CORPORATE STATEMENT - QSR Brands Bhd.
CORPORATE STATEMENT - QSR Brands Bhd.
CORPORATE STATEMENT - QSR Brands Bhd.
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<strong>CORPORATE</strong><br />
<strong>STATEMENT</strong><br />
FELLOW SHAREHOLDERS,<br />
AT THE CORE OF OUR BUSINESS LIES ONE TRUE NOTION – CREATING A GREAT CUSTOMER<br />
EXPERIENCE. ALL OUR UNIFIED EFFORTS, FROM THE PROVISION OF QUALITY PRODUCT OFFERINGS,<br />
RESTAURANT NETWORK EXPANSION, OPERATIONAL PROCESS ENHANCEMENTS RIGHT UP TO COST<br />
EFFECTIVE MEASURES, STRONG GOVERNANCE, AND A ROBUST <strong>CORPORATE</strong> CULTURE CREATE<br />
BETTER VALUE FOR ALL OUR STAKEHOLDERS. BY UNDERSTANDING THAT THIS ONE NOTION IS<br />
THE KEY, WE GROW IN LEAPS AND BOUNDS IN EVERY WAY. OUR FINANCIAL PERFORMANCE FOR<br />
FINANCIAL YEAR 2008 WAS ASTOUNDING AND CONTINUES TO DO US PROUD.<br />
AT THE SAME TIME AT THE <strong>CORPORATE</strong> LEVEL WE CONSISTENTLY ENSURE THAT WE DO<br />
NOT LOSE SIGHT OF STRATEGIC POSITIONING FOR OUR LONG TERM BUSINESS INTERESTS.<br />
WE ALSO CONTINUE TO BE MORE SOCIALLY INVOLVED, ESTABLISHING OUR FOOTHOLD AS<br />
A TRULY SUSTAINABLE GROUP THAT CARES AND SHARES.<br />
from left to right:<br />
JAMALUDIN BIN MD ALI<br />
Managing Director<br />
TAN SRI DATO’ MUHAMMAD ALI<br />
BIN HASHIM<br />
Chairman<br />
AHAMAD BIN MOHAMAD<br />
Deputy Chairman<br />
<strong>QSR</strong> BRANDS BHD ANNUAL REPORT 2008<br />
014
On behalf of the Board of Directors, it<br />
is our deepest pleasure to present to you<br />
the Corporate Statement of <strong>QSR</strong> <strong>Brands</strong><br />
<strong>Bhd</strong> (‘<strong>QSR</strong>’) for the financial year ended<br />
31 December 2008.<br />
2008 ECONOMIC OVERVIEW<br />
The year was a mixture of sorts in terms<br />
of economic growth. Starting the year at<br />
a steady pace, the global crisis that hit the<br />
masses created a more cautionary market<br />
from the third quarter of the year onwards.<br />
2008 began positively, buoyed by domestic<br />
sales prospects and a steady local economy,<br />
in spite of market volatility from the US<br />
subprime mortgage crisis.<br />
In Malaysia, there was a notable<br />
reduction in consumption and business<br />
profits due to the impact of higher food<br />
and oil prices. The country was also faced<br />
with political uncertainties, interest rate<br />
adjustments, exchange rate fluctuations<br />
and surging commodity prices. As a result<br />
of the continued decline in merchandise<br />
exports circa November 2008, the nation<br />
only achieved GDP growth of 4.6%, much<br />
lower than the 6.3% growth recorded<br />
in 2007.<br />
Southside, our normally flourishing<br />
neighbour Singapore, only managed<br />
to register a growth of 1.1% over 2007,<br />
mainly impacted by the negative growth<br />
of 4.2% in the last quarter of 2008 .<br />
The global economy slowdown has<br />
affected Singapore exports, resulting<br />
in poorer sales for many sectors in the<br />
country. Though inflation has eased<br />
somewhat from its alarming peak of 7.5%<br />
registered in the second quarter, there<br />
was still a decline in the retail market as<br />
consumers became more cautious with<br />
their spending. Unemployment rates and<br />
news of job losses in various organisations<br />
continued to trigger fears over job security.<br />
A RESULT DRIVEN 2008<br />
As we mentioned earlier, 2008 was<br />
