Yahoo  Aug 29  Comment 
Let’s check out the Yahoo Finance charts of the day.
Motley Fool  Aug 29  Comment 
The Chinese investment firms' lowball isn't enough for a world-class restaurant operator.
Financial Times  Aug 29  Comment 
Motley Fool  Aug 28  Comment 
Find out how potential M&A activity lifted some of these stocks.
Wall Street Journal  Aug 28  Comment 
Yum China has rejected a private buyout offer from a consortium of investors that valued the restaurant operator at more than $17 billion.
Motley Fool  Aug 26  Comment 
The operator of KFC, Pizza Hut, and Taco Bell chains in the Middle Kingdom may be changing hands once again.
Motley Fool  Aug 23  Comment 
The companies have found themselves in the crosshairs of major investors looking to take their restaurant chains private.
Benzinga  Aug 22  Comment 
The following stocks are currently in the midst of strong trendsaccording to VantagePoint, an AI charting platform that uses intermarket analysis and artificial intelligence to predict future price action 1-3 days in advance. For a more detailed...
Benzinga  Aug 17  Comment 
Oppenheimer analyst Brian Bittner downgraded Yum China Holdings Inc (NYSE: YUMC) from Outperform to Perform and removed his $40 price target. The Thesis After spinning off from YUM! Brands, Inc. (NYSE: YUM) last November, Yum China shares...
Yahoo  Aug 17  Comment 
The "Halftime Report" traders debate Raymond James downgrading Walmart to "outperform" from "strong buy."


Yum! Brands Inc. (NYSE: YUM) is the world's largest fast food company with 35,000 restaurants in over 110 countries. Yum restaurants include KFC, Pizza Hut, Taco Bell, Long John Silvers (LJS), A&W, Pasta Bravo, Wing Street, and East Dawning. KFC, Pizza Hut, Taco Bell, and LJS are the world leaders in their respective categories. There are three operating regions as well: the US, China, and International. Yum is part of the Quick Service Restaurant (QSR) industry primarily competing with McDonald's (MCD), Domino's Pizza (DPZ), and Burger King Holdings (BKC).

As a competitor in the QSR industry, Yum must deal with commodity prices, health concerns, and intense competition. The main inputs for Yum are chicken, beef/pork, cheese, flour, produce, paper, and beverages. If commodity prices rise, intense competition makes it difficult to counter by setting higher prices. Health and obesity concerns are a constant factor in this industry. In response to these concerns, KFC is eliminating trans fat and Taco Bell is allowing customization of menu items.[1]

Yum has experienced tremendous growth overseas. Yum made China its own division in 2005 due to its overwhelming success and rapid expansion. Yum is now the dominant QSR company in mainland China with over two times as many restaurants as McDonalds. Yum now plans to make a turnaround in the US with continued re-franchising, introducing new products, and improving the overall quality of its restaurants. Given that the US still represents over 59% of Yum's revenues, a turn around in US markets has to be a priority.

Company Overview

Error creating thumbnail

Pizza Hut

Pizza Hut claims the leading position in the US pizza QSR segment with a 15% market share. Pizza Hut operates in 92 countries with a total of 12,685 restaurants worldwide. There are 360 Pizza Huts in China and it is the leading casual dining brand in China. Wing Street and Pasta Bravo are two restaurant concepts that are many times paired with Pizza Hut. Wing Street Wing Works (usually paired with KFC) features flavored chicken wings. Pasta Bravo adds a made to order pasta segment to Pizza Hut.

Taco Bell

Taco Bell is claims the leading position in the US Mexican QSR segment with a 58% market share. Taco Bell operates in 14 countries with a total of 5,846 restaurants worldwide. Despite rumors and claims that their ground beef is anything less, taco bell has proven the accusers wrong, and continues to supply quality food for a low price. b gfkn jkbf djkb gfngsl gryiytr ythnrwoi;jy5ow5 toewyit

Kentucky Fried Chicken

KFC Corporation, based in Louisville, Kentucky, is one of the few brands in America that can boast about having a rich, 59-year history of success and innovation. In fact, KFC is the world's most popular chicken restaurant chain, specializing in Original Recipe®, Extra Crispy™, Colonel's Crispy Strips® and Honey BBQ Wings®, with home-style sides and freshly made chicken sandwiches. Since its founding by Colonel Harland Sanders in 1952, KFC has been serving customers delicious, already prepared complete family meals at affordable prices. There are over 15,000 KFC outlets in 105 countries and territories around the world. (From the YUM Corporate Website)

Key Trends and Forces

A Rising Global Middle Class Provides Business Expansion Opportunities for YUM in Emerging Markets

