China Boosts Giant Yum Brands Profits

For a number of years it’s been well known that Yum has received a huge revenue and income boost from its operations in China.  Following is continuing evidence of this fact.

Yum Brands Inc. further raised its full-year earnings outlook after fiscal third-quarter profit rose 6.9%, led by growth in China. The owner of KFC, Pizza Hut and Taco Bell brands saw same-store sales rise in each operating division for the first time since the end of 2008. China enjoyed a 6% gain, while U.S. and other international locations posted 1% growth.

On Yums revenue base, a 6% gain in China versus 1%  in its other markets  is significant!

Faced with a lackluster U.S. market, Yum has relied on international expansion to drive growth, particularly in China where consumer confidence remains strong. Domestically, Pizza Hut continued to post strong same-store sales growth at 8%, driven by lower pizza prices. Taco Bell's same-store sales rose 3%. KFC remained the weak link in the U.S., with same-store sales falling 8%. U.S. operations of both KFC and Pizza Hut will see their share in Yum's profit drop in coming years as the company sells stores to franchisees to focus on international growth and its Taco Bell chain. For the quarter ended Sept. 4, Yum posted a profit of $357 million, or 74 cents a share, up from $334 million, or 69 cents a share, a year earlier. Revenue increased 3% to $2.86 billion reported the Wall Street Journal.

About the Author: Ed Teixeira has over 35 years of franchise industry experience as a franchise executive and franchisee. He has served as a franchise executive in the c-store, manufacturing and home healthcare industries and has licensed franchises in Asia, Europe and South America. Ed operates FranchiseKnowHow  which provides information and advice to prospective and existing franchisees and franchisors. He publishes newsletters for the franchise community.