an astounding year for us. <strong>QSR</strong> continued<br />
to record amazing profits year in, year<br />
out. The Group recorded a revenue<br />
growth of 14.2% to RM532.8 million<br />
from RM466.4million in 2007. Profit before<br />
tax – including our share of the profits<br />
of our associate company, KFC Holdings<br />
(Malaysia) <strong>Bhd</strong> (KFCH) – increased<br />
substantially by 21.8% to RM97.7 million<br />
as compared to RM80.2 million in 2007.<br />
As a result of such high performing profits,<br />
<strong>QSR</strong>’s earnings per share rose from 27.31<br />
sen as at 31 December 2007 to 30.88 sen<br />
as at 31 December 2008.<br />
Revenue from Pizza Hut Malaysia<br />
restaurants accounted for approximately<br />
66.0% of the total revenue (excluding<br />
the contribution from KFCH), Pizza Hut<br />
Singapore (including Multibrands)<br />
contributed 33.1%, whilst KFC Cambodia<br />
made up the balance of 0.9%.<br />
Financial highlights included:<br />
A 16.8% growth in revenue by<br />
Pizza Hut Malaysia to RM351.7<br />
million from RM301.0 million in 2007<br />
An increase of 8.5% in Same Store<br />
Sales by Pizza Hut Malaysia<br />
A revenue growth of 6.5% by<br />
Pizza Hut Singapore to RM176.2<br />
million from RM165.4 million in 2007<br />
A 22.8% increase in the share<br />
of KFCH Group’s profit after tax to<br />
RM57.1million from RM46.5 million<br />
in 2007<br />
An impressive increase of 14.8% in<br />
Same Store Sales by KFC Malaysia<br />
STRATEGIC INITIATIVES<br />
Strategic innovation continued to<br />
differentiate our performance from<br />
our industry peers. Our focus on quality<br />
delivery at all times, allowed us to plan<br />
and strategise the best possible solutions<br />
to carry the Group forward.<br />
Our strategic initiatives for the year included:<br />
The continued expansion of the<br />
Pizza Hut network, with 19 new<br />
outlets being opened in Malaysia<br />
and nine in Singapore<br />
Reimaging of various Pizza Hut and<br />
KFC stores for better ambience overall<br />
Pizza Hut Malaysia’s continuation<br />
of the hugely successful Sensasi<br />
Delight combo value meals promotion<br />
and a number of other exciting products<br />
<strong>QSR</strong> BRANDS BHD ANNUAL REPORT 2008<br />
015
Introduction of Online Ordering<br />
System to improve the performance<br />
of Pizza Hut delivery business<br />
Strong expansion of the KFC network,<br />
with 37 new stores in Malaysia,<br />
eight in Singapore and one in Brunei<br />
Successful product launches<br />
in KFC Malaysia and Brunei that<br />
included our crowd pleaser, Colonel<br />
Chicken Rice, which coincided with<br />
our 35th anniversary celebrations<br />
The introduction of the KFC<br />
breakfast menu to target the morning<br />
crowds and 24-hour operating hours<br />
extension at 139 KFC restaurant.<br />
The increase in RasaMas stores<br />
with 15 new openings, bringing the<br />
total to 36 and an addition of five<br />
Kedai Ayamas stores bringing the<br />
total to 27 stores to date<br />
New Primary Processing Plant<br />
in Bandar Tenggara, Johor, now fully<br />
operational since December 2008<br />
Strong sales by KFC Marketing<br />
Sdn <strong>Bhd</strong> of Ayamas further<br />
processed products locally<br />
and in the export market<br />
The beginning of our foray<br />
into Cambodia, beginning with<br />
