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.

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. 2

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 such a 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.

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.

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. This information 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 y y y y y MCDONALDS KFC PIZZA HUT DOMINOS PIZZA. COFFEE DAY 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. 5

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 fastfood companies that are hungry for growth are gathering around the table. y The India invasion Domino's Pizza dominates the Indian pizza market with a total share of around 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.

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).

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 Working Women: 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 7

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 increased consumption 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 for consumers 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 in 1986, 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 offpremise sales for some of the largest firms in the industry

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.

CHALLENGES FOR THE INDUSTRY

y Social 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 fast food global formula, without any apparent previous cultural training. y Emphasis 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. y Retrenchment of employees: Most of new industries will be capital intensive and may drive local competitors, which have more workers, out of business. y Profit 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 biodegradable 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 the market. 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 in downtown 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 16

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 17

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 the same 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 y y y

Drive aggressive international expansion and build strong brands everywhere. Build leading brands across China in every significant category. Dramatically improve U.S. brand positions, consistency and returns. 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

22

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 restaurantquality 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 deliverybased 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: bonein, 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 Structure

Board 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. y Audit Committee y Compensation Committee y Nominating and Governance Committee y Executive/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 of Yum! 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 customerfocused 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! International
Yum! 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 jointventure 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 26

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 28

Market Share
Yum 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 hamburgerbased 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.

29

30

Yum! Brands Business Model

In 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

31

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

International Division
KFC 8,230 Pizza Hut - 5,153 Taco Bell 251 Long John Silver's - 35 A&W - 293

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Total Number of Units - 13,962

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

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Yums Success
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

34

Yum! Brands In 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 most populous 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 of the 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.

35

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 median age 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 menus
The 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 restaurant

chains 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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Yums STRATEGIES
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-meDavid 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 38

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 listed company 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, 39

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

40

Yum! Financial Data- Worldwide sales

41

42

WORLD WIDE SYSTEM UNITS

43

(LANDSCAPE DOCUMENT)

44

Key YUM! Brands, Inc. Financials

Public -(NYSE: YUM) Company Type Headquarters Fiscal Year-End 2008 Sales (mil.) 2010 Employees December $11,279.0 378,000

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

Latest 08/25/11 16:00:56 EST

$51.71

Change ($)
-1.340

Change (%)
-2.530

High
$53.52

Low
$51.33

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Yum Brands Key Financials

Rank: 214 (Previous rank: 216) on Fortune 500 CEO: David C. Novak Compare tool: Yum Brands vs. Top 10

% change Key financials Revenues Profits Assets Stockholders' equity Market value (3/25/2011) Profits as % of Revenues Assets Stockholders' equity Earnings per share 2010 $ % change from 2009 2000-2010 annual growth rate % Total return to investors 2010 2000-2010 annual rate 2.38 7.2 13.1 % 43.3 20.8 10.2 13.9 73.5 $ millions 11,343.0 1,158.0 8,316.0 1,576.0 24,232.5 from 2009 4.7 8.1

YUM! Brands, Inc. Balance Sheet

46

Assets Current Assets Cash Net Receivables Inventories Other Current Assets Total Current Assets Net Fixed Assets Other Noncurrent Assets Total Assets Liabilities Current Liabilities Accounts Payable Short-Term Debt Other Current Liabilities Total Current Liabilities Long-Term Debt Other Noncurrent Liabilities Total Liabilities Shareholder's Equity Preferred Stock Equity Common Stock Equity Total Equity Shares Outstanding (thou.)

Dec 08

Dec 06

Dec 00

216.0 229.0 143.0 363.0 951.0 3,710.0 1,866.0 6,527.0 Dec 08

319.0 220.0 93.0 267.0 899.0 3,631.0 1,823.0 6,353.0 Dec 06

133.0 302.0 47.0 206.0 688.0 2,540.0 921.0 4,149.0 Dec 00

1,473.0 25.0 224.0 1,722.0 3,564.0 1,349.0 6,635.0

1,386.0 227.0 111.0 1,724.0 2,045.0 1,147.0 4,916.0

978.0 90.0 148.0 1,216.0 2,397.0 858.0 4,471.0

-(108.0) (108.0) 462,558.0

-1,437.0 1,437.0 530,152.8

-(322.0) (322.0) 468,583.6

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AWARDS AND ACHIEVEMENTS

KFC 2008-2010

AWARD
Trusted Brand in 2010 Gold Award (Voted by Consumers for Family Restaurant Category)

YEAR AWARD BODY

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

48

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
Trusted Brand in 2010 Gold Award (Voted by Consumers for Family Restaurant Category)

YEAR AWARD BODY

2011 Readers Digest

49

Yum! Best New Product Crunchy Cheesy Bites

2010

Yum! Brands

Yum! Best Overall Marketing Mocktail Innovation Award

2010 2010

Yum! Restaurant International 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 Consumers for Family Restaurant Category)

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. 50

DOMINOS PIZZA

51

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 introduced that 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 Steak Pizza. 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. 54

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 y y

A competitive salary. An excellent benefits package. 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

56

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 home delivery is free with a guarantee of Thirty Minutes Nahi to Free. Although they are expert in delivering Pizzas on time, their eating joints and outlets are also good. We plan to have a total of 500 stores in 75-80 cities by 2010 to 2011. It would entail an investment of Rs 200 million during the period MARKET GROWTH During last four months, dominoes have opened outlets in Jammu, Panipat, Surat, Baroda, Nashik, Trivandum, Meerut and Patiala. While earlier, 70 percent of our business used to be in metros and mini-metros, now the ratio is 50:50 between big cities and smaller Tier II and III cities. Dominos Pizza is expanding its base in India by opening 500 outlets to add to its current tally of 156 outlets, across 50 cities in India by 2011 with an investment of Rs.1, 000 crore. MARKET STRATEGIEsS Promotional and Advertisement Campaigns(Coupons and discounts) The '30 Minutes' Promise Use of Technology(Digital interactive Television, Internet on the PC, Mobile telephony) Premium Pricing Strategy Indian fast food industry and entry of multinational players Distribution strategies of fast food chains in India COMPETITORS Fast food is one of the world's fastest growing food types. It now accounts for roughly half of all restaurant revenues in the developed countries and continues to expand there and in many other industrial countries in the coming years. But some of the most rapid growth is occurring in the developing world; where it's radically changing the way people eat. People buy fast food because it's cheap, easy to prepare, and heavily promoted. This paper aims at providing information about fast 57

food industry, its trend, reason for its emergence and several other factors that are responsible for its growth. India is a developing country with 2 percent of organized and 98 percent of unorganized sector. So most of the fast foods came into Indian market as India has a high growth in every sector. Some of the competitors of dominos are  McDonald's  Pizza Hut  Barista  Coffee Day

PRESENT MARKET SHARE

Domino's was founded in Michigan by Tom Monaghan in 1960; at the end of FY 2007 the company operated over 8000 locations in all 50 states and 55 countries. The company focuses on two core strengths: high quality pizza and fast delivery. Domino's business model sits on three pillars: 1) low cost delivery-oriented store design , 2) Franchising and 3) a vertically integrated supply chain. The company operates in three segments: domestic stores, domestic supply chain and international.

