RBD
26/06/2014 14:22
ADDRESS
REL: 1422 HRS Restaurant Brands New Zealand Limited
ADDRESS: RBD: Chief Executive's Address
Chief Executive's Address
Annual Shareholders' Meeting
26 June 2014
Thank you Ted
As you have heard this year has been a good one for the company. I will give
you a brief run down by brand on our performance and then provide some
insights into our capabilities and strategic direction.
Virtually all brands delivered an increase in total sales on prior year, up
5.6% in total. KFC was up $4.5 million to $241.5 million and Carl's Jr (on
the back of new store roll outs) saw sales reach $14.3 million. Pizza Hut
sales increased to $48.4 million despite having six less stores and Starbucks
total sales were flat at $25.0 million.
Total brand EBITDA was up 3.9% to $53.5 million with a slightly softer
performance from KFC ($44.5 million) more than offset by another sterling
year for Pizza Hut - up 44.8% to $5.5 million and Starbucks Coffee up 19.4%
to $3.5 million. Carl's Jr returned from an EBITDA loss to breakeven for the
year.
Total store numbers were flat to prior year at 176 with the sale of six Pizza
Hut stores offset by new Carl's Jr store builds.
I'd now like to focus on the future and where Restaurant Brands is going in
terms of our broader strategic direction.
Our mission is to be the "Best Cost Provider of Franchise Food Systems". In
order to achieve this we need to be a best-in-class employer, investment
partner and community partner. Delivering on these outcomes will position the
business to where franchise system food brand owners want Restaurant Brands
to represent and operate their brand in New Zealand.
We already have evidence of progress towards this outcome with a number of
food brand owners already coming to Restaurant Brands as their first "port of
call" when seeking to develop their brand presence in this country and we are
frequently presented with franchise options that require evaluation.
As you can see from the slide, our brands occupy a number of strong positions
in the competitor set; there are however opportunities for growth with
several food segments not yet part of the Restaurant Brands portfolio.
We have been progressively building a "one system" approach to the management
and development of our brand portfolio.
We operate across all our stores many common functions such as Food Safety,
Supply Chain, Information Systems, Human Resources, Health and Safety and
Loss Prevention all to the same high standards. Other areas such as digital
platforms for communicating and interacting with our customers, leveraging
advertising spend and customer relationship management also see these
consistent standards of management across all brands.
Building a Best Cost Franchise Food Systems business requires investment in a
solid foundation. The biggest challenge for growth is attraction and
retention of suitable staff to work in the fast food environment. Our
centralised recruitment centre has improved the employment processes and
reduced employment risk significantly, but ensuring enough suitable
candidates are entering the workforce in our sector is an ongoing task. We
have recently run a series of career expos around the country and a
Restaurant Brands 'Just the Job' TV programme series (featuring employment in
each brand) has just featured on TV2. A DVD of the full series was playing as
you came into the meeting.
As human connectivity and availability of information continues to grow at an
exponential rate, we are increasingly aware of how vital technology is to the
future of our business and therefore we will continue to invest in multiple
technology areas. Connecting with customers on their terms is vital for
building a sustainable business.
The KFC Facebook page is now the second largest page in this country (just
behind Air New Zealand) with more than double the average customer
interactions of any of its competitors. Over the past three years Restaurant
Brands has built an entire team engaged in working online with our customers
across several social media platforms. Further investment is required in
upgrading websites and introducing new mobile technologies such as remote
ordering, loyalty applications and CRM programmes, which are ideally suited
for the fast food category.
KFC and Carl's Jr. have moved to new digital menu technology in stores
providing us with "real time" ability to update menu offerings in response to
different day parts and customer needs.
As part of the ongoing training and development of our staff we have
introduced "e-learning" across our KFC and Pizza Hut brands. This function
enables us to provide interactive online training for all our store staff
with centralised tracking of their learning progress.
Our loss prevention systems are also advanced, linking sophisticated
exception tracking software to closed circuit TV cameras, vastly reducing
opportunity for fraud and theft and making our stores much safer places for
customers and staff alike.
Restaurant Brands has, as you will have read in the annual report, a series
of core competencies not only in the running of our stores, but also in the
above-store and back of house support that is vital to keep the brands
operating.
This encompasses store design and development capability - further building
on the immensely successful new KFC design, but also a bold new look for the
Carl's Jr stores and further refinements in our other brands. We pride
ourselves in taking the essence of a brand's store design and making it work
locally.
New product development is another strength we continue to build on. Again we
take the best of what our franchisors have to offer in terms of new products
worldwide and, where required, modify them to the New Zealand palate. We also
develop a number of our products in-house with great success.
After a number of years of contracting out our supply chain functions we have
this year decided to bring it back in house. As a fundamental part of our
business model we determined it was appropriate to retake control of the
warehousing and distribution of our raw ingredients to our stores. This
initiative is expected to deliver more efficiencies in sourcing and
delivering this product.
As you can see from the annual report we have now started formally reporting
to our shareholders on how we are striving towards better environment and
community outcomes.
Our community involvement sees our continued support of Surf Lifesaving New
Zealand, with both donations and in-store fundraising. Other worthwhile
causes we regularly support include: World Hunger Relief and the NZ
Gynaecological Cancer Foundation. We were instrumental in raising over
$240,000 for these causes last year.
We also take our responsibilities to our staff seriously. As part of being a
best in class employer we recognise that the safety of our staff and
customers is paramount. All employees are required to undergo safety training
and demonstrate ongoing competency. We have been for a number of years
accredited at the Tertiary Level for the ACC Accredited Employers programme.
Diversity is important to us and we recognise the benefits that diversity can
bring to an organisation. From a gender diversity viewpoint I am pleased to
say 52% of our employees and 40% of our senior management are female.
Food is our business and we are passionate about constantly improving the
quality and nature of our product offerings. Food safety is paramount in our
stores and we have extensive quality control systems for our food at all
stages of the supply chain and preparation process.
We are also not immune to the challenges of the obesity issue in New Zealand.
We encourage our customers to enjoy our food in moderation, but more
importantly we are making big strides towards improving the inherent
nutritional composition of our products.
Three years ago we shifted from using palm oil to 100% canola and sunflower
oil. We are actively reducing the amount of sodium across the menu wherever
possible and reducing the amount of sugar content in ingredients.
All these initiatives will go some way towards bringing a healthier product
offering to our loyal customers. We are also transparent about the
nutritional content of our products, making detailed nutritional information
available in stores and on our websites.
We also remain conscious of our environmental responsibilities and the
conservation of our resources. To that end we recycle up to 80% of our
packaging and all the oil from our stores and are working on eliminating all
plastic bags from our businesses.
Energy conservation makes economic as well as environmental sense and we make
effective use of energy management systems including peak load reduction, use
of sensors for exterior lighting and a progressive move to gas hot water
heating. Our stores also increasingly show more energy efficient building
design features such as double glazing, insulation and energy efficient air
conditioning systems.
In conclusion I want to assure shareholders that Restaurant Brands is a
business going from strength to strength. We have the core competencies, the
financial muscle and scale to capitalise on any opportunities that do arise
as we continue to roll out our strategies to add more value to our existing
brands.
End CA:00252091 For:RBD Type:ADDRESS Time:2014-06-26 14:22:39