the opening of KFC Asia Hotel,<br />
followed by another KFC restaurant<br />
in Phnom Penh<br />
<strong>QSR</strong> BRANDS BHD ANNUAL REPORT 2008<br />
016<br />
Dividends<br />
Worthwhile returns for the benefit of<br />
our investors remain a mainstay of <strong>QSR</strong>’s<br />
corporate philosophy. For 2008, the Board<br />
of Directors recommended a total dividend<br />
of 11 sen per share (comprising an interim<br />
dividend of 4 sen and a final dividend<br />
of 7 sen).<br />
The recommended total dividend is<br />
after taking into account the rights issue<br />
(mentioned below) which enlarged <strong>QSR</strong>’s<br />
share capital by 40,911,847 rights shares,<br />
from 245,471,082 to 286,382,929 shares.<br />
The total dividend for 2007 stood at 9 sen<br />
per share.<br />
STRENGTHENING OUR BUSINESS<br />
Enhancing shareholder value has always<br />
been at the heart of <strong>QSR</strong>. In that aspect,<br />
our Strategic Plan 2008-2012 laid great<br />
emphasis on what needs to be done<br />
to forge our success story forward.<br />
During the year, <strong>QSR</strong> continued to<br />
increase its interest in KFCH by acquiring<br />
shares in the open market. As of 2 January<br />
2009, <strong>QSR</strong> acquired an additional 865,300<br />
ordinary KFCH shares, increasing its total<br />
holding in KFCH to 50.25%. Subsequently,<br />
KFCH became a subsidiary of <strong>QSR</strong>.<br />
This important milestone is crucial towards<br />
streamlining of business activities and<br />
most important towards long term<br />
management stability and ensuring a<br />
steady income contribution to <strong>QSR</strong>.<br />
Our foray into Cambodia has been a<br />
gradual rise upwards. On 29 February<br />
2008, the venture was formalised by the<br />
signing of the Joint Venture Agreement<br />
with two partners: Royal Group of<br />
Companies Ltd and Rightlink Corporation<br />
Limited Hong Kong, with <strong>QSR</strong> having a<br />
55% stake in the joint venture company.<br />
The first KFC outlet in Cambodia opened<br />
on 2 March 2008 and has been well<br />
received by Cambodian customers.<br />
Upon obtaining approval to operate KFC<br />
restaurants in Cambodia from Yum! during<br />
the third quarter of last year, we started<br />
our upward spiral and to date we have<br />
four KFC restaurants in Cambodia – three<br />
in Phnom Penh and one in Siem Reap.<br />
Due to our commitment to building<br />
the KFC brand in Cambodia, Yum! <strong>Brands</strong><br />
Inc (Yum!) has given us the approval to<br />
also operate Pizza Hut restaurants in the<br />
country. The first Pizza Hut restaurant<br />
there is expected to be completed in<br />
mid 2009.<br />
In addition, we have completed our<br />
capital restructuring through the carrying<br />
out of the renounceable rights issuance<br />
exercise. The renounceable rights issues<br />
undertaken were of 40,911,847 new<br />
ordinary shares of RM1 each with free<br />
detachable warrants on the basis of one<br />
Rights Share and one Warrant for every<br />
six existing ordinary shares.
With over 200 Pizza Hut restaurants<br />
in Malaysia and Singapore, Pizza Hut<br />
is the most popular pizzeria on either<br />
side of the Causeway!
KFC, with over 500 restaurants<br />
in Malaysia, Singapore, Brunei and<br />
Cambodia, is the region’s #1 Western<br />
quick service restaurant chain.