Domino's revenue by segment

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Trends & Forces

Rising Food and Energy Costs Shrink Margins Rising Food Costs: Domino's margins are dependent on food prices. In particular, the company is dependent on the price wheat (used to make dough) and cheese, two key ingredients of any pizza. Over the past few quarters the prices of these key inputs have risen significantly in February 2008 a bushel of wheat cost $11.21 compared to $4.35 a year earlier The company is also impacted by the price of corn beef, poultry, other important ingredients for much of its menu. Rising Energy Costs: Domino's is also affected by the price of oil which has risen four-fold since 2001 with the price of gas rising more than two-thirds since last year alone. Oil is used to produce food, as well as to transport it all over the world. More importantly, the company covers over 10 million miles per week in pizza deliveries, making it a large consumer of gas. Furthermore, Domino's relies on diesel to fuel the delivery fleet of its domestic supply chain. Intense competition in the pizza delivery category limits the company's ability to pass rising food and energy costs onto customers; because of this, increased costs shrink margins and hurt profitability.

Same Store Sales: Can International Growth Offset a U.S. Slowdown? Domino's operating income is dependent in part on royalty fees paid by franchisees. Because these royalties are a percentage of total revenues, same store sales are an important metric of Domino's performance. Increases in same-store sales translate to increased royalties which go right to the company's bottom line.

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U.S. consumer belt-tightening: Soaring food and energy prices, the housing slump and a weakening job market have a negative impact on restaurant spending in Domino's core U.S. marke. As consumers in the U.S. pare back discretionary spending, the company has seen two years of negative same store sales growth at its domestic stores. Although the company has a sizable international presence, it still generates 59% of revenue in the U.S. making it vulnerable to a continued slowdown in consumer spending.

Domino's domestic same-store sales Period 2006 2007 Q1 2008

Company-owned Stores 7.1% -2.2% -2.4% Franchise Stores 4.6% -4.4% -5.5%

Strong International Growth: Domino's has a sizable international presence; 41% of retail revenues occur outside of the United States. In addition to developed markets like the U.K., Canada, South Korea and Australia, Domino's operates in fast growing emerging markets like India and Turkey. The company's international operations give it access to a rapidly growing global middle class and has consistently posted strong same-store sales growth:

Domino's international same-store sales Period 2006 2007 Q1 2008

International Stores 4.0% 6.7% 8.8% New Marketing Campaign Aims to Drive Store Traffic In fiscal 2007, Domino's hired a new advertising agency meant to lead the company's new marketing campaign and service message: "You've Got 30 Minutes." The "You've Got 30 Minutes" hopes to highlight the value of what pizza delivery really does for consumers gives them free time. The campaign will generate customer awareness of the company's commitment to deliver a hot, fresh

60

meal in about 30 minutes. Domino's strong national advertising presence may help it lure customers from smaller, local pizzerias; the company estimates that it has spend $1.4B over the last five years on branding and marketing efforts .

Competition
Domino's competes in the QSR segment. The QSR segment of the food and beverage industry generated $440B in revenue last year alone. Most broadly, Domino's competes with other QSR's like McDonald's, Wendy's and KFC. More narrowly the company operates in the pizza delivery category which is comprised of Pizza Hut, Papa John's and thousands of smaller, local pizzerias. Pizza Hut, a division of Yum! Brands is the company's largest competitor with 12,877 stores worldwide generating $10B in system wide sales. Although Pizza Hut is the world's largest pizza chain by sales, Domino's actually delivers the most pizzas to homes and holds the title of the world's largest pizza delivery company[. As of April 2008, Domino's held an impressive 19% market share in domestic pizza deliveries. This dominant market share arises from it's sizable advertising and marketing budget- a key competitive advantage.

Domino's holds a 19% share of U.S. pizza deliveries

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FUTURE STRATEGIES
Despite or perhaps because of difficult economic times, the pizza delivery company Dominos UK & Ireland has enjoyed rapid growth over the last couple of years. The company, which owns the Master Franchise to the Dominos brand in the UK and Ireland, now operates through over 130 franchisees with an average of 4.5 stores each. And their long-term strategy contains the target of rolling out at least one new Dominos store per week in each of the next ten years, growing the business into a billion pound brand in the UK almost double the current size.

Shareholders in Dominos are happy! The company floated on the Alternative Investment Market (AIM) in 1999 and moved into the FTSE-250 mid-cap index in 2007. It now trades at 5.20 per share contrasted with an initial floatation price of 17 pence. Measured by turnover, Dominos is now bigger than the combined income of its largest four rivals including Perfect Pizza and Pizza Hut. The sheer scale of the Dominos operation is a vital part of its competitive advantage. In the year ended December 27, 2009, it delivered to 3.4milllion homes, 500,000 more than in 2008. And their network of stores services between 35-40 per cent of the UK population. They want to grow to over 1,000 stores in five years, drive over the 1 billion mark for turnover and make in excess of 100m annual profits.

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One aspect of Dominos success that has impressed stock market investors is therapid like-for-like growth in sales. Like-for-like is a measure of growth in revenues which makes an adjustment for the changing number of stores and sales floor space to give a better indication of business growth from one period to another. You will usually see quoted retailers using LFL to explain the underlying growth in sales. Dominos has made gains in three key measures: 1. Penetration i.e. the percentage of all households in the UK that has ordered at least once from Dominos in the last year (last year Dominos delivered to 14% of all homes!) 2. The frequency with which a customer re-orders (about once per month) 3. The average value on the receipt ticket from each order (typically around 18) For a hugely consumer-centric business Dominos must always be keenly aware ofconsumer needs and wants and stay tuned to when they change. My own experience is probably not atypical. I want hot pizza, competitively priced, produced to a consistently good standard, delivered on time and ordered and paid for over the internet with the minimum of fuss! That gives Dominos five operational and quality hurdles to overcome and doubtless there are many more for different groups of consumers for example the hundreds of thousands of people who enjoy a pizza but who are glucose intolerant. But the challenge is clear a successful business must innovate and maintain ahigh quality of product day in day out. The value and sustainability of the brand also depends crucially on the performance of thousands of employees at the front end of the business Dominos employs over 25,000 people in the UK. There is a clear link between the quality of Dominos people and the quality of the customer experience and product.

