Struggling Pizza Hut to Get New Campaign

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CHICAGO (AdAge.com) -- Yum Brands said it plans to boost ad spending for its largest fast-food chains and will rework marketing for its Pizza Hut and KFC brands as it outlined a bullish forecast for 2003.

Buoyed by its international expansion, "multi-branding" efforts and a comeback by Taco Bell, Yum Brands, the parent of chains KFC, Pizza Hut, Long John Silver's and A&W, said it was committed to an annual 10% earnings-per-share target "for 2003 and beyond."

Revenues up 12%
Louisville, Ky.-based Yum Brands reported fourth-quarter earnings of 56 cents per share, up 4% over the prior quarter and a penny higher than analysts' expectations, on lower taxes and higher than expected repurchased shares. Revenue for the quarter rose 12% to $2.4 billion. For the full year, Yum reported earnings per share of $1.88, up 16%, on $7.6 billion in revenue. Taco Bell drove same-store sales, ending the year up 7%, while KFC and Pizza Hut were flat.

Long-suffering Pizza Hut continued

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to be a sore spot for Yum Brands, as the pizza chain's category-wide sales remain flat and competitors nibble at its share. To reverse that trend, Yum Brands said the chain will get a 4% boost to its marketing budget to $300 million and a fresh ad campaign in the second quarter. Executives wouldn't give specifics, but said new work will play up the pervasiveness of the brand, as well as value. Omnicom Group's BBDO worldwide, New York, handles advertising for Taco Bell.

'Fast-food alternative'
KFC also will see a boost in marketing dollars, in addition to menu tweaks and service overhauls. The chicken chain's ad budget will rise 3% to $200 million, but will focus on improving its "fast-food alternative" position with family-style meals, plated meals, on-the-go foods and "non-fried" foods to provide "meaningful variety," the company said.

Despite earlier attempts to sell roasted whole birds that mired operations and ultimately failed, Yum Brands Chairman-CEO David Novak said consumers told the chain that "[non-fried foods] is an area where we can provide meaningful variety."

"We want to bring forward a product line that makes KFC even more contemporary, reinforces the complete-meal notion in an operating format that won't slow us down," Mr. Novak said. "We're confident we're working on something that will really make a difference." BBDO also handles advertising for KFC.

The company also will begin testing a value program for KFC, but not a "99-cent menu," Mr. Novak told analysts in a conference call. "We mean sustained value, not a short-term hit." Another goal for KFC is to improve late-night sales and combo trade-ups.

Good year for Taco Bell
"Taco Bell is on a path for a good year," Mr. Novak said, adding that the chain is positively overlapping strong 2002 sales. Aimed at loyal and new customers, marketing spending will grow 3% to $200 million. While Taco Bell's "bold choice" position (anchored by the "Think Outside the Bun" tagline) will continue to drive the marketing calendar, executives vowed to get "better and better at late night and Hispanic" efforts.

Interpublic Group of Cos.' Foote, Cone & Belding Worldwide, San Francisco, has the account for Taco Bell. Dieste & Harmel Partners, Dallas, handles Hispanic marketing for Taco Bell and Pizza Hut.

Yum plans to add 400 combo units, in which two or more brands are housed in the same site, and will begin testing the so-called "multibranded" units overseas.

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