In tougher times, it seems we turn to fast food outlets for sustenance. The recession, admittedly along with some other more constructive strategies and actions, proved something of god send for Restaurant Brands.
To be fair, in naming Restaurant Brands the recipient of the Top 200 Marsh Most Improved Performance Award for 2010, the judges pointed out that two or three years of product innovation, brand repositioning and infrastructural cost-cutting were the key ingredients in the company’s recipe for success.
The strategic plays and economic conditions combo proved winner. Profit after tax climbed 137 percent on very modest three percent lift in revenues. The profitability increase was driven mainly by KFC’s enhanced performance. This was result of the chain’s brand transformation involving new products and store refurbishments which grew both sales and margins. The brand also cut its operational costs and benefited from volume growth, despite substantial increases in chicken prices and labour costs.
The Pizza Hut business continued to be challenging but with leveraging through sales growth, closing unprofitable stores and improved cost and management controls, it contributed to the group’s performance. However, Starbucks served up flat and very trim helping. The group’s chief executive, Russell Creedy, said recently that it would, “be quite interested in selling [Starbucks] as going concern and reinvesting that back into KFC”.
This year’s improved performance is, said the judges, payback for the considerable effort the company has made to smarten its marketing act, to refurbish its outlets, to cut operational costs and increase efficiencies and to gain market share.
The company has demonstrated its resilience in difficult economic times and the directors expect another strong profit performance in the current year. After tax profit for the first half of the current year is up an impressive 50.3 percent on the prior year, with all three brands contributing to this.
Judges Comments:
Winner
Restaurant Brands Group
Product innovation, brand repositioning, infrastructural cost-cutting and recessionary marketplace that favours the sale of fast foods contributed to very strong performance by Restaurant Brands in 2010. The company has been transforming its fast food chains for the past three years and worked itself into an ideal position to capitalise on the economic downturn.
The Group is now earning payback on its repositioning investment and product innovation strategies.
Finalist
Briscoe Group
Briscoe Group slashed the sale prices of its retail offerings and its operating costs in 2010. It also undertook some long overdue internal restructuring and organisational changes. The result was an impressive 80 percent improvement in its bottom line profit. Despite the realities of competitive and challenging retail marketplace, Briscoe made the most of things by promoting its strong brands, sharpening prices and improving its corporate structure.
The group also enhanced its performance by changing its employee and management remuneration philosophy to store profit centre structure. Investment in new technology has also enhanced the ability to control inventories and refine product ranges. great result in tough marketplace.
Finalist
Meridian Energy
Meridian Energy switched on high voltage performance in 2010. Its after tax profit climbed 106 percent to $184 million. Revenue climbed eight percent to $2.06 billion. Higher than average rainfalls over the past couple of years delivered ideal energy generation opportunities and the company made the most of its good fortune. It implemented sound organisational changes that resulted from comprehensive “fit-for-purpose” operational review.
It also recharged its commercial focus through new performance management framework, more disciplined capital allocation and better and more integrated decision making across its retail and wholesale businesses.