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Costs and Efficiency The typical Dominos store has a weekly turnover of 17,000 making and delivering close to 1000 pizzas per week. Annual turnover is close to 800k per store and each pizza sold makes 3 profit. In 2009, 68 stores had sales in excess of 1 million. A crucial element of the commercial viability of the business is in improvingefficiency within the stores and here Dominos focuses a metric known as out of the door time the time it takes between new orders being placed online or in store and the ready to eat pizza leaving the store en route to the customer. Dominos has managed to get this down from 17 to 13 minutes in recent years (typically it takes less than a minute for the pizza to be readied before going into the oven!) and their average delivery times has shrunk to just twenty three minutes. Once on the road, investment in improving routing software for Dominos vehicles provides another way of cutting costs. Although Dominos cannot be immune from rising fuel and food prices globally, for a pizza delivery business they have become ultra-efficient in getting products to the consumer in 2009, fuel accounted for only 10% of total distribution costs. Smart Marketing Few businesses or brands invest as much as Dominos in marketing. Four and a half per cent of the turnover of each Dominos franchise store goes into a fund used for national marketing of the Dominos brand. In 2010 the business is expected to spend around 40million on marketing, a figure bigger than the top-line revenue of many of their rivals. The 64

marketing fund is used to develop high-profile communications such as the sponsorship of Britains Got Talent, The Simpsons and the X-Factor. Television advertising remains the drug of choice for most fast-food businesses although Dominos has also joined the flood of companies seeking to establish and build an effective social media presence through Facebook, Four Square and other social network sites. A case in point is that a Dominos iPhone app already delivers 3-4% of online sales.

Price discrimination has been successful for the business. The Two for Tuesday promotion has been so effective that Dominos now sells as much pizza on a Tuesday (traditionally the quietest night of the week) as it does on a Saturday.Price discounting mid week help to smooth the pronounced ups and downs of daily sales during a normal week. Two for Tuesday generates extra revenue and grows volumes all helpful to franchisees with large fixed overhead costs.

Dominos is also targeting core groups of consumers. They have sponsored the setting up of Pizza Societies at numerous universities in the UK (how long before the idea takes root in schools?). And this is a business fully aware of the importance of changing demographics. Pizza eating is less 65

popular among people aged 55 and over, but younger generations have become used to the Dominos model and as this group ages, the commercial opportunities are sizeable. And because forty per cent of their business comes over the internet, Dominos has built up a terrifically valuable database of location-specific customers a mine of information that can be used to great effect when promoting special offers, new products and reinforcing brand awareness. Put simply, Dominos knows where you live and the ever-expanding size of their customer database has great commercial value. Since 2007, Since January 2007, an additional 3million new customers have ordered from Dominos here is a business that understands a business truism, namely that the cost of selling to an existing customer is always lower than searching for a new one! There are many businesses that are successful because they focus in a single-minded way on identifying a model that works for them and then concentrating on carrying it out extremely well. Dont expect Dominos to diversify into exotic areas! They are happy to allow competitors to grow the market for pizza delivery and then use their undoubted muscle to take a growing slice of it. For a business founded fifty years ago in Michigan whose distinctive 3 dots on their logo marked an early ambition to run just three stores, Dominos hasnt done too badly! It has a justifiable claim to be the most profitable pizza delivery company in the world.

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COMPANY FINANCES
BALANCE SHEET
Currency in Millions of U.S. Dollars

As of:

Dec 30 2007
USD

Dec 28 2008
Reclassified USD

Jan 03 2010
USD

Jan 02 2011
USD

Assets Cash and Equivalents TOTAL CASH AND SHORT TERM INVESTMENTS Accounts Receivable Notes Receivable TOTAL RECEIVABLES Inventory Prepaid Expenses Deferred Tax Assets, Current Restricted Cash Other Current Assets TOTAL CURRENT ASSETS Gross Property Plant and Equipment Accumulated Depreciation NET PROPERTY PLANT AND EQUIPMENT Goodwill Loans Receivable, Long Term Deferred Tax Assets, Long Term Deferred Charges, Long Term Other Intangibles Other Long-Term Assets 11.3 11.3 68.4 0.4 68.9 24.9 11.1 9.0 81.0 20.7 226.9 287.8 -164.9 122.9 20.8 0.7 45.8 33.1 10.1 12.8 45.4 45.4 69.4 0.6 70.0 24.3 6.2 9.0 78.9 20.4 254.3 274.8 -166.3 108.4 17.7 1.7 43.0 24.5 3.7 10.5 42.4 42.4 76.3 1.1 77.4 25.9 6.2 10.6 91.1 25.1 278.7 279.7 -176.9 102.8 17.6 1.9 21.8 17.3 3.2 10.4 47.9 47.9 80.4 1.5 81.9 27.0 9.8 16.8 85.5 36.1 305.0 285.8 -188.4 97.4 17.4 2.7 8.6 12.3 7.8 9.7

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TOTAL ASSETS

473.2

463.8

453.8

460.8

LIABILITIES & EQUITY Accounts Payable Accrued Expenses Current Portion of Long-Term Debt/Capital Lease Current Income Taxes Payable Other Current Liabilities, Total TOTAL CURRENT LIABILITIES Long-Term Debt Other Non-Current Liabilities TOTAL LIABILITIES Common Stock Additional Paid in Capital Retained Earnings Comprehensive Income and Other TOTAL COMMON EQUITY 60.4 68.4 15.3 1.6 29.8 175.5 1,704.8 43.0 1,923.3 0.6 -1,444.9 -5.8 1,450.1 1,450.1 473.2 56.9 60.7 0.3 1.2 30.4 149.6 1,704.4 34.4 1,888.4 0.6 1.9 -1,421.7 -5.3 -1,424.6 64.1 67.8 50.4 -37.1 219.4 1,522.5 32.9 1,774.8 0.6 24.5 1,342.0 -4.1 1,321.0 1,321.0 453.8 56.6 78.8 0.8 -49.9 186.1 1,451.3 34.0 1,671.5 0.6 45.5 1,254.0 -2.7 1,210.7 1,210.7 460.8

TOTAL EQUITY TOTAL LIABILITIES AND EQUITY

-1,424.6 463.8

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Financial Statement
Currency in Millions of U.S. Dollars

Dec2007
USD

Dec 2008 Jan 2011

USD USD

Jan2011
USD

Revenues TOTAL REVENUES Cost of Goods Sold GROSS PROFIT Selling General & Admin Expenses, Total OTHER OPERATING EXPENSES, TOTAL OPERATING INCOME Interest Expense Interest and Investment Income NET INTEREST EXPENSE EBT, EXCLUDING UNUSUAL ITEMS Merger & Restructuring Charges Impairment of Goodwill Other Unusual Items, Total Insurance Settlements Legal Settlements Other Unusual Items EBT, INCLUDING UNUSUAL ITEMS Income Tax Expense Earnings from Continuing Operations NET INCOME NET INCOME TO COMMON INCLUDING EXTRA ITEMS NET INCOME TO COMMON EXCLUDING EXTRA ITEMS