<strong>QSR</strong>’s paid-up share capital as at<br />
end of last year has increased from<br />
RM245,471,082 to RM286,382,929<br />
following the issuance of 40,911,847 new<br />
ordinary shares at RM1.00 each coupled<br />
with 40,911,847 new free detachable<br />
warrants. This was on the basis of one<br />
rights share together with one free<br />
warrant for every six existing ordinary<br />
shares of RM1.00 each held.<br />
The number of warrants outstanding as<br />
at 31 December 2008 was 40,911,847.<br />
The warrants, which will expire on 5<br />
March 2013 provide an incentive to the<br />
shareholders to subscribe to the Rights<br />
Shares and allow them to benefit from the<br />
future growth of the Group. At the same<br />
time it will also raise further proceeds<br />
for <strong>QSR</strong> when they are exercised.<br />
The rights issue which was approved by<br />
the Securities Commission, Bank Negara<br />
Malaysia, Bursa Malaysia Securities<br />
Berhad and the <strong>QSR</strong> shareholders,<br />
was completed on 10 March 2008.<br />
ENERGISING PERFORMANCE<br />
<strong>QSR</strong>’s work culture is one that is<br />
fervently driven by performance.<br />
Our Key Performance Indicators<br />
(KPIs) support our performance culture.<br />
The KPIs are used to measure corporate<br />
achievement and also form the basis<br />
for rewarding and promoting our<br />
valued people.<br />
Pedoman is one of our most powerful<br />
cultural bonding and performance building<br />
tools. It is conducted annually throughout<br />
the Johor Corporation Group of Companies,<br />
including <strong>QSR</strong> and our holding company<br />
Kulim Malaysia Berhad. For the year 2008,<br />
the theme “Business Jihad” was adopted<br />
for the <strong>QSR</strong> Pedoman. The term Jihad,<br />
a sustainable strive for higher success,<br />
comes in various forms, be it spiritual,<br />
social, political and economic. Jihad in<br />
Business advocates the enriching of all<br />
members of the <strong>QSR</strong> community, and<br />
through <strong>QSR</strong> outreach, the enriching of<br />
the public at large, through <strong>QSR</strong>’s ethical<br />
business practises and consistently<br />
delivering value.<br />
Pedoman’s “Business Jihad” fundamentals<br />
encourage an ethics-based business<br />
module that is both market and business<br />
driven. It also states that, in its pursuit<br />
for profits, business must also contribute<br />
positive outcomes to society, nature and<br />
all creation. At the minimum it must not<br />
bring harm and diminish value to society,<br />
nature and creation.<br />
As we move forward as one of the<br />
fastest growing corporations in Malaysia,<br />
Pedoman will help us overcome various<br />
future challenges that might arise from<br />
the size of the business, its ever growing<br />
complexity, as well as the effects of<br />
external shifts and changes.<br />
Pedoman’s open and informal concept<br />
which encourages mutual trust, faith<br />
and confidence, will enable the Group<br />
to progress forward while maintaining<br />
our dynamic focus as a reputable,<br />
sustainable Group.<br />
During the year, <strong>QSR</strong> and KFCH<br />
simultaneously hosted a Group-wide Hari<br />
Mekar. We are delighted to announce that<br />
<strong>QSR</strong> has garnered the Overall Champion’s<br />
Trophy for two years running. With the<br />
theme “Pursuit of Excellence in Quality”,<br />
Hari Mekar, an annual quality event<br />
organised by Johor Corporation, is a<br />
quality movement that allows participants<br />
to showcase their innovative ideas on<br />
ways to increase sales, reduce costs,<br />
enhance profitability, improve efficiency<br />
and move creativity. Through the setup<br />
of a quality focus in the Group, several<br />
teams have been formed to propel this<br />
quality movement, including suggestion<br />
scheme teams, innovative and creative<br />
circle teams and cross functional teams.<br />
Hari Mekar encourages staff to put their<br />
thinking caps on and come up with ideas<br />
that can take the Group to a higher level.<br />
IMPROVING GOVERNANCE<br />
Realising the importance of strong<br />
governance, <strong>QSR</strong> adheres to the<br />
fundamental principles of disclosure and<br />
transparency as a means to help realise<br />
long term shareholder value. Taking into<br />
account the interests of our many<br />
<strong>QSR</strong> BRANDS BHD ANNUAL REPORT 2008<br />
019
stakeholders, we try our utmost best<br />
to be transparent in all our corporate<br />
