2000 Annual Report - Yum!

120 were multibranded.
Without multibranding, in
many cases we would not have
been able to open these units
and generate good returns.
The biggest news for us in
2000 was the development of
Personal Pan Pizza Express, which allows us to provide our
customers individual size pizzas through Taco Bell and KFC
drive-thrus. Drive-thru pizza on demand is a breakthrough
in the category. We plan to add 280 Personal Pan Pizza
Expresses to new or existing restaurants this year and will
continue to add units as our operating capability allows.
What’s more, we have had good success testing Taco Bells
in rural Pizza Huts and have a test agreement with KFC
and A&W that is generating strong results. We are now the
world’s leader in multibranding, and we know leading the
way in multibranding will pay huge dividends for our share-
holders down the road.
“We plan to add 280
Personal Pan Pizza
Expresses to new and
existing units this year
that allow us to provide
our customers
individual size pizzas
through Taco Bell and
KFC drive-thrus.”
“Over the last three years, it has been my privilege
to serve as Tricon’s first Chairman and CEO. Last year,
the Board of Directors named David Novak CEO.
On January 1, 2001, David assumed the additional
responsibility of Chairman. I can think of no finer
person to lead Tricon into the future than my partner,
David Novak. I will remain active in the operation of
the business as well as serving
on Tricon’s Board of Directors.
I’m enthusiastic about Tricon’s
opportunities ahead as we build
on the progress begun these
last few years.”
Andrall E. Pearson
Founding Chairman
4 TRICON GLOBAL RESTAURANTS
4. Franchise Fees
We now generate about $800 million per year in franchise
fees, up almost 40% in three years. What’s more, our fran-
chise partners are expanding around the world. Franchisees
and affiliates opened over 1,000 restaurants and acquired
over 700 restaurants from Tricon in 2000. All in all, we have
refranchised over 3,000 U.S. restaurants in the last three
years, including more than 500 KFCs, 1,500 Pizza Huts
and nearly 1,000 Taco Bells – generating about $1.4 billion
in net proceeds after tax. The refranchising program has been
a major success and has dramatically improved our returns.
We will wind down our refranchising program by the end of
2001. There continues to be significant demand to buy and
build new restaurants because of the power of our leading
brand names. It should be noted, however, that certain of
our Taco Bell franchisees are experiencing financial difficulty
because of soft sales. We are proactively working with these
franchisees to restructure debt and ensure operational viabil-
ity. We believe these issues will be resolved in 2001.
5. Cash Flow
Tricon generated $850 million of cash prior to investment
this year. Our objective is to turn this strong cash flow into
high returns. Here we have made huge progress with our