1,462.9 1,462.9 1,084. 378.9 179.9 179.9 198.9 -130.4 5.3 -125.1 73.9 ---18.3 --5.0 -13.3 55.6 17.7 37.9 37.9 37.9

1,425.1 1,425.1 1,061.9 363.3 163.7 163.7 199.6 -114.9 2.7 -112.2 87.4 -1.4 -3.1 ----82.9 28.9 54.0 54.0 54.0

1,404.1 1,404.1 1,017. 387.0 199.2 199.2 187.8 -110.9 0.7 -110.3 77.5 --0.3 58.3 2.0 -56.3 135.5 55.8 79.7 79.7 79.7

1,570.9 1,570.9 1,132. 438.6 210.7 210.7 227.9 -96.8 0.2 -96.6 131.3 --0.2 7.8 --7.8 138.9 51.0 87.9 87.9 87.9

37.9

54.0

79.7

87.9

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U.S PIZZA

70

ABOUT THE COMPANY

It all started in 1972, when owner Judy Waller opened her first U.S. Pizza Company in a burned out clock shop in Levy, AR. Armed with a unique recipe for thin crust pizza and an old fashioned stone hearth oven, U.S. Pizza embarked on a quarter-of-a-century journey that has done everything but dwindle. That first store grossed only about $1,000 per week, but eight other U.S. Pizza Company locations have opened since. In addition to the chain of U.S. Pizza Companies, in 1981, Judy opened Hillcrest Liquor Store on Kavanaugh Boulevard in Little Rock. Since they opened our first store in 1972, they have been making our thin crust pizza from scratch when someone orders it. And thye still use stone hearth ovens.

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HISTORY
Judy Waller opened her first U.S. Pizza store at 3124 Pike Ave. in Levy in 1972. It had 10 tables and seated 36, and word of mouth soon got people lining up at the door. She finally moved it two blocks north to a former Pizza Planet location in 1989. Waller says she also owes her success to maintaining her basics and listening to her customers, whom she credits for the signature salads. says. "We're just as well known for our salads as for pizza," Waller

"Our customers created our Salad Supreme, early on, maybe 1973," she recalls. "A customer

would say, 'Hey, throw a few olives on there.' Another would say, 'Throw on a few mushrooms.' Now we throw all of that on there, and you can just delete what you don't want." Waller now operates 8

pizza outlets, including restaurants in Hillcrest and the Heights, on JFK and Fair Park Blvd., and behind McCain Mall in North Little Rock, on Rodney Parham Rd. in West Little Rock, in Maumelle, and on Dickson St. in Fayetteville. Various former employees over 33 years have opened their own places and U.S. Pizza clones have sprung up in eastern Arkansas and Tennessee. Waller, who admits she has little other choice, considers imitation the sincerest form of flattery.

THE COMMUNITY
U.S. Pizza Co. and its owner, Judy Waller, value the importance of philanthropic endeavors to reach out to the community, which has given them so much support throughout the years. U.S. Pizza provides support through monetary contributions, corporate sponsorship, and donations of food and gift certificates. They support: UAMS Carelink Lakewood Pool Jacksonville Softball Kaleidoscope Kids Special Olymics Arkansas Kidney Foundation Woodlawn Therapeutic Children's Center Sheriff's Boys and Girls Ranch Multiple local school fundraisers Arkansas Heart Association Arkansas Cancer Research Association LRRC Dolphins Swim Team 72

U.S. PIZZA IN INDIA

U.S Pizza is owned by United Restaurants Limited, A company incorporated in India with a mandate to create a Pizza Brand. The company has pioneered the freshly baked pizza and home delivery in India. In 1994 the founder and chairman of U S Pizza brought the brand to Bangalore at Manipal center. In 1998 they started expanding by franchising which took them to 34 cities and 12 states. In 2008 they took a quantum leap by tuning their infrastructure to Franchising by starting a call center, Training academy and ERP to service our 90 odd stores. They are now ready to provide services in any part of the world instead of any part of India.

MARKET SHARE
US Pizza, owned by Bangalore-based United Pizza, with 57 outlets across 26 towns, is planning to expand its base to 100 outlets by March 2007 and more than double this figure to 250 by the end of 2008. Already present in Gujarat, Maharashtra, Andhra Pradesh and Karnataka, US Pizza is now looking at Delhi NCR, Haryana, Punjab and the North East. It aims to expand through the franchisee route. Its expansion plans will be backed by a Rs 10 crore brand building strategy that will include a mass media campaign. The market for pizzas consumption is Rs 200 crore but is expected to touch Rs 300 crore by the end of 2006, according to industry estimates. The pizza market is categorized into two segments specialist and functional. While Pizza Hut and Dominos operate within the ambit of the first category, US Pizza is looking to create a niche for itself in the latter segment, a largely untapped market. Other players in the second category are Amul, Nirulas, Smokin Joes and so on.According to a loose categorisation, the specialist category is the indulgence product while functional pizzas fit the daily lunch bill. Obviously, price points also determine consumption trends in India. In the functional category, price 73

ranges from Rs 50-200. US Pizza is also targeting institutional sales since, for the smaller players, this is, typically, a growth driver.US Pizza operates through three business models - dine-in, takeaway and home delivery. But it is home delivery (40%) and dine-in (40%) that are contributing to its 12% market share.

TURNOVER
Total Turnover 100-250 crores No. of Employees 501-1000

With MNC players like Pizza Hut and Dominos having bitten off a huge 65-70% market share between them, what does a comparatively smaller brand with a pan-Indian presence do? As a growth strategy, it targets tier-II cities with a population base of 50-10 lakh. This itself poses challenges of sorts since pizzas are still a nascent fast-food product, especially in the small towns of India where taste buds are comparatively more rigid compared with the larger cities. But Akbar Khwaja, managing director, United Pizza, is convinced that pizza will find its place under the Indian sun. Pizzas are an unsaturated segment, offering scope for players to grow the market, he said. US Pizza, owned by Bangalore-based United Pizza, with 57 outlets across 26 towns, is planning to expand its base to 100 outlets by March 2007 and more than double this figure to 250 by the end of 2008. Already present in Gujarat, Maharashtra, Andhra Pradesh and Karnataka, US Pizza is now looking at Delhi NCR, Haryana, Punjab and the North East. It aims to expand through the franchisee route. Its expansion plans will be backed by a Rs 10 crore brand building strategy that will include a mass media campaign. The market for pizzas consumption is Rs 200 crore but is expected to touch Rs 300 crore by the end of 2006, according to industry estimates. The pizza market is categorized into two segments specialist and functional. 74

While Pizza Hut and Dominos operate within the ambit of the first category, US Pizza is looking to create a niche for itself in the latter segment, a largely untapped market. Other players in the second category are Amul, Nirulas, Smokin Joes and so on.According to a loose categorisation, the specialist category is the indulgence product while functional pizzas fit the daily lunch bill. Obviously, price points also determine consumption trends in India. In the functional category, price ranges from Rs 50-200. US Pizza is also targeting institutional sales since, for the smaller players, this is, typically, a growth driver. US Pizza operates through three business models - dine-in, takeaway and home delivery. But it is home delivery (40%) and dine-in (40%) that are contributing to its 12% market share.

