SCENARIO ANALYSIS Actual gain from home delivery

Total sales achievable Net field contribution from delivery Total gain $ 104.33 Million 8.80% 9.18 Million = Per store sales(Delivery) * No of Delivery units =Total sales achievable * Net field contribution from delivery

Scenario 1 : Loss due to cannibalization

Assuming that 20 % of carry out business and 5 % of eat in business is converted to home delivery Company owned traditional units 2173 Exhibit 6, Page 16 Company owned delivery only units 361 Exhibit 6, Page 16 Sales through Traditional channels (PSA) $400 Thousands Exhibit 2, Page 12 Sales through Delivery channels (PSA) $289 Thousands Exhibit 2, Page 12 Total sales of Pizza hut in 1986 $973,529 Thousands = PSA(Traditional)* No of Traditional units + PSA(D Carry out Business % of carryout business 40% Page 1, Para 4 Sales through carryout business $389,411.60 Thousands (% of Carryout x Total Sales) Cannibalization in carryout business $77,882.32 Thousands Cannibalization (Carryout) % = 20 % of Carryout Sa Eat-in Business Sales through eat in business $584,117.40 Thousands (Eat in Business = Traditional - Carry out Business) Cannibalization in eat in business $29,205.87 Thousands Cannibalization (Eat-in) % = 5 % of Eat-in Sales Reduction in Profits Sales affected due to cannibalization $107,088.19 Thousands (Carry out Cannibalization + Eat in Cannibalization Profit in Traditional channels $14,028.55 Thousands Exhibit 4, Page 14, Profit % = 13.1% Profit in Delivery Channel $9,423.76 Thousands Exhibit 4, Page 14, Profit % = 8.8% Total Profits Lost $4.60 Million

Scenario 2: Potential gain from home delivery

Assuming that in the home delivery market Pizza hut will achieve a market share equal to its market share in the conventiona Sales value in delivery market $ 2,600.00 Million Table on Page 1 % Potential share of Pizza Hut 15.40% Assumption Total sales achievable $ 400.40 Million = Sales value in delivery market* % Net field contribution from delivery 8.80% =Total sales achievable * Net field Total gain $ 35.24 Million contribution from delivery

Scenario 3: Potential loss from not offering home delivery

Assuming 10% of current sales lost to competitors Total Sales $ % of sales lost to competition Total sales lost $ 869.2 Million 10% 86.92 Million (Taking only traditional sales into account) Assumption = Total sales* % of sales lost to competition

Net field contribution from delivery Total Profits lost

8.8% 7.65 Million

=Total sales lost * Net field contribution from deli

es(Delivery) * No of very units

Exhibit 2, Page 12; Exhibit 6, Page 16 Exhibit 4, Page 14

chievable * Net field on from delivery

Assuming that in the home delivery market Pizza hut will a = Sales value in delivery market* % Potential share of Pizza

l)* No of Traditional units + PSA(Delivery) * No of Delivery units

Total Sales) Carryout) % = 20 % of Carryout Sales

= Traditional - Carry out Business) Eat-in) % = 5 % of Eat-in Sales

balization + Eat in Cannibalization) 4, Profit % = 13.1% 4, Profit % = 8.8%

s market share in the conventional segment Exhibit 2, Page 12 Exhibit 4,Page 14

n delivery market* %

chievable * Net field on from delivery

itional sales into account)

Exhibit 2, Page 12 ; Exhibit 6, Page 16

of sales lost to competition

Exhibit 4,Page 14 * Net field contribution from delivery

ery market Pizza hut will achieve a market share equal to its market share in the conventional segment % Potential share of Pizza Hut

Analysis of Various Scenarios

Scenario 1 Scenario 2 Scenario 3 Loss due to cannibalization Potential Gain from home delivery Potential loss from not offering home delivery 4.60 Million 35.24 Million 7.65 Million