taco Bell in the Indian city of Bangalore by March, then open

another four or five test stores there later in the year. Yum!s new Taco Bell international

restaurant, located in Bangalore, India, is the countrys first experience with the Mexicaninspired

quickservice restaurant brand. Taco Bells Think Outside the Bun positioning and brand

essence is expected to resonate extremely well with Indias young population. With the medianage in India just 25 years, versus about 37 years in the U.S., Yum hopes to get teens and young

adults hooked on its inexpensive food. The cheapest menu items will be tacos, priced between 35

cents and 45 cents each. The new Taco Bell India menu features tacos, burritos, nachos,

quesadillas and Crunchwraps, including spicier products tailored to the Indian market. The menu

offers breakthrough value priced items starting at 35 cents. In addition, fifty percent of the menu

features a vegetarian range of products specially created for Indian consumers including potato

paneer burritos and crunchy potato tacos, among others.

The menu will be similar to American stores, although spicier and more vegetarian. Yum has

designed its Indian stores to appeal to young adults. KFCs are decorated in bright colors, offer

big, flat-panel televisions, and seating areas where groups can freely mix. It also is sponsoring an

international cricket competition widely followed by young Indians. The company this year

opened 27 new KFCs in India, nearly twice the number it opened in 2008. Pizza Hut has bulked

up its menu to include Masala Pizza and spicy Indian drinks.

KFC is the fastest growing quickservice restaurant brand in India with 72 restaurants in 13 cities as

of yearend 2009. Yum! opened 27 new KFC restaurants in India in 2009, which is among the

highest number of store openings in the countrys quickservice restaurant industry. KFC is a young,

vibrant brand in India from its contemporary restaurant designs featuring bold colors, open seating

areas for large groups and flatpanel televisions to innovative marketing programs to unique

signature products, including vegetarian items. Last year, the Company opened its first KFC

Krushers beverage bar and store design in India highlighting YRIs popular new line of yogurt and

fruit smoothies, dairybased and sodabased drinks and teas.

Pizza Hut has been named the Most Trusted Food Service Brand in India for the fifth year by

The Economic Times (India), ahead of all other Indian and global brands, demonstrating its

popularity in the country. As of yearend 2009, there are 158 Pizza Huts in 34 cities offering a

range of localized products including masala pizza, chicken tikka appetizers and spicy Indian

drinks.


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Morgan Stanley analyst John Glass said in a recent note to investors that they have been slightly

disappointed since recommending Yum this summer, as a turn in China has yet to materialize and

the U.S., along with the rest of [the fast-food industry], has labored. But he added that they still

contend that Yum is the best positioned to capture the growing global demand for food

convenience, particularly in international markets.

Customized menusThe menus have been indigenized to include Indian favorites such as onions, garlic, and the

Indian version of cottage cheese. Kataria of Yum Restaurants says burgers and pizzas have been

customized for local tastes. "Indians do like food more spicy. The other is that a lot of Indians are

vegetarians or vegetarians most of the week. And therefore our menus reflect that. A lot of the

vegetarian innovation has happened in India," Kataria explained.Many of the new restaurantchains heading to India plan to take a leaf out of outlets already in India, and adapt their cuisines

to suit local tastes. While those heading to India initially plan to set up shop in the big cities,the ones already established like McDonalds and Pizza Hut are expanding at a fast pace, by both

increasing their outlets in big cities and making a foray into smaller towns.


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YumsSTRATEGIES

It is one of the biggest companies in one of the biggest industries in America and in the world. Its

brand names litter the highways and high streets of the world. From its modest base in Louisville,

Kentucky, it oversees the opening of three new restaurants, one of them in China, every day. Last

year it earned pre-tax profits of $1 billion on sales of $9 billion. Yet few of its customers have ever

heard of it.

But if they know KFC (previously Kentucky Fried Chicken), or Pizza Hut, or Taco Bell, then they

know Yum! Brands. The parent of those three fast-food chains, it has 34,000 (mostly franchised )

restaurants around the world, 2,000 more than McDonald's. At home in America it accounts for about

4% of all restaurant-industry sales, behind only McDonald's at 6.5%. With 1,378 KFC restaurants in

China, and 201 Pizza Huts at mid-2005, Yum! owns two of the best-known brand names in the

world's most populous market. Not bad going, you might say, for a company that Pepsi-Cola got rid

of in 1997 because, in the words of one PepsiCo executive, restaurants weren't our schtick.