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ORGANISATIONAL STRUCTURE
1. Vahid Berenjian - Chairman 2. Akbar - Director 3. Sunil Kumar - CEO 4. DVSN Kumar - Business Development 5. Thangiachalam Finance

Supply/Production Change

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ACHIEVEMENTS
US Pizza has always been believed to serve the best pizzas and salads in Arkansas; and their customers think so, too. These are some of the awards they have won for their superior food: Arkansas Times Reader's Choice Awards: Best Salad Best Pizza Best Beer

FUTURE STRATEGIES

VISION: An inspired TEAM, creating WEALTH

Aiming to expand aggressively across India, US Pizza is all set to share its franchise details and requirements. Sunil Kumar, CEO, US Pizza elaborates on the successful voyage of the company since its origin in Sweden and its future plans. The origin of the company traces back to 1989, when a young Iranian food technologist and an entrepreneur settled in Sweden, Vahid Berenjian had set up the first US Pizza outlet in Sweden. After getting a considerable experience, he set his eyes on opportunities in India in the early 90s, during the liberalisation of the Indian economy. In India, Vahid joined hands with Akbar Khwaja, an experienced restaurateur to set up his first store in Bengaluru in 1995. Akbar and Vahid partnered to take the brand pan-India. Over the years, US Pizza has seen an exponential growth which includes the opening up of over 73 outlets till date. The company has outlets not just in the metros but also in the tier II and tier III cities. This strategy has worked wonders for the company.

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Franchising that contributes to the growth of the parent company Franchising is a partnership model in which the franchisee gains by taking charge of an already successful business model. On the other hand, the franchisor gains by spreading his business quickly without having to invest and with the help of eager franchisees. US Pizza has been in the franchising business since 1996, when we franchised our first restaurant. Over the years, we have developed the concept, such that, it is most efficient, for both the franchisee and the franchisor. Today, the majority of our outlets are owned and operated by franchisees.

Qualities expected of a prospective franchisee who wishes to get a US Pizza franchise The qualities required are as follows: 1. Clear understanding of quality delivery of customer service 2. Ability to manage outlet level finances 3. Financially stable and capable of taking business related risks 4. Proven level of success in any other business or job

Number of franchisees They have 52 franchisees in 27 cities and 21 company owned stores.

Training and support provided to the franchisees The Company provides various kinds of training to the franchisees, like start-up, consultancy in designing and construction, logistics and ingredients, supply chain management, development, training and audit, restaurant operating systems, research and development, centralised direct sales systems, call center and online support.

Investment required US Pizza has three concepts of delivery, dine in and super dine in with a franchise fees ranging from Rs four to ten lakh. The total investment required for the three concepts ranges from Rs 22.50 to Rs 59 lakh.

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Companys future plans in terms of expansion through franchising SK: Food retailing is spreading across the country and making its presence felt in different parts. In the last few years it has gained tremendous momentum because of many industry giants making an entry into this segment of retailing and offering exhaustive product range and services to the consumers. In the Indian retail industry, food is the most dominating sector and is growing at a rate of nine per cent annually. Factors behind faster growth of food retailing industry in India are the increasing disposable incomes, need for convenience, faster life style and increasing consumer awareness through the reach of media. US Pizza plans to open 25 more number of outlets by March 2010.

Break even period for a US Pizza franchise The break even period for each franchise is of six months.

Challenges before a franchisee in this business Managing the manpower is the biggest challenge faced by the franchisee in the ever growing Indian market. To overcome this challenge one has to keep motivating and giving incentives to the employees.

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FINANCIAL INCOME STATEMENT

Period Ending
Total Revenue Cost of Revenue Gross Profit Research Development Selling General and Administrative Non Recurring Others Total Operating Expenses Operating Income or Loss Total Other Income/Expenses Net Dec 26, 2010 1,126,397 572,677 553,720 434,569 32,407 86,744 875 87,619 5,338 82,281 26,856 (3,485) 51,940 51,940 51,940

Interest Expense Income Before Tax Income Tax Expense Minority Interest Net Income From Continuing Ops Discontinued Operations Extraordinary Items Effect Of Accounting Changes Other Items Net Income Preferred Stock And Other Adjustments Net Income Applicable To Common Shares

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Balance Sheet
Period Ending
Cash And Cash Equivalents Short Term Investments Net Receivables Inventory Other Current Assets Total Current Assets Long Term Investments Property Plant and Equipment Goodwill Intangible Assets Accumulated Amortization Other Assets Deferred Long Term Asset Charges Total Assets Accounts Payable Short/Current Long Term Debt Other Current Liabilities Total Current Liabilities Long Term Debt Other Liabilities Deferred Long Term Liability Charges Minority Interest Negative Goodwill Total Liabilities Misc Stocks Options Warrants Redeemable Preferred Stock Preferred Stock Common Stock Retained Earnings Treasury Stock Capital Surplus Other Stockholder Equity Total Stockholder Equity Net Tangible Assets 81 Dec 26, 2010 46,225 35,004 17,402 13,741 112,372 18,958 186,594 74,697 23,320 415,941 90,687 90,687 99,017 12,100 6,937 8,506 217,247 361 243,152 (291,048) 245,380 849 198,694 123,997

Cash Flow Statement

Period Ending
Net Income Depreciation Adjustments To Net Income Changes In Accounts Receivables Changes In Liabilities Changes In Inventories Changes In Other Operating Activities Total Cash Flow From Operating Activities Capital Expenditures Investments Other Cash flows from Investing Activities Total Cash Flows From Investing Activities Dividends Paid Sale Purchase of Stock Net Borrowings Other Cash Flows from Financing Activities Total Cash Flows From Financing Activities Effect Of Exchange Rate Changes Change In Cash and Cash Equivalents

Dec 26, 2010 51,940 32,407 11,942 (5,022) 971 (1,848) (1,294) 89,096 (31,125) 3,696 (1,228) (28,657) (40,188) 96 (39,733) 62 20,768

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MEANING
Research is a diligent and systematic inquiry or investigation into a subject in order to discover or revise facts, theories, applications, etc.

OBJECTIVES:
This particular research study was undertaken and design with some predetermined objectives. The main objective of the study is to develop a better understanding of the working of a particular industry in this case the Fast Food Industry, and this was facilitated by the study of Yum! Brands, Dominos Pizza and U.S. Pizza. The objectives of the research are: y y y y y To know about the top players in the Fast Food Industry. To know the problems and opportunities of the Fast Food Industry. To ascertain the start of the Industry and its current position. To know the extent of government control on the sector. To have a complete picture of the company under study from the origin to the present financial situation. y To compare different companies under one Industry and draw conclusions regarding their specialization, diversification and expansion. y To have a brief knowledge about how companies work and manage their Future Initiatives and Changing Trends of the market. y To understand the internal working of different companies working under same Industry and in what ways they compete and differ from each other. y To compare those companies on different basis and have an idea of their management in the sense of target market, competition, goodwill etc. y To have a fair knowledge as to how these companies deal with each other at the time of competition.

