Yum China aims to triple outlets
Yum Brands opened its foray into China with a KFC restaurant in Beijing in 1987. There are now more than 7300 KFC and Pizza Hut outlets.
“I really don’t see any reason why we cannot have 20,000 restaurants in China,” says Yum China division CEO Micky Pant.
However, Yum China has had challenges in recent years including marketing blunders, rising competition, bird flu outbreaks, food-safety problems and slowing economic growth. Just this month, executives blamed anti-US protests sparked by political tensions in the South China Sea for a surprise 1 per cent drop in China sales during the latest quarter.
Pant says those sales are recovering and “the fundamentals of the brands in China are very strong”.
He says Yum China will have 15 per cent earnings expansion in the world’s fastest-growing economy with plans to open restaurants in burgeoning mega-cities, major transportation hubs and new shopping malls.
There are also plans to open Little Sheep and Taco Bell restaurants.
Partners Primavera Capital and Alibaba Group Holding affiliate Ant Financial, which will buy a US$460 million stake in Yum China, bring competitive advantages such as real-estate market knowledge and digital leadership, Pant says.
Yum China already is the biggest user of Ant’s Alipay service, and the restaurant group is investing in making its mobile ordering system and loyalty programs even more robust.
After the separation, Yum China Holdings will become a licensee of Yum! Brands in mainland China with exclusive rights to quick-service restaurant KFC, casual dining brand Pizza Hut and Taco Bell, which is expanding globally but is not yet in China. It will also own the Little Sheep Mongolian hot pot and East Dawning Chinese cuisine concepts. Yum China has more than 400,000 employees in more than 1100 cities, generating more than $8 billion in system sales last year.
The standalone Yum China is expected to start trading on the New York Stock Exchange on November 1.