activities. Furthermore, for better<br />
governance control, we ensure that all<br />
staff, from the top management right<br />
down to our service and front line,<br />
adopt the highest ethical standards<br />
and practise a strong sense of due<br />
diligence, responsibility and absolute<br />
integrity in all their business dealings.<br />
BEING A RELIABLE, SUSTAINABLE<br />
<strong>CORPORATE</strong> CITIZEN<br />
<strong>QSR</strong> is highly committed in giving back<br />
to the communities in which we serve and<br />
operate. On a day-to-day basis, we work<br />
together with all our stakeholders – our<br />
people, suppliers, governmental and NGO<br />
bodies, right up to our shareholders – to<br />
help create a more sustainable approach<br />
in how we operate our business. When<br />
we act in a sustainable manner – from<br />
how we govern our business and enhance<br />
our people skills right up to how we help<br />
communities in need, we express our<br />
respect for all of those around us. It is<br />
about doing good and acting in an<br />
honest, reliable manner.<br />
Halal compliance, a vital part of our<br />
business, is duly recognised as our core<br />
Corporate Social Responsibility. Other<br />
than embedding halal practices into our<br />
processes, the company sponsors the<br />
World Halal Forum and the Malaysia<br />
<strong>QSR</strong> BRANDS BHD ANNUAL REPORT 2008<br />
020<br />
International Halal Showcase, both<br />
of which involve the promotion of our<br />
many products.<br />
The Group also participated at the<br />
annual Halal Food Standards Realisation<br />
(HAFSTAR) MS 1500:2004. The halal<br />
market is not just for the Muslim community.<br />
The concept of halal which puts great<br />
emphasis on cleanliness, hygiene and<br />
a healthy lifestyle has also captured the<br />
interest of non-Muslims globally. Having<br />
identified halal as one of <strong>QSR</strong>’s critical<br />
success factors, we have put in place an<br />
elaborate and professional halal Audit<br />
infrastructure, the first of its kind in<br />
Malaysia’s foods industry.<br />
We also believe in the all encompassing<br />
power of knowledge. As one of the<br />
building blocks of the country, we heeded<br />
the Government’s call to increase English<br />
proficiency in local schools. Pizza Hut<br />
sponsors The Star Newspaper-in-Education<br />
(NIE), a programme that is supported by<br />
the Ministry of Education, and helps students<br />
grasp the internationally used language<br />
of the masses. In 2008, close to 94,000<br />
students from 362 schools throughout the<br />
country participated in the programme.<br />
Also well known as a health conscious<br />
Group, <strong>QSR</strong> continues to promote a<br />
healthy, active lifestyle especially in the<br />
sponsorship programmes related to local<br />
sports activities. We are proud to<br />
associate ourselves with some of the<br />
leading sporting personalities in the<br />
country, including Datuk Nicole David,<br />
through our support of squash in Malaysia.<br />
We sponsor a state-of-the-art glass squash<br />
court used by the Malaysian Squash<br />
Association in some of the leading<br />
tournaments in the country, including<br />
the Malaysian CIMB Open 2008.<br />
In addition, our subsidiary <strong>QSR</strong>, supports<br />
the Johor FC football team. The Group<br />
also sponsors the Malaysian Yachting<br />
Association and futsal activities, with the<br />
aim of encouraging young Malaysians to<br />
pursue sports not only as a hobby, but<br />
also as a means to garner international<br />
recognition for oneself and country. Indeed<br />
some of the sailors trained under the<br />
Association have made us and Malaysia<br />
proud in some of the leading Yachting<br />
competitions in Malaysia as well as<br />
internationally.<br />
Another cause close to our hearts is<br />
entrepreneur development. A collaborative<br />
effort with Johor Corporation’s, the<br />
entrepreneurial development programmes<br />
–Tunas Bistari, Didik Bistari and Siswa<br />
Bistari, help develop entrepreneurial skills<br />
among young, talented Malaysians so that<br />
they are both market as well as global<br />
ready individuals.
A new name and a new logo, but the<br />
same commitment to quality, service<br />
and great taste. RasaMas currently<br />
operates 36 restaurants in Malaysia.
Fast, convenient, and gaining an<br />
ever wide following, Ayamas currently<br />
operates 27 stores selling freezer to<br />
fryer and shelf chicken products,<br />
roasters and snacks.
