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Yum China plans major expansion

News, 13 October 2016

SHANGHAI: Yum! Brands, the parent company of restaurant chains KFC, Pizza Hut, Taco Bell and others, has announced plans for its China division to triple the number of restaurants it operates in the country.

Yum China, which is being spun off from its US parent company, already operates 7,300 restaurants in the country, but this is expected to edge up to 7,500 by the end of this year with a view to expanding to more than 20,000 in the longer term.

Already the largest independent restaurant company in China, with exclusive rights to the KFC, Pizza Hut and Taco Bell brands as well as ownership of China's Little Sheep and East Dawning brands, the company said in a statement that it has no debt and expects to have $900m cash on hand once it goes its own way.

"At separation, we will be operating a highly cash-generative business, with no external debt and ample cash on hand," said Micky Pant, CEO of Yum China.

"This will enable us to invest in new restaurants, digital engagement and our delivery network, providing job opportunities to thousands more people across the country and contributing to economic growth."

Yum China said it could become the market leader in China because of the country's growing middle class and urban population, and it expected further growth to be fuelled by China's younger consumers "who are digitally sophisticated and brand driven".

New restaurant openings will be focused on China's major cities, new shopping malls and major transportation hubs, and the company also has plans to expand its Taco Bell and Little Sheep brands, although at a slower pace than KFC and Pizza Hut.

However, Taco Bell is being earmarked for significant expansion in India where Yum! Plans to greatly increase its presence from just nine restaurants at present to more than 100 over the next five years.

"We don't want to be a regular quick service restaurant chain [QSR]," explained Ankush Tuli, Managing Director of Taco Bell India, in comments to Livemint.

"What we are going to replicate is the QSR plus model to make Taco Bell a lifestyle brand in India."

Data sourced from Yum! Brands, Livemint; additional content by Warc staff