YUM Presents to Investor Confab, All International Focus, Says US Operations Not Strong
YUM presented to the Cowen and Company Consumer Conference Tuesday. Of 27 slides, not one discussed US KFC, Pizza Hut nor even Taco Bell US trends or prospects. Taco Bell was verbally noted as the "second most profitable brand" behind McDonald's.
Side questions on US KFC operations arose, and YUM indicated that they" have to fix what they have now" and that "US operations werent as good as those as in China". The grilled versus fried conflict between company and franchisees was noted as a contributing difficulty.
Here is the Yum webcast.
With the EBITDA of KFC US franchisee restaurants in the high single digits, operations will not be robust. Franchisees are leaning towards survival mode. If the store level EBITDA does not cover the cost of a new store investment, US store development / recapitalization will not occur.
Pepsico
At one time these brands were profitable with happy franchisees. Without knowing their numbers, I wouldn't be surprised if their COGS had outpaced their sales growth for the past 5-7 years.
International growth is their focus today because the brands are domestically mature. Strong global recognition drives the international momentum. Reminds me of a business model I came across for very large east coast donut proveyor. Come to think of it Pepsico was a large jv shareholder thru 2006.
- Log in to post comments
KFC open 1 per day
Yum tell us they are opening about 1 franchise per day in China. I wonder how much Yum investment is leading the way and has the international development strategy investment left franchisees in established markets to fend for themselves?
Yum in Australia has not displayed any corporate ethics so my opinion may be slightly biased. When we see standards drop in a franchise we can usually associate that with floundering franchisee profit. When we see franchisee profitability drop across a brand we can usually associate that with a franchisor that has fed and is moving on.
The KFC franchisee conference in San Diego in Feb-Mar 2011 should be a lively event.
- Log in to post comments
- Log in to post comments
Pepsico
At one time these brands were profitable with happy franchisees. Without knowing their numbers, I wouldn't be surprised if their COGS had outpaced their sales growth for the past 5-7 years.
International growth is their focus today because the brands are domestically mature. Strong global recognition drives the international momentum. Reminds me of a business model I came across for very large east coast donut proveyor. Come to think of it Pepsico was a large jv shareholder thru 2006.