Under our Intrapreneurship Development<br />
programme, Johor Corporation has<br />
initiated Catur Bistari – a Malaysian<br />
business board game which cultivates<br />
entrepreneurial skills amongst the younger<br />
generation. Developed by Bistari Young<br />
Intraprenuers, a subsidiary of Johor<br />
Corporation, the investment game is<br />
currently sold at KFC outlets nationwide.<br />
As part of our CSR effort, KFC also<br />
organises and sponsors Catur Bistari<br />
competitions yearly to encourage<br />
entrepreneurship developmental skills<br />
amongst Malaysians. This is part of our<br />
CSR marketplace initiative, aimed at making<br />
a success of Malaysia’s developmental<br />
program in the next lap in the country’s<br />
economic growth. This next lap has<br />
obviously to be more business-driven<br />
than before, thus relying extensively<br />
on the role to be played by the country’s<br />
entrepreneurs, and <strong>QSR</strong> has positioned<br />
itself to play a strong supportive role.<br />
In addition, we continue to extend<br />
our hands and hearts to the less<br />
fortunate. <strong>QSR</strong> and KFCH continued<br />
the sponsorship of three episodes per<br />
year of Tijarah Ramadhan – a television<br />
programme that helps many poverty<br />
stricken families in Malaysia.<br />
We also actively participated in the Yum!<br />
<strong>Brands</strong> Annual World Hunger Relief<br />
Campaign. The campaign, the world’s<br />
largest volunteer movement and private<br />
sector effort to combat hunger, aims<br />
to help stop world hunger through<br />
volunteerism and increased donations<br />
to benefit the United Nations World Food<br />
Programme (WFP) and other hunger relief<br />
agencies. In 2008, KFC and Pizza Hut<br />
Malaysia’s Hunger Relief Period 2008<br />
campaign raised RM1million for charity.<br />
Our Projek Penyayang founded in 1996,<br />
is our avenue to feed and reach orphaned<br />
and underprivileged children. Organised<br />
every quarter, to date around 150 charitable<br />
homes and institutions throughout the<br />
country continue to receive finger lickin’<br />
good KFC meals.<br />
AWARDS AND ACCOLADES<br />
Our commitment to quality has not gone<br />
unnoticed. Throughout the year, <strong>QSR</strong> has<br />
been recognised and awarded for amongst<br />
others, product excellence, marketing<br />
excellence and brand promise delivery.<br />
Pizza Hut’s commitment to winning<br />
over Malaysian consumers, won the<br />
Brand Laureate Award 2008-2009<br />
excellence in Product Branding as<br />
well as the Gold Trusted Brand for the<br />
Reader’s Digest Trusted Brand poll,<br />
considered the region’s leading, objective<br />
barometer of brand performance.<br />
In addition, for our continuous dedication<br />
and hard work, Pizza Hut Malaysia became<br />
the proud recipient of two Yum! awards<br />
- the Best Home Service award and the<br />
White Plate Award. The Best Home Service<br />
Award was given for the outstanding<br />
achievement in building Pizza Hut as a<br />
strong brand and sales in Home Service.<br />
Another feather in our cap is Pizza Hut’s<br />
Bronze Award win at the 1st Malaysia<br />
Effie Awards 2008 for the effectiveness<br />
of the Sensasi Delight Campaign. The<br />
Effie Awards programme is presented<br />
annually in the United States by the New<br />
York American Marketing Association in<br />
recognition of the year’s most effective<br />
marketing communications campaigns.<br />
It is acknowledged as the most<br />
recognised award by companies in<br />
the communications industry.<br />
KFCH, our subsidiary, received the<br />
Gold Trusted Brand award in the Reader’s<br />
Digest Trusted Brand poll. It was also<br />
awarded the Brand Laureate Award 2008<br />
-2009 for Brand Excellence in Product<br />
Branding under the Fast Foods Chicken<br />
Category, while Ayamas received the<br />
Brand Laureate Award 2008-2009 for<br />
Excellence in Product Branding under<br />
the Chicken Based Products category.<br />
<strong>QSR</strong> BRANDS BHD ANNUAL REPORT 2008<br />