Restaurants are very much the expertise of David Novak, the boss of Yum!, a PepsiCo veteran who

was named president at the time of the spin-off. He became chief executive in 1999 and chairman in

2001, inheriting those jobs from Andrall Pearson, a former president of the PepsiCo group who was

put in charge of Yum! to give the company stature on Wall Street. At PepsiCo Mr Pearson was rated

one of the toughest bosses in America. Mr Novak, by contrast, was a dress-down, folksy, call-me-

David type of boss who wanted people to feel that work should be fun too. The two men got on well,

partly because Mr Pearson softened his approach when he saw how employees responded to. Some

of th strategies employed by YUM include: -

y Mr Novak declared that he was going to love the franchisees, who owned 60% of Yum!'s

restaurants at the time of the spin-off (the proportion is now about 75%), and whom PepsiCo had

not always treated gently. Restaurant managers got stock options. The logic: if the managers

were happy, they were more likely to treat well the crew members working the kitchen and the

counter, whose efficiency and relative cheerfulness was also vital to the restaurants' success.

y Mr Novak's more accessible style, which included frequent presentations, tunefully accompanied


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by an in-house kazoo band, of rubber chickens and mechanical false teeth to employees who

impressed

y Some morale-boosting has trickled down, but still not enough. The average American kitchen

employee sticks at a job with Yum! for one year, almost twice as long as in 2000.

y The spin-off gave Yum! (which was called Tricon until 2002) the chance to reap economies of

scale across the restaurant brands, which had sometimes behaved more like rivals under PepsiCo.

Advertising media-buying was unified through a single agency, for example. Individually, each

brand might be the 40th or 50th biggest buyer in America, but collectively they were in the top

five and Yum! could use that to get better deals. The acquisition of restaurant sites could be

managed so that divisions would not bid against one another.

y International operations were brought within a single division, continuing a trend started under

PepsiCo. This concentrated the resources needed to penetrate new markets, a strategy that has

paid off handsomely in China. There, KFC has gone after the fast-food market, whereas Pizza

Hut has positioned itself more as a place for casual dining, Taco Bell is just beginning to test the

market and Yum! has set up a focused logistics and supply company to serve all of its chains.

y At McDonald's, vast resources power a single brand, generating sales per American restaurant

almost twice as high as Yum!'s. But Yum! has come a long way since the spin-off in 1997, as has

its share price. Yum! has left even McDonald's in the dust.

y Sales faltered early this year when Yum! had to withdraw products containing an allegedly

dangerous additive, sparking a public health scare. But that was quickly overcomegood

practice if bird flu becomes a pandemic, perhapsand sales are recovering fast. If Yum! were in

almost any other industry, the glow of admiration surrounding its early years as a publicly listedcompany would be almost embarrassing.

y The company also is focused on emerging markets whose gross national income per capita is less

than $12,000. Countries in those markets, including Indonesia, Malaysia, India, Russia, Vietnam

and Brazil, have a booming middle class population. The company has almost 10,000 stores

already in these markets and plans to continue expanding there

y Yum!, like other fast-food companies, has felt obliged to respond to health concerns. It has put

more salads and lighter dishes on its menus, though without any great expectations. We are

offering salads because that is what people want to see, says Mr Novak, choosing his verbs

carefully.

y Yum! hit on two strategies for putting KFC right. It added a cheap hot sandwich to the menu,

called a Snacker, which is easy to eat (unlike chicken on the bone). And it started a makeover

of the brand image, bringing back the full Kentucky Fried Chicken name at some outlets,

giving new prominence to touched-up portraits of Colonel Harland Sanders, the chain's founder,


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and promoting once more the cardboard buckets of chicken it had abandoned briefly in the

1990s.

y A longer-term Yum! strategy, cutting across all its brands, is to put two or sometimes three of its

brands into a single restaurant, with a common kitchen. This means additional training and

equipment, but it boosts customer volume and makes new outlets economic in places where the

population would be too small, or the real estate too expensive, for one brand alone.

