Yum Brands in China

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International Management & Negotiations

Yum! Brands in China – A Success Story

Table of Contents
1Yum! Brands1
2Expansion in China1
3Yum! Brands vs McDonalds in China2
4Main Brands3
4.1KFC3
4.2Pizza Hut4
4.3Taco Bell6
4.4Local Brands7
5Success Factors10
5.1Management10
5.2Globalization vs Localisation10
5.3Life Style and Leisure Restaurants11
5.4Employment11
5.5Partnerships11
5.6Distribution Network12
5.7Expansion & Competition12
5.8Local Brands12
5.9Past experience in Global Expansion12
6Concerns12
7References14
8Appendix15
8.1Yum! Brands’ Organizational Structure15
8.2Yum! Brands’ stock price in NYSE16
8.3Comparison between KFC and McDonalds16

Yum! Brands
Yum! Brands, Inc. constitutes a group of companies of 400.000 employees, with global presence, selling its products in 117 countries and territories worldwide. Headquartered in Louisville, Kentucky, Yum! operates more than 37.000 restaurants worldwide and it is considered as the world's largest fast-food restaurant company. Spin off in 1997 from PepsiCo, Yum! was created as Tricon Global Restaurants, Inc., a company that will own and franchise the KFC, Pizza Hut, and Taco Bell brands worldwide. In 2002, and after some acquisitions that previously have occurred, Tricon changed the company's name to Yum! Brands, Inc. As per 31/12/11 Yum! Brands had a turnover of $12billion, operating profit of $1.8 billion and net profit of $1.3billion, financial results that rank it #214 on the Fortune 500 List. [16] Its market capitalisation is more than 34 billion dollars and its current stock price in NYSE is just above $70. The chart with the historic prices of the stock is presented in Appendix (Section [8.2]). The increasing price of the stock indicates the successful strategy of Yum! Brands. Nowadays, the company franchises six brands, having its core brands KFC, Pizza Hut and Taco Bell been included in the top-ten chains of fast-food in the world, competing directly with other industry giants such as McDonalds, Burger King, Domino’s Pizza, Brinker International and Wendy’s. Its three core brands are all dated back to 50s & 60s. KFC was founded in 1952 and it is the world's most popular chicken restaurant chain, Pizza Hut was founded in 1958 and now has become the biggest pizza company in the world and Taco Bell was founded in 1954 and it serves American-adapted Mexican food, considered as the global leader in the Mexican-style food category. Yum!’s vision is to be the defining global company that feeds the world, when the consumers are seeking for fast food and simultaneously by being the industry leader, to transmit value to their shareholders and their franchisees. Following its vision, Yum!’s goal is to build leading brands everywhere in the world and for that reason they aggressively continue their international expansion by opening 1500 new restaurants per year, reinforcing their presence where the highest growth is expected to occur. [15] Expansion in China

The dominant factors of Yum!’s success were Yum!’s very early expansion in the emerging markets and the multi-branding strategy that is follows according to its business model. Yum! entered China with KFC in 1987, which was the first quick-service restaurant chain in China. Nowadays, it is the indisputable leader in the western quick service restaurants in China with more than 3,800 restaurants in more than 800 cities. Following KFC’s success, Yum! introduced Pizza Hut in China three years later. At the moment, Pizza Hut is the dominant casual dining brand in this market with more than 660 restaurants in over 120 cities. In 2001, the company introduced the Pizza Hut Home Service, which is a pizza delivery chain, having 136 units in 15 cities. Yum! Brands is the most important retail developer in China with approximately 4,650 restaurants in more than 800 cities. However there...
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