Yum to focus on China

09 December 2011

BEIJING: Yum Brands, the restaurant company, intends to pursue an aggressive expansion strategy in China over the medium term, doubling its number of outlets by 2020.

The owner of restaurant chains including KFC and Pizza Hut plans to have 9,000 restaurants in China by the end of the decade, up from around 4,200 today.

Currently, Yum operates a global network of 38,000 restaurants in over 110 countries. In 2012, Yum intends to open 1,500 restaurants in total, including 600 in China and 100 in India.

For a closer look at KFC's growth strategy in China, Warc subscribers can read an exclusive in-depth analysis of the company.

According to the firm's current targets, the proportion of overall Yum restaurants located in the emerging world will rise from 53% to 70% by 2014.

Collectively, fast-growth economies already contribute a majority (58%) of Yum's net income.

David Novak, CEO of Yum Brands, said that the company would aim for a market positioning in China similar to that of McDonald's in the US, the Financial Times reports.

"In small-town America, McDonald's will have a prime location in all the spots," Mr Novak told the company's investor conference.

"What you're going to see 10 years from now is that we're going to own that [in China]. We're going to have the very best locations."

Part of the Yum's Chinese plan is to increase its presence in second- and third-tier cities, away from the saturated markets of Beijing and Shanghai.

Across Asia, it also intends to adjust its products more to reflect local tastes, and to extend opening hours.

According to its latest statement to investors, Yum expects its Chinese sales to increase by 13% in 2012. Globally, it expects an increase of 6%, with emerging world growth weighed down by North America and Europe.

Data sourced from Yum Brands/Financial Times/Reuters; additional content by Warc staff