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SCOPE:
This report attempts to present a snapshot of developments and/or important features in the general area of the Fast Food Industry developments, challenges, opportunities, future prospects, Indian market scenario, market share, government regulations etc. The study was carried out to basically develop a analytical view of the sector and to better understand the sector, its functioning process etc. this provides us with the understanding of how a industry works and what challenges they face in their day to day activities and how they overcome them.

METHODOLOGY OF DATA COLLECTION:

For this study data collection was necessary for each and every aspect of the report. We used secondary sources of data collection. For the secondary sources, we have resorted to the World Wide Web (Internet) as our main source of information. Magazines were also referred to but not much information was available here. We referred to the official company websites, Wikipedia, Economic Times, research websites etc. We used to collect data on a weekly basis and the same data was evaluated and verified by our project guide. This was done every week for 5-6 weeks. Final comparison and competitive analysis was done by everyone and the results of this analysis are presented in the report.

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LIMITATIONS:
Every research has its own limitations. It is not possible that a research is accomplished without having any bindings and limitations. There are always some shortcomings, which come into the way of the accomplishment of a particular research study. It is almost impossible for researcher to get away from it. Following are a few limitations of the study y In the particular research, the study duration was limited to a time of few weeks. So having a limited time span, we had to collect information subject to the availability of various sources i.e. World Wide Web, Magazines, Research Papers, etc. y We could not go much into the collection of primary data because of the lack of time and also the cost involved in it. y y Human error factor is always involved as a basic limitation in study. The objective of the project was very limited therefore it was not possible to go in details in many aspects. y Lack of valuable and concise information on the internet for free, as most of the useful information was only available to members. y Information such as organization structure, strategies etc are classified information.

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SWOT ANALYSIS

Yum! Brands

STRENGTHS
1. Geographically Diverse Business:- Geographically diverse business and revenue should help

shield the business from shocks in any one part of their business. Different countries or locations around the world have different characteristics. Those characteristics do not always match, therefore, a company can lower their risk by investing in part of the world with low correlations. The lower the risk, the better. This lowers risk and increases the value of the business over the long-term. 2. Strong reputation:- KFC is recognized highly and has a strong reputation around the world.

They have a strong brand image that they are recognized throughout the entire world in many different countries. 3. Ranked highest:- KFC has been ranked the highest when it comes to chicken restaurant

chains, convenience restaurants and variety food provider. 4. 5. Largest Chicken Restaurants:- KFC has one of the largest chicken restaurants in the world. Loyal Customer Base:- The company has many loyal customers. This always helps Being a market leader in the industry gives them the competitive advantage.

companies grow and make more money when they have repeat business. 6. Diverse Business :- Diverse operations should shield a business during downturns in the

economy. A stable business also allows the company to lower it's risk and increase it's value. Additionally, if one area suffers a downturn, other business can provide cash flow to reinvest in the depressed area before the next upturn in business. Diversification could bring benefits and stability to company especially in volatile markets. 7. Trans Fat-Free Formula:- Back in 2007, the company adopted the trans-fat free formula. This

gives the company an advantage over competitors and allows for them to gain more market share for promoting their formula. 86

8. 9.

Delivers Products:- Pizza Hut delivers products to customers for customer's convenience. Marketing Campaigns:- Pizza Hut has one of the best marketing approaches thus far. The

company is able to market any idea they have to promote it efficiently to the market. 10. Best Mexican Fast Food Chain:- Taco Bell is recognized as one of the best Mexican fast food chains in the US. 11. One of the Largest Restaurant Chains:- Pizza Hut has one of the largest restaurant chains in the world. 12. International Reach:- Companies with international reach have a big advantage over rivals especially when there clients conduct a lot of business in different countries. For instance, if a business traveler needs to access they money in another country, they can either bank with a company that has branches in that country, or they'll have to work with a third party, which will increase they fees and lower their productivity. Having international reach also works for businesses like McDonald's, which serves food in nearly every country in the world. Global access means that a consumer from one country can feel comfortable eating at any McDonald's around the world. Non global companies can't match these advantages, therefore, international companies have strong advantages over rivals.

WEAKNESSES
1. Weak R&D:- KFC does not pay much attention to the research and development part of their business. This hurts many business because they are not focusing on how to improve efficiency for the business. This will hurt the company in the long run. 2. A Few Lawsuits:- When companies have to deal with lawsuits this not only cost them money, but it also hurts the brand image of the company. 3. Internal Conflicts With Employees:-Problems within the company is a reflection of poor communication and bad management. When employees are fed up or feel that they are not motivated within the company their performance suffers. This can have a negative drawback on the company and affect future business. 4. Overexposure:- An overexposed, or over saturated market, makes it difficult to grow simple by adding restaurants, because the market is already full of restaurants. The only way to growth in this case is to take market share from competitors.

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OPPORTUNITIES
1. New Recipes:- New Recipes are always being created to help with the sales of the company. This gives them an opportunity to put new products out and gain market share. 2. New Flavours and Recipes:- New flavors and recipes give the company an opportunity to promote new products that can increase sales. With new healthy ideas being pushed into the recipes this may also help and gain more market share then before. 3. Emerging Markets:- The company can open up in different countries. With countries like India and China growing as fast as they are, this could be an opportunity for the company to gain market share in these regions of the world. 4. Stays Open Late:- Every Weekend, Taco Bell stays open late. This gives the company opportunities to make more sales from the night life crowds. 5. Emerging Markets:- The company can open in different countries and gain market share all over. This gives the company opportunities to develop and grow in countries like, India. India has a huge population and can give Pizza Hut a tremendous amount of business. 6. Innovative Pizza:- The company has come up with new styles of pizza. Also new recipes and other dishes that help deliver a product to its customer. This is an opportunity for the company to reach new prospects and keep old customers returning. 7. Different Payment Options:- Pizza provides a list of different payment options upon delivery of the pizza. Being limited to cash only would limit the company to proceed with the transactions. This gives the company an opportunity to make money through different approaches. 8. Sports Season:-Sport seasons brings people together to watch the different sport games that come on. Pizza Hut has a business model that caters to their customers on these many different occasions. Whenever there is a football or basketball game on, customers like to have food delivered, this gives Pizza Hut an opportunity each and every event.0

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9. Product Innovation:- Consumers demands change over time. These changes can be gradual, but many times, they occur quickly. The ability to a company to meet that changing demand with new and interesting products if paramount to success. 10. Fast Food Expansion:- Expanding into emerging markets will lower risk via diversification of stores and it will increase the potential revenue of each store 11. Emerging Markets:- Demand from emerging markets is helping growth and margins. Emerging markets create new opportunities to expand products from the developed world. Paper products, computer services and other industries will all benefit as emerging countries increase demand for industrial and agricultural products.

