Yum! Brands, Inc. has recently announced that it intends to split the business into two independent, publicly traded companies in order to allow for “separate strategic focus.” In this regard, the company looks to separate its China business from everything else.
For Yum! Brands, it makes sense to devote focus and attention to the China market, which has been growing really well for the company lately. In fact, the China business alone made $6.9 billion in annual revenue last year. Moreover, the company believes they can have as much as 20,000 restaurants in China in the future or even more. This is why having a Yum! China business that will become a franchisee of Yum! Brands in all of Mainland China looks ideal.
In 2014, KFC made approximately $4.8 million in China, signifying a 10% 4-year compound annual growth rate. Meanwhile, Pizza Hut in China grew by 25% with around $1.6 million. Last year, there were 4,800 KFC restaurants in China, making it the county’s top foreign brand. Meanwhile, Pizza Hut is also said to be the top western casual dining chain in China with 1,300 restaurants last year. This means that Pizza Hut leads its nearest competition in the market 6:1. And aside from continuously growing both Pizza Hut and KFC in the market, the company is also looking to introduce Taco Bell to China.
Meanwhile, Yum! Brands looks to continue growing its business elsewhere around the world, also putting focus on its top brands: KFC, Pizza hut and Taco Bell. Last year, the company’s KFC Division brought in around $14.2 million to the company, followed by Pizza Hut with around $13.6 million and Taco Bell with around $6.2 million. Excluding the China business, Yum! Brands managed to achieve an annual revenue of $6.3 billion back in 2014.
With more than 41,000 restaurants and as much as 2,000 locations opening every year, Yum! Brands is hoping to have at least 95% of its restaurants to be owned and operated by franchisees by 2017.
Meanwhile, Yum! Brands says the decision to split the company into 2 separate entities is still subject to final approval from its Board of Directors, among others.