These strategies have helped Yum! to increase same-store sales by 3% year-on-year in the first half

of 2005less than the 5% growth for the same period at McDonald's, but better than the zero growth

Yum! was getting from its American stores two years ago


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Yum! Financial Data-Worldwide sales


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WORLDWIDE SYSTEM UNITS


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(LANDSCAPE

DOCUMENT)


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Key YUM! Brands, Inc. Financials

YUM! Brands, Inc. Stock Quote (NYSE: YUM)

Latest

08/25/11 16:00:56 EST

Change

($)Change (%) High Low

$51.71 -1.340 -2.530 $53.52 $51.33

Company Type

Public -(NYSE: YUM)

Headquarters

Fiscal Year-End December

2008 Sales (mil.) $11,279.0

2010 Employees 378,000


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Yum Brands Key FinancialsRank: 214 (Previous rank: 216) on Fortune 500

CEO: David C. Novak

Compare tool: Yum Brands vs. Top 10

Key financials $ millions

% change

from 2009

Revenues 11,343.0 4.7

Profits 1,158.0 8.1

Assets 8,316.0

Stockholders' equity 1,576.0

Market value (3/25/2011) 24,232.5

Profits as % of

Revenues 10.2

Assets 13.9

Stockholders' equity 73.5

Earnings per share

2010 $ 2.38

% change from 2009 7.2

2000-2010 annual growth rate % 13.1

Total return to investors %

2010 43.3

2000-2010 annual rate 20.8

YUM! Brands, Inc. Balance Sheet


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Assets Dec 08 Dec 06 Dec 00

Current Assets

Cash 216.0 319.0 133.0

Net Receivables 229.0 220.0 302

Inventories 143.0 93.0 47.0

Other Current Assets 363.0 267.0 206.0

Total Current Assets 951.0 899.0 688.0

Net Fixed Assets 3,710.0 3,631.0 2,540.0

Other Noncurrent Assets 1,866.0 1,823.0 921.0

Total Assets 6,527.0 6,353.0 4,149.0

Liabilities Dec 08 Dec 06 Dec 00

Current Liabilities

Accounts Payable 1,473.0 1,386.0 978.0

Short-Term Debt 25.0 227.0 90.0

Other Current Liabilities 224.0 111.0 148.0

Total Current Liabilities 1,722.0 1,724.0 1,216.0

Long-Term Debt 3,564.0 2,045.0 2,397.0

Other Noncurrent Liabilities 1,349.0 1,147.0 858.0

Total Liabilities 6,635.0 4,916.0 4,471.0

Shareholder's Equity

Preferred Stock Equity -- -- --

Common Stock Equity (108.0) 1,437.0 (322.0)

Total Equity (108.0) 1,437.0 (322.0)

Shares Outstanding (thou.) 462,558.0 530,152.8 468,583.6


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AWARDS AND ACHIEVEMENTS

KFC 2008-2010

AWARD YEAR AWARD BODY

Trusted Brand in 2010 Gold Award (Voted by

Consumers for Family Restaurant Category)

2011 Readers Digest

Yum! Reel Advertising Excellence Award New

Discoveries

2010 Yum! Brands

Readers Digest Most Trusted Brands 2010 Readers Digest

Putra Brand Awards 2010(Silver) 2010 Putra Brand Awards Association

of Accredited

Industrial Excellence Award for Service 2008 Malaysia 1000

Brand Excellence in Product Branding for Fast

Food Chicken Category

2008 Yum! Brands

Restaurant People Excellence Award 2008 Yum! Brands


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Restaurant Excellence Award 2008 Yum! Brands

Marketing Excellence Award 2008 Yum! Brands

Franchisee of the Year 2008 Yum! Brands

Best Operations Excellence Award 2009 Yum! Brands

Yum! Reel Advertising Excellence Award 2009 Yum! Brands

Effie Award (Bronze) 2009 Effie

Readers Digest Most Trusted Brands 2009 Readers Digest

Franchisee Of The Year 2009 Yum! Brands

Pizza Hut 2009-2011

AWARD YEAR AWARD BODYTrusted Brand in 2010 Gold Award (Voted by


2011 Readers Digest


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Yum! Best New Product Crunchy Cheesy Bites 2010 Yum! Brands

Yum! Best Overall Marketing 2010 Yum! Restaurant International

Mocktail Innovation Award 2010 PepsiCo

Above and Beyond Award 2010 PepsiCo

Yum! Reel Advertising Excellence Award

Neighbours

2010 Yum! Restaurant International

The BrandLaureate Award 2009-2010 Best Brands

Category

Food & Beverage Pizzas 2009-2010

2010 The Worlds Best Brand The

BrandLaureate 2009-2010 in the

Asia Pacific

Trusted Brand 2010 Gold Award(Voted by


2010 Readers Digest

OTHER AWARDS

y Yum! Brands World Hunger Relief initiative was recognized for successfully mobilizing

millions of employees, franchisees and suppliers to address the global hunger crisis, through

awareness, engagement, volunteerism and philanthropic fundraising. The award was

presented on May 10th, 2011, at UnitedHealthcares 2011 Annual Customer Forum held in

Scottsdale, Ariz.

y At the recent YUM! Star Supplier Awards ceremony, held in Louisville, Kentucky, the

Delfield Company took home the 2008 U.S. Equipment Supplier of the Year Award.


