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Yum! Brands Sets Global Expansion

Posted by Barry Silverstein on January 13, 2011 05:00 PM

McDonald's may be the first brand name that comes to mind when you think of fast food restaurants, but it is actually the restaurant empire of Yum! Brands Inc. that leads the world in QSR (quick service restaurants), with more than 37,000 outlets in over 110 countries and territories.

Yum! is better known, of course, by its brand portfolio, which includes KFC, A&W, Long John Silver's, Pizza Hut, Taco Bell, and Wing Street. The good news for Yum!, according to information the company shared at an investors meeting this week, is that it projects robust growth from areas outside North America and China through its Yum! Restaurants International division.

China, in fact, has been a stronghold for its KFC and Pizza Hut units.

Tim Jerzyk, senior VP of investor relations, told investors, "The important thing here is that we're not just growing in big tier-one and tier-two cities. We have over 250 restaurants in Shanghai alone, but of the nearly 500 restaurants we built in 2010, 52 percent were in tier-three through tier-six cities, so we're everywhere in China."

With around 3,900 restaurants in China, Yum! out-distances McDonald's and Starbucks, who together have about 1,800 Chinese locations, according to Nation's Restaurant News. Yum! anticipates opening another 500 restaurants in China in 2011.

Yum! is also seeing significant growth in Africa, with 44% market share in South Africa alone. "There are one billion people in Africa, and their protein of choice is chicken on the bone. This market is definitely set up for KFC," Jerzyk said.

This year marked a milestone in India, where Yum! opened its one hundredth location. Now, it's looking to other parts of Asia for growth.

For a five-year period from 2005 to 2010, Yum! Brands restaurants experienced compound growth rates of 21%, 13%, and 54% respectively in Indonesia, Malaysia and Vietnam. Jerzyk thinks these and other emerging markets will "drive 40% of profits" this year and account for as much as 60 percent of the company's profit growth by 2015.

Jerzyk thinks there is plenty of room for growth. In the US, he added, Yum! has about 60 restaurants per one million people, versus under 3 restaurants per million in China, and under 2 units per million in the top 10 emerging markets, excluding India, where there are just 0.2 units per one million people. In the emerging markets targeted by Yum!, there will be about 2 billion consumers by 2020.

That's a lot of chicken, tacos, and pizza to bring to the world.

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