THREATS
1. Farmers Raising Prices:- Farmers can raise prices to raise and keep up chickens. This would lower profit margins for the company over the long term. 2. Unhealthy Lifestyle:- The products that the company sells are very unhealthy to the consumers. As more people become aware and educated on the effects of not eating properly, this could lower sales dramatically and hurt business. 3. Lower Prices Better Recipes:-Kfc faces the threat of competition having lower prices then they do. This will cause customers to try out new business. Also a competitor can come up with a better recipe and sell it for less than the company. 4. Competition:- Its subsidiaries have many competitors in the industry. This poses a threat because it takes away market share from the company. 5. Rising Prices of Cheese:- Rising prices for main ingredients will have an impact on profits for the company. Cheese is a main ingredient for the company and if prices were to increase, this would be a threat to the company. 6. Credit Card Rates:- Credit card companies can charge any rate they like per transaction. If the credit card company was to increase the rate per transaction this would pose a threat to the company and would lower the profit margins. 7. Price Wars:- Pizza Hut has to deal with the prices of their competitors who may charge a lower price and better quality product. 8. Changing Consumer Tastes:- Consumers are demanding healthier options from fast food chains. 9. National Economic Instability:- People visit restaurants less often and spend less money, during adverse economic times, especially when cheaper alternatives are available, such
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as cooking their own meals. Instability increases the risk of losing one's job, which leads to higher saving rates and less spending on more expensive dinning options.

U.S. Pizza

1.Good brand name and high brand loyalty 2.High quality Ingredients 3.Strong employee training program Strength 4. Efficient restaurant layout 1. Limited menu items. 2.Franchise management Weakness 3. Limited number of stores 1.New menu items 2.Venture more into home delivery 3.Venture into newer markets Opportunity 4.Create more brand awareness 1. U.S. PIZZA competition offers many varying menu items where as U.S. PIZZA only offers a select offering of pizza, appetizers, and drinks. Threats 2.Health conscious people

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Dominos
Strengths
y Leading pizza delivery company in the US with more than 5,000 stores in the US y Global franchise operations - more than 3,500 in over 50 countries y Strong brand equity supported by heavy advertising & marketing campaigns y Supply chain & distribution network y y

Weaknesses
Slow growing and declining samestore sales Weakening bottom line

Threats Opportunities
y y Growing presence in emerging markets, particularly in India, China y Leverage supply chain & distribution system to introduce new products y y Changing consumer habits towards healthier food choices Franchise operations affected by currency exchange fluctuations Intensive competition from a fragmented number of small competitors

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MCKINSEY 7S
As the name suggests, 7 S refers to the 7 major aspects which are needed for a companys success.

y "Hard" elements are easier to define or identify and management can directly influence them. These are strategy statements, organization charts and reporting lines, and formal processes and IT systems. y "Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful.

Classification of the elements

Hard Elements ` Soft Elements

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Strategy Structure Systems

Shared values Skills Style Staff

YUM! Brands

Strategy:
Yum! Brands key strategies are stated as follows:

y y y y

Drive aggressive international expansion and build strong brands everywhere. Build leading brands across China in every significant category. Dramatically improve U.S. brand positions, consistency and returns. Drive industry leading, long-term shareholder and franchisee value.

Structure:
Structure involves the proper chain of command and communication in the organization. There should be a proper chain where people defined their roles, responsibilities and duties. At Yum! Brands the roles are clearly defined. Each employee knows what he/she should do. This is what contributes to the success of the organization despite being dynamic in its innovations and adjusting to the varied environment that exists globally, it always has strict long organizational hierarchy that is characterized by well-defined chain of command and roles.

Systems:
Yum! Brands practice the style of management. In this style of management employees can provide more feedback and improve the services Yum! provides. The top level issues the orders while the lower levels implement the orders given. This makes the organization work more efficiently and smoothly.

Shared Values:
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Yum Brands is committed to continuing the success realized during its first ten years. Their success has only just begun as they look forward to the future. Yum is building a vibrant global business by focusing on key growth strategies and strong company ethics. The core values of Yum! Brands is what defines it, These values are made them rise to the top and become what it is today. Values like these were made in the inception of the company and have directed the company. They helped in deciding on how to use the resources given to them.

Style
Each company has a different culture. Similarly, at Yum! Brands there is culture. A culture that is oriented towards clan culture. A culture, which forges people together to work in teams and achieve goals of the organization.

Staff
Staffs are motivated to do work. They motivate them. This makes an employee more dedicated towards the organization. Skills The skills lie not only in the managements product, but also in its Customer relations, management style and catering to the needs of the different demography.

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Dominos
Structure
The Leadership Team - Responsible for strategic decision-making. Marketing - Understanding customers' needs and publicising the Domino's brand. Developing new products and use of technology. Food Service - Manufacturing fresh pizza dough and sourcing fresh ingredients. Buying in or inventing equipment. Information Technology - Technology and e-commerce activities. Property - Acquires store premises, oversees planning permission applications and refurbishes stores. Flawless Execution - Not a form of capital punishment! Actually, Domino's training and operations, including career development and store check activities. Finance - Organises finance for franchisees, as well as overseeing cashflow, budget planning, sales and purchase ledgers, payroll, accounts and credit services.

System
The company had introduced the online ordering system last year as a pilot project in Bangalore. At present, online sales contribute around 4 per cent of its total business. Last fiscal, the firm had a turnover of Rs 678 crore. "E-commerce is a growing business. In India, the penetration of internet is very low. However, in developed countries around 20-30 per cent of sales comes online. Though it is difficult to say when such can achieve in India, we expect a huge double growth in the few years," he said.

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Under the online system, customers can order pizzas online by way of cash on delivery or credit card, debit card, net banking or mobile cash card. This platform is integrated with social media like Facebook

Style
Dominos pizza change their style according to the place they are in. There are some thing which dont change at all. Eg peproni pizza. Thats something you will find no matter which country you go to. But there are some thing which do. Eg. They introduced a chicken tikka flavour pizza. In india their style is kinda Indian. The flavours and they have offers during festivals. In india they have the modern American approach to that they add a little Indian approach the give a more at home feeling.

Skill
They have good skills of adapting with the country they are in. Eg. In india they serve Indian flavours. They have that skill of giving something where they take their products and mix it with the culture of the country they are in and satisfy their customers.

