building big brands in asia pacific henry saliba director of development
TRANSCRIPT
Building BIG Brands in Asia Pacific
Henry SalibaDirector of Development
China
Agenda
YUM Brands / YRI – who we are
Asia Franchise Business Unit (AFBU)
Our business philosophy
Our franchising model
How we engage
Page 10
34,880 restaurants as of Dec 2009
16,143
11,681
5,377
We are the largest restaurant company in the world!
1700+ gross builds a year in 2009!
898
569
266
We are also the largest retail developer in the world
YRI
CHINA
US
8,248
5,158
250 294
Over 13,000 restaurants, of which 83% are franchised
As of Q1 2010
YRI’s asset base is vast…
4000+ restaurants in Asia Pacific alone!
LARGEST
contributor toYRI’s Operating Profit
Countries : 11Franchisees : 15
AFBU covers 14 countries ; 29 franchisees and all 5 brands
Countries : 2Franchisees : 13
Countries : 1 Franchisee : 1
(Sub-Franchisees : 108)
Sales : $1.5+ billion
South East Asia/HK/Taiwan/Korea
Japan
Pacific
Hong Kong Taiwan
KoreaStores : 2500+
Sales : $1.5+ billion Stores : 1500+
Sales : $150MM+ Stores : 150+
Page 16
AFBU
Units Added 2000+
System Sales ($MM) Double Digit CAGR
Operating Profit ($MM) 4 x
Strong growth since spin-off – 1998 to 2009
Asia Franchise (ex-Japan) Japan
KFC is the “800 lb gorilla”!
% of Sales
KFC
Pizza Hut
Taco Bell
A&WLJS
% of Sales
KFC Company
KFC JapanFranchise
PH Company
PH Franchise
Page 18
Our business
philosophy
Page 19
Our business
philosophy
Page 20
Our business
philosophy
We are about ACCELERATING THE BUILDING OF BIG BRANDS
How our business is organized
Brand
Development
Product
Excellence
Restaurant
ExcellenceFranchise Excellence
Organization Excellence
Finance
Excellence
Core FunctionsSupport
Functions
Building
Brand
Equity
Developing
Great
Products
Providing
Maniacal
Customer
Service
Asset
Development
Building
Great
Restaurants
Our franchising model
Consumer proposition Business system Commercial terms
Culture
Alignment System discipline & process
Ready for growth Constructive engagement
WORLD-CLASS
FRANCHISOR
WORLD-CLASS
FRANCHISEES
GLOBAL FRANCHISE PARTNERSHIP (GFP)
Roles & responsibilities
Dallas RSC– Globalization of Best Practices– Defining Operating Standards
Business Units & Franchisees– Creation of Best Practices
– Execution
The partnership works!
• Dominant Brands
• Dominant Market Share
• World Class Assets
• World Class Teams
And our partnership has a bold future…..
YUM = 1,700 openings per year - 4 restaurant openings per day!
Asia at almost an opening every day!!
YUM = 2,500 remodels per year - 7 remodels per day!
Asia at 2 remodels per day!!• Best looking, branded restaurants in the world
• More powerful brands
Our franchisees make this possible
New Net Openings
'05 '06 '07 '08 09
924
852
785780
FZ
Equity
Company17%
Franchise83%
27
900
Our GROWTH & LEADERSHIP mindset is key
Scale advantages– Supply chain– Media efficiency
Competitive Advantage– Raises barriers to entry
– Builds credibility with developers/landlords– Assets that separate us from the competition
Market penetration drives– Convenience– Awareness
– Market Share
Franchisee gets:– License to use our Trademarks for a defined
term – A business system
Franchisor gets: – Fees – Growth of System,
goodwill
Dynamic relationship
Our Franchising Model
There is no agency or partnership
YRI and Franchisee are independent parties
Both parties should be sensitive to information on which the other party may seek to rely
Franchisee/Franchisor Relationship
Key Terms– Right to Use the System, System Property, and Trademarks – Confidentiality protection– Protection of System Property & Goodwill of System (non-compete)– Renewal Criteria
Franchise Agreement
General Principles– Site-Specific License: no territorial exclusivity or radius protection– No Sub-Franchising
Trademarks and System Property– The Franchise Agreement includes
comprehensive provisions aimed at protecting our Trademarks and intellectual property rights
Confidentiality– The franchisee’s obligation of confidentiality extends from the terms of the
Franchise Agreement and Manuals to all other information concerning the System or YRI’s business and affairs
Franchise Agreement
Principal Operator– The franchisee is required to appoint a Principal Operator
to be primarily responsible for the management of the business and for dealing with YRI
Guarantee– The Franchise Agreement requires a guarantee to be
obtained from appropriate parties
Franchise Agreement
Contains operational details
May be amended by YRI any time by notice to franchisees in response to operational changes
Formalizes franchisee notification/receipt systems for annual updates
Is incorporated into and forms part of the Franchise Agreement
Manual
Franchise Policies Manual
During the Term, YRI must approve any franchisee involvement in any competitive food concept or business anywhere in the world
Approval may be withheld for concepts/ businesses in which chicken, pizza/pasta, Mexican, or beef/chicken burger products represent a certain % of the product mix
Non-Compete
Page 36
General Principles– Applies where franchisee is granted the right to develop stores in a specified
Development Area– Franchisees are not given territorial exclusivity. A first right of refusal is a form of
territorial protection– Development rights subject to compliance with global Expansion Criteria
Development Agreement
WHY is Development so important?
Our Goals
Build & Rebuild
Units
Build & Rebuild
Units
Build World
Class Designs
Build World
Class Designs
Build Profitable
Restaurants
Build Profitable
Restaurants
Build PeopleBuild People
Building of Big Brands
How we engage - Top 6 Franchisees ranked by System Sales
Country Brand Franchisee Ownership
Japan KFC/ PH
KFC Japan Public Listed (majority : Mitsubishi)
Malaysia/ Singapore/ Cambodia
KFC/ PH
QSR Brands/ KFC Holdings
Public Listed (majority : Kulim)
Indonesia KFC PT Fastfood Indonesia
Public Listed(family controlled)
HK/ Taiwan/ Vietnam
PH Jardines Public Listed(family controlled)
Philippines KFC High-Flyer Food
Private
Hong Kong KFC Birdland (HK) Private Equity (Navis)
Page 40
AFBU Partner Engagement ModelTYPE PROCESS / METHODS DETAILS
STRATEGIC 1. HWWT2 Action Planning Meetings2. Partners Council3. Franchise Convention
One APM with each partner per year. Strategic / troubled markets have more
Partner’s council held once a year
Franchise Convention once every other year
BUILDING KNOWHOW 1. Yum Colleges2. Conferences & Workshops3. Best practice visits 4. Champs Challenge / Champions
Club
In 2010: 2 Yum colleges held 1 workshop held 4 conferences held 7 Best practice visits arranged 2 events held
DRIVING RESULTS(ONGOING BUSINESS SUPPORT)
1. Organization structured functionally & by brand to provide markets ongoing support
Marketing, Operations – by brand
Development, Finance, SCM, QA, R&D, HR - Shared
More than a restaurant company……
…….a global leader in Franchising