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DOMINOS PIZZA


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INTRODUCTION

History

Early years

In 1960, Tom Monaghan and his brother, James, purchased DomiNick's, a small pizza store

in Ypsilanti, Michigan near Eastern Michigan University. The deal was secured by a US$ 75 down

payment and the brothers borrowed $500 to pay for the store. Eight months later, James traded his

half of the business to Tom for a used Volkswagen Beetle. As sole owner of the company, Tom

Monaghan renamed the business Domino's Pizza, Inc. in 1965. In 1967, the first Domino's Pizza

franchise store opened in Ypsilanti. The company logo was originally planned to add a new dot with

the addition of every new store, but this idea quickly faded as Domino's experienced rapid

growth. By 1978, the franchise opened its 200th store.

In 1975, Domino's faced a lawsuit by Amstar Corporation, maker of Domino Sugar, alleging

trademark infringement and unfair competition. On May 2, 1980, a federal appeals court found in

favor of Domino's Pizza.

International expansion

On May 12, 1983, Domino's opened its first international store, in Winnipeg, Manitoba, Canada. That

same year, Domino's opened its 1,000th store overall, and by 1995 Domino's had 1,000 international

locations. In 1997, Domino's opened its 1,500th international location, opening seven stores in one

day across five continents.

Sale of company

In 1998, after 38 years of ownership, Domino's Pizza founder Tom Monaghan announced his

retirement and sold 93 percent of the company to Bain Capital, Inc. for about $1 billion and ceased

being involved in day-to-day operations of the company. A year later, the company named David A.

Brandon Chairman and Chief Executive Officer.


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Current era

In 2004, after 44 years as a privately held company, an employee of Domino's Pizza rang the opening

bell at the New York Stock Exchange and the company began trading common stock on the NYSE

under the ticker symbol "DPZ".

Industry trade publication Pizza Today magazine named Domino's Pizza "Chain of the Year" in

2003 and did so again in 2010. In a simultaneous celebration in 2006, Domino's opened its 5,000th

U.S. store in Huntley, Illinois, and its 3,000th international store in Panama City, making 8,000 total

stores for the system. Also that year, the Domino's Pizza store in Tallaght, Dublin, Ireland, became

the first in Domino's history to hit a turnover of $3 million (2.35 million) per year. As of September

2006, it has 8,238 stores which totaled US$1.4 billion in gross income.

In 2007, Domino's introduced its Veterans and Delivering the Dream franchising programs and also

rolled out its online and mobile ordering sites. In 2008, Domino's introduced the Pizza Tracker, an

online application that allows customers to view the status of their order in a simulated "real time"

progress bar. In addition, the first Domino's with a dining room opened in Stephenville, Texas, giving

the customers the option to either eat in or take their pizza home. Since 2005, the voice of Domino's

Pizza's US phone ordering service 1-800-DOMINOS has been Kevin Railsback.

In a 2009 survey of consumer taste preferences among national chains by Brand Keys, Domino's was

last tied with Chuck E. Cheese's. In December that year, Domino's announced plans to entirely

reinvent its pizza. It began a self-flogging ad campaign in which consumers were filmed criticizing

the pizza's quality and chefs were shown developing the new product.The new pizza was introducedthat same month, and the following year, Domino's 50th anniversary, the company acquired J. Patrick

Doyle as its new CEO and experienced a historic 14.3% quarterly gain. While admitted not to endure,

the success was described by Doyle as one of the largest quarterly same-store sales jumps ever

recorded by a major fast-food chain.


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PRODUCT PROFILE

The current Domino's menu features a variety of Italian-American entrees and side dishes. Pizza is

the primary focus, with traditional, specialty and custom pizzas available in a variety of crust styles

and toppings. Additional entrees include pasta bread bowls and oven-baked sandwiches. The menu

offers chicken side dishes, breadsticks, as well as beverages and desserts.

From its founding until the early 1990s, the menu at Domino's Pizza was kept simple relative to other

fast food restaurants, to ensure efficiency of delivery. Historically, Domino's menu consisted solely

of one pizza in two sizes (12-inch and 16-inch), 11 toppings, and Coke as the only soft drink option.

The first menu expansion occurred in 1989, with the debut of Domino's deep dish, or pan pizza. Its

introduction followed market research showing that 40% of American pizza customers preferred

thick crusts. The new product launch cost approximately $25 million, of which $15 million was spent

on new sheet metal pans with perforated bottoms. Domino's started testing extra-large size pizzas in

early 1993, starting with the 30-slice, yard-long "The Dominator".

Domino's tapped into a market trend toward bite-size foods with spicy Buffalo Chicken Kickers, as

an alternative to Buffalo Wings, in August 2002. The breaded, baked, white-meat fillets, similar to

chicken tenders, are packaged in a custom-designed box with two types of sauce to "heat up" and

"cool down" the chicken.

In August 2003, Domino's announced its first new pizza since January 2000, the Philly Cheese SteakPizza. The product launch also marked the beginning of a partnership with the National Cattlemen's

Beef Association, whose beef Check-Off logo appeared in related advertising. Domino's continued its

move toward specialty pizzas in 2006, with the introduction of its "Brooklyn Style Pizza", featuring a

thinner crust, cornmeal baked in to add crispness, and larger slices that could be folded in the style of

traditional New York-style pizza.

In 2008, Domino's once again branched out into non-pizza fare, offering oven-baked sandwiches in

four styles, intended to compete with Subways toasted submarin sandwiches. Early marketing for

the sandwiches made varied references to its competition, such as offering free sandwiches to

customers named "Jared," a reference to Subway's spokesman of the same name.

The company introduced its American Legends line of specialty pizzas in 2009, featuring 40% more

cheese than the company's regular pizzas, along with a greater variety of toppings.[ That same year,

Domino's began selling its BreadBowl Pasta entree, a lightly seasoned bread bowl baked with pasta

inside,and Lava Crunch Cake dessert, composed of a crunchy chocolate shell filled with warm fudge.


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Domino's promoted the item by flying in 1,000 cakes to deliver at Hoffstadt Bluffs Visitor Center

near Mount St Helens.

In 2010, the company changed its pizza recipe "from the crust up", making significant changes in the

dough, sauce and cheese used in their pizzas. Their advertising campaign admitted to earlier

problems with the public perception of Domino's product due to issues of taste.

Distribution

Supply Chain Management

Management positions at Domino's Pizza distribution centers offer you the opportunity to join a

world-class company with:

y A competitive salary.

y

An excellent benefits package.y Opportunity for career growth.

Our team leaders are involved in all facets of our business. The work is a combination of

administrative and operational responsibilities performed throughout the distribution center. The best

candidates are strong yet thoughtful leaders who have the ability to respect their team members and

mentor them onto greater career development. If you care about the people who work for you and

have the desire to encourage and assist in their career growth, you're the type of leader we look for.

What Types of Management Positions Are Available?

Our General Manager Development Program is an excellent start to acquiring skills and learning the

fundamentals of business operations. In addition to several requirements, it is necessary to work

successfully in a team leader position (minimum of six months ) to apply for the program. The

program is customized for each individual and focuses on the following areas.

Food Production

Preparing and mixing fresh pizza dough is the responsibility of a production team member. The

production team is the secret behind the great-tasting Dominos Pizza consumers turn to when

theyre hungry. If you have the desire to create a top-quality food product every day, then our

production department is for you.


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Commercial Delivery and Service Drivers

We look for team members with a commitment to safety and excellent customer service to be part of

our Delivery & Service team. Delivery & Service drivers will drive a truck over an established route

to deliver products to Dominos Pizza stores. When you take the wheel for Dominos Pizza

Distribution, you are the face of our company to our customers. Youre interaction with the stores is

crucial to our success. Many drivers build lasting relationships with customers in the fun and

supportive family environment of Dominos Pizza.

Warehouse

Our warehouse team members ensure that our customers receive each and every product they order,

every time they order it. As a warehouse team member, your main responsibility will

be to load, unload and move materials within or near the distribution center. Youre the one who

makes it happen for us every day and you are an important piece of who we

ORGANIZATION STRUCTURE


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SIZE OF THE MARKET

Domino's Pizza is one of the biggest and fastest growing international food joints in South Asia. The

very first Domino's Pizza outlet in India opened in Jan, 1996 at New Delhi. Today, Domino's Pizza

India has become a wide network of Pizza delivery and food chain. There are close to 220 outlets in

42 cities of India and the brand is the top most among the food delivery business. Dominos Pizza

outlets can be seen at major locations of Delhi and NCR. Their

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