Benzinga  Jun 6  Comment 
Attention breakfast lovers, Yum! Brands, Inc. (NYSE: YUM)'s Taco Bell unit has a new concept to win over the competitive landscape: breakfast salsa. Taco Bell is been "killing it" in the breakfast space, as evidenced by an 8-percent same-store...
Motley Fool  May 30  Comment 
The chain plans to add around 100,000 employees in the United States by 2022.
Benzinga  May 26  Comment 
Inspired by Taco Bell’s fresh focus on international markets, Credit Suisse analysts Jason West and Jordy Winslow came out of Thursday’s Investor Day more bullish on the Yum! Brands, Inc. (NYSE: YUM) fast-food segment. West and Winslow were...
Benzinga  May 23  Comment 
Jim Cramer said on CNBC's "Mad Money" that Yum China Holdings Inc (NYSE: YUMC) is inexpensive and he likes it very much. He advised his viewer to hold his long position in the stock. Cramer would take the profits in Panera Bread Co (NASDAQ:...
Motley Fool  May 21  Comment 
When the biggest bone-in-chicken seller makes a change, it has far-reaching implications.
Benzinga  May 16  Comment 
Premised on the transformation of Yum! Brands, Inc. (NYSE: YUM)'s business through refranchising, Argus upgraded the shares of the company on Tuesday. Refranchising In The Works Analyst John Staszak noted that the company plans to raise...
MarketWatch  May 9  Comment 
Taco Bell, the Yum Brands Inc. fast-food Mexican chain, said Tuesday that it will fill 3,500 newly-created jobs in May, and seeks to fill 50,000 more jobs by the end of the summer. The hiring spree is part of a previously-announced plan to create...
Benzinga  May 8  Comment 
The Vetr crowd on Monday upgraded its rating for Yum China Holdings Inc (NYSE: YUMC) from 1.5 stars (Strong Sell), issued 10 dyas ago, to 2.5 stars (Sell). Crowd sentiment at the time of the upgrade was unanimously cautious, with 100 percent of...
MarketWatch  May 5  Comment 
Goldman Sachs downgraded Yum China Holdings stock on Friday, and said it sees limited upside as the stock has gained 22% since the company reported earnings on April 6. The S&P 500 has gained just 2% in the same period, the bank wrote in a note....


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

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

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