Staff
Founded in 1960, Dominos Pizza is the recognized world leader in pizza delivery. Today, Dominos Pizza has 500 company-owned stores in the United States and over 8,000 franchise-owned stores in more than 60 different countries. The Dominos Pizza brand had global retail sales of over $5.4 billion in 2007, comprised of $3.2 billion domestically and $2.2 billion internationally. Headquartered in Ann Arbor, Michigan, Dominos Pizza employs more than 10,000 employees; 9,000 of whom are hourly-based employees. The Dominos Pizza vision, to be the best pizza delivery company in the world, relies on employing a staff of exceptional people. Given that the turnover rate for 96

hourly employees is typically in excess of 50% across any retailer, the challenge to attract and retain exceptional staff for Dominos was significant.

Strategy
The company has a 20% share of the UK pizza delivery and takeaway market. This market was estimated to be worth nearly 450 million in 2000. At present, 20 percent of all pizzas consumed are delivered. This figure is expected to increase to 40 percent. Home delivery now makes up 70% of the total take-away and home delivered food sector, up from 62% in 1997. The Future Foundations report (see 'The Business' section of this case study) estimates that the UK's home delivery pizza market will more than double by 2010 to approximately 800 million. Domino's believe that their business model and brand strength place them well to exploit this growth. Fast growth in franchised stores is planned, coupled with more aggressive marketing including terrestrial TV advertising and local store initiatives

Shared Values

y y y y y y y

Treat people as youd like to be treated. Produce the best for less. Measure, manage and share whats important. Think big and grow. Incentivise what you want to change. Set the bar high, train, never stop learning. Promote from within.

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U.S. PIZZA
Strategy
Franchising is at the core of our expansion strategy. At U.S.Pizza, we have been engaging with franchising partners through proprietary models that are based on our experience over the past years. These models are of the highest international standards of franchising. Operator Franchisee Through this model you could own and operate your own U.S.Pizza outlet, which could be one or more in number. Master Franchisee . In this franchisee model, you have a territorial right to the franchisee, generally covering a state, where you can own a number of outlets in the particular territory and can even subfranchise these outlets. These outlets in turn can be operated by professional outlet managers or by sub franchisees. As a master franchisee, you will have to work closely with the corporate team to provide operational support to these outlets and share the franchising revenue earned through your territory. This is an investment intensive model, where you will have to build and maintain infrastructure to manage the outlets in your territory. Joint Venture . If you have property and financial resources, you could partner with us to open and operate outlets. In this model both, you and U.S.Pizza bring equal value to the deal and share the rewards proportionately. Employeepreneurship . If you are an employee or have been an employee with us, and have shown exceptional performance, you could opt for this model, and become a U.S.Pizza franchisee partner.

Systems
Legal agreements are a necessary evil to ensure that there is a meeting of the minds as to exactly what the parties agree to when they enter into a relationship such as that of employer and employee. 98

As the employer, it is appropriate for you to establish standard terms and conditions under which you are willing to employ your workers. The agreement should specify the term, termination, duties, responsibilities and compensation. At Peoples Income Tax, we incorporate our policies and procedures manual into the agreement by reference and provide each employee with a copy, for which they sign a receipt. We also attach detailed job description to the agreement as an exhibit. Confidentiality and non-solicitation provisions are essential. A non-compete provision is often used; but to be enforceable, it must be reasonable in scope, distance and duration. Other standard legal provisions must also be included. Sample employment agreements are included in Peoples' P&P manual. Make sure each employee you hire fully understands the terms of the agreement, including the restrictive covenants that survive termination of employment. If employees understand up-front exactly what is expected of them and you make it clear that the clients and customers belong to the company, they are less likely to shirk their responsibilities or try to steal your clients if they leave. For legal advice, be sure to consult with a qualified attorney who is familiar with the laws in your state and locality

Structure
This company profile is a premium company information product offering an unmatched depth and breadth of content. It analyzes the strategic positioning of the company - how the company has evolved and how it has been performing over the years. Sectional Highlights - Structure of the organization, partnerships, mergers & acquisitions and recent developments have been examinedBusiness segments of the company have been explored along with analysis of key products and services - SWOT Analysis highlights the weaknesses of the company and the threats to which it is exposed; the strengths of the company and the way the company has positioned itself to take advantage of the opportunities - Business and marketing strategies boosting earnings, brand value and competitive edge have been discussed - Key financial indicators have been analyzed Competitive positioning of the company has been evaluated in terms of sales, profitability and stock performance, as compared to its competitors.

Style
All dedicated to the focus of u.s. pizza of providing great-tasting pizza delivered directly to your door or available for carryout. They pioneered the pizza delivery business, and their total system sells 99

more than million of pizzas worldwide every year . That first store grossed only about $1,000 per week, but eight other U.S. Pizza Company locations have opened since. In addition to the chain of U.S. Pizza Companies, in 1981, Judy opened Hillcrest Liquor Store on Kavanaugh Boulevard in Little Rock.Various former employees over 33 years have opened their own places and U.S. Pizza clones have sprung up in eastern Arkansas and Tennessee. Waller now operates 8 pizza outlets .The company has pioneered the freshly baked pizza and home delivery in India. In 1994 the founder and chairman of U S Pizza brought the brand to Bangalore at Manipal center. In 1998 we started expanding by franchising which took us to 34 cities and 12 states. In 2008 we took a quantum leap by tuning our infrastructure to Franchising by starting a call center, Training academy and ERP to service our 77 odd stores.

Shared values
U.S. Pizza Co. Conway is always trying to find new ways to show appreciation to their customers. Whether it be the rewards points for valued customers or a fun game of rock, paper, scissor.

Skills
U.S. pizza pride themselves in offering customers the very best pizza, salads and sandwiches, and they value customers patronage. y y y y y y y y y y Excellent numerical and reasoning abilities Ability to think strategically Ability to work in a fast paced environment Strong customer service and verbal communication skills Good interpersonal and organizational skills Efficient client oriented services Excellent correspondence skills Careful attention of assigned duties Ability to meet strict deadlines Adaptable to environments 100

Good telephone skills

Staff
As of December 26, 2010, u.s. pizza employed approximately 5000 persons, of whom approximately 4200 were restaurant team members, approximately 230 were restaurant management personnel, approximately 600 were corporate personnel and approximately 700 were QC Center and our whollyowned print and promotions subsidiary, Preferred Marketing Solutions, Inc. (Preferred) personnel. Most restaurant team members work part-time and are paid on an hourly basis. None of their team members is covered by a collective bargaining agreement. U.S. pizza consider their team member relations to be excellent.

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Conclusion
The Industry Review Project was based on the thorough knowledge of the telecommunication industry of the two companies viz. Yum! Brands, Dominos and U.S. Pizza. While doing our review on companies of Fast Food Industry we came to know certain important key facts of these companies. We got in depth knowledge about the industries, in particular the Fast Food Sector and their Global strategies. The market share, growth, competitors, the turnover Government Regulations were analyzed. The Strength Weakness Opportunities and Threats of all the two companies are clearly given above. At last the Survival of these companies in tough competition was analyzed.

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