023
OUTLOOK FOR THE YEAR AHEAD<br />
The deepening of the global financial<br />
crisis has become a main source of worry<br />
on the international business front. The<br />
initial International Monetary Fund (IMF)<br />
projection of a world economic growth<br />
of 2.2% in 2009 was recently revised to<br />
only 0.5%. Developed economies such<br />
as the USA, United Kingdom and Japan<br />
are now experiencing recession.<br />
The global slowdown is expected to<br />
change the landscape of numerous<br />
industries all over the world. As a result<br />
of the pressures created by the current<br />
economic landscape, Malaysia’s GDP<br />
growth is expected to be in the range<br />
of –1% to 1% for 2009 from 3.5%<br />
announced in November 2008.<br />
Nonetheless, we are confident that<br />
the business will continue to expand<br />
exponentially, boosted by the newly<br />
introduced RM60 billion stimulus package<br />
by the government, on top of the previous<br />
RM7 billion stimulus package, which is<br />
expected to invigorate the Malaysian<br />
economy and consumer sentiments.<br />
The weakening commodity prices will<br />
also work in our favour and will improve<br />
margins and help sustain the Group’s<br />
performance in 2009.<br />
<strong>QSR</strong> BRANDS BHD ANNUAL REPORT 2008<br />
024<br />
BUILDING THE FUTURE<br />
Despite the uncertainties of the global<br />
business landscape, <strong>QSR</strong> believes<br />
that 2009 will still be a year of buoyant<br />
performance for the Group. We aim to<br />
boost revenue and profitability by increasing<br />
the number of outlets, enhancing customer<br />
experience, developing new and improved<br />
products, expanding business activities,<br />
developing better cost efficiencies<br />
throughout the Group and improving<br />
productivity at all of our restaurants<br />
and manufacturing facilities. Restaurant<br />
development plans are on a continuum<br />
and 18 Pizza Hut restaurants and 30 KFC<br />
outlets are expected to be introduced<br />
by the end of 2009.<br />
Our restaurant chains continue to<br />
face growing competition from food<br />
courts, other fast food operators as well<br />
as hawker stalls. The increasing number<br />
of food courts at newly opened malls<br />
currently tempts consumers with the<br />
promise of variety and convenience at<br />
an affordable price.<br />
In view of this, Pizza Hut and KFC are<br />
taking up the challenge by bringing in<br />
local taste products such as the 35th<br />
Anniversary Chicken Rice to pique the<br />
taste buds of the local customers. As<br />
a competitive measure against our fast<br />
food operating peers, our restaurants<br />
have developed value for money meals,<br />
such as Pizza Hut’s Sensasi Delight,<br />
Variety Box and KFC’s Jom Jimat<br />
product variants.<br />
In addition, Pizza Hut Malaysia’s tie up<br />
with Telekom Malaysia <strong>Bhd</strong> for TMNet<br />
Hotspot’s wireless broadband access<br />
and KFC Malaysia’s offering of free<br />
internet access from 2.00 p.m. to 6.00 p.m.<br />
on weekdays continue to signify our<br />
commitment to provide convenience to<br />
our customers. As at 31 December 2008,<br />
158 Pizza Hut restaurants and 412 KFC<br />
restaurants in Malaysia were offering<br />
WiFi service.<br />
Following our inroads into Cambodia<br />
via the KFC brand, we now expect to<br />
focus our resources into the opening<br />
of more restaurants, primarily in the big<br />
cities like Phnom Penh, Siam Reap and<br />
Sihanoukville. Ten new restaurants are<br />
expected to be opened by end of 2009.<br />
In order to build a stronger market<br />
presence, Kedai Ayamas will be<br />
introducing additional products under<br />
the LIFE brand, while other products,<br />
including side orders, ice cream, bakery<br />
and seafood based items, would also<br />
be added in the future.<br />
RasaMas, on the other hand, has<br />
gone through a recent rebranding<br />
exercise, which is expected to<br />
gradually put the restaurant chain<br />
on a return to profitability roadmap.