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RBD delivers pizza and coffee growth

By Phil Boeyen, ShareChat Business News Editor

Tuesday 12th December 2000

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Fast food company Restaurant Brands (NZSE: RBD) is beginning to see the results of its diversification strategy show up in sales figures with 30% of total sales now coming from outside its dominant KFC chain.

In the latest quarter the company says Pizza Hut sales totalled $15.2 million, rising 58% on last year, and Starbucks sales were up 89% to $3 million.

Overall company sales increased by 13% to $60.7 in the latest quarter, which was the eighth consecutive quarter of sales growth.

Total KFC sales were $42.5 million, similar to the same period last year, while same store sales were down by 1.1%. However chief executive Jim Collier says KFC faced a difficult task as sales were very strong in the fourth quarter last year, particularly during November.

Mr Collier says the latest figures show the company is making strong progress implementing its strategy to diversify its revenue base, and that the prime focus in the latest quarter was the integration of Eagle Boys outlets into Pizza Hut.

"The company made a deliberate decision to achieve this as quickly as possible to minimise the disruption that many companies experience following a takeover."

He says the aggressive conversion programme had seen Pizza Hut transformed into a brand with 60 delcos and 22 restaurants. Previously, it had 43 outlets, 32 restaurants and 11 delcos.

"As expected, sales and margins suffered during the transition period. However, since the conversions were completed, sales and margins have improved steadily with acceptable performance at year end."

Mr Collier says because of the changes store sales comparisons for Pizza Hut were not meaningful so would not be calculated until the next comparative period.

Pizza Hut has finished a successful test of its beer and wine delivery service in Auckland, and is planning to roll it out nationwide next year. It is also testing delivery of a wider range of products including energy drinks, ice-creams, snacks and confectionery, with early results showing strong success.

Restaurant Brands says Starbucks expansion has been temporarily constrained as the company focused on the Eagle Boys integration, but the programme will be accelerated next year with at least ten new stores to be opened.

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