YUM's KFC and Pizza Hut brands span over 110 countries worldwide; the China Division, YRI and Taco Bell-U.S. represent approximately 85% of the Company’s operating profits.[2] This high international exposure is offsetting a slowdown in YUM's North American market as U.S. consumers pare back discretionary spending. YUM's the top-25 markets for KFC, Pizza Hut, Taco Bell, A&W and Long John Silver's are present in several highly coveted markets where the middle class and disposable income are growing, including high-growth markets like Mexico, South Africa, Poland and Egypt alongside a sizable presence in Asia. Yum is also well established in the developed economies of Canada, Western Europe, Japan and Australasia. Although the company faces the challenge of expanding beyond the traditional KFC and Pizza Hut brands in these markets, the company is well positioned to benefit from strong global economy and a rising, global middle class.

In order to diversify its emerging markets concentration away from China, Yum! Restaurants India plans to invest $100 million USD to more than triple the number of stores across India to 1,000 eateries by 2015. About half of the planned restaurants would be KFC outlets, which compares to currently 300 restaurants across India, most of which are under the "Pizza Hut" and "KFC" banners. The company also plns to aggressively increase the number of Taco Bell restaurants, and as the company opens more outlets across India, it will also plan to increase employee headcount to 50,000 over the next five years.[3]

A Unique Approach with KFC in China has Proven Valuable for YUM's Expansionary Efforts

Yum's China division has produced the company's greatest growth and profitability over the last few years. Yum's earnings growth model in mainland China is expected to drive annual Operating Profit growth of 15% per year.[4] In China, KFC's growth is outpacing rival McDonalds at a rate of 3 to 1. Unlike its competitors, Yum owns its own distribution centers. Yum's 16 distribution centers allow the company to grow more efficiently as its serves to its restaurants in 402 different Chinese cities.

A major part of KFC's success in China has been Yum's approach. Compared to KFC in the US, KFC China has a more diverse menu, focuses on health by meeting with health councils in China, and involves itself in the community by sponsoring 3 on 3 basketball tournaments and creating dance programs at high schools. Yum strives to become deeply rooted in the society and trusted by the Chinese consumer. China's growth potential is still substantially untapped as Yum believes that it could have close to 20,000 restaurants in China in the future. Although, as Yum's presence in China expands and occupies the smaller cities and towns, the risk for Yum's continued success also increases.

Despite Major Concentration in the US, YUM has Developed Turnaround Strategies in Face of a Declining Market

Yum's US division accounts for 50% of total profits, but unfortunately for Yum, the US has not seen the same growth success as the overseas divisions. While there is still a lot of growth potential in China and the International division is expanding into continental Europe, Russia, and India, the US division operates in a saturated market. There are over 18,000 Yum restaurants in the US which as a population of about 300MM, whereas China has over only 2,000 restaurants and a population of 1.3 billion.

Taco Bell has been Yum's best performer in the US. About 55% of the US profits come from Taco Bell. Product and branding innovation in Taco Bell, KFC, and Pizza Hut will also play an important role. KFC is also marketing lower priced products like the 99 cent Snacker to build a more value friendly image. Yum's US multi-branding strategy calls for the occasional combination of a Pizza Hut and Pasta Bravo, KFC and Wing Works, and LJS and A&W, among others. This strategy increases unit sales and makes more expensive locations plausible for Yum to occupy. Yum is dependent on the success of its US division and its turnaround strategies aims at increasing the growth and profitability of this important division.


The QSR segment is a crowded and intense environment. Yum's diverse portfolio of restaurants attracts competition from many different types of quick service restaurants. McDonald's (MCD) is Yum's largest global competitor. MCD is the leader in the US QSR segment and is growing in China. KFC is the dominant player in the chicken QSR segment with its closest competitor as Popeye's. Although, increased chicken choices at burger joints like McDonalds, Burger King, and Wendy's are also grabbing sales from KFC. Pizza Hut has received significant competition from Domino's Pizza (DPZ) and Papa John's over the last few years and they have been keeping Pizza Hut's sale growth down.

From a market perspective Yum faces its fiercest competition in the US. This is due in large part to the fact that US market is extremely saturated with QSRs. Overseas, Yum has a very strong position and plans to expand its already very successful International division into continental Europe, Russia, and India.


  1. KFC plans 'important' trans fat 'milestones'- USA Today
  2. FY2009 10-K Pg 24
  3. Yum! to invest $100mn to triple number of restaurants in India
  4. FY2009 Yum Brands 10-K Pg 25

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki