Business Description
Yum China Holdings is the largest independent restaurant in China. They are in the Restaurant, Bars, and Food Services industry. Yum China is a spin-off of its parent company, Yum Brands. The company was founded on April 1, 2016 and is headquartered in Louisville, Kentucky. Yum China became a publicly traded company on November 1, 2016. They have exclusive rights to operate and sub-license KFC, Pizza Hut, and Taco Bell with outright ownership of East Dawning and Little Sheep restaurants as well.
Yum China is the leading restaurant company with over 7,300 restaurants in 1,100 cities spanning across every province and mainland in China. They have become the leading restaurant company in only three decades of
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He has served as CEO of the YUM China since August 2015. Ted Stedem is the Chief Financial Officer for the company. He has served as Chief Financial Officer since August 2016. He has served in a number of leadership roles for YUM over the past seven years, including General Manager and Managing Director of KFC Asia.
Yum China has collected consumer preference and loyalty in the minds of their consumer. Their mission statement involves their dedication to serving their consumers needs by improving their in-store experience, refining mobile connectivity, pioneering innovative new products, and consistently delivering superb value.
Pertinent Financial Information
Yum China is doing well compared to its competitors and is very financially stable considering its early life. Yum China has seen negative same-store sales growth in the past year due changing customer preference but do plan to keep opening new stores. Their EBITDA is seeing positive growth at 11.83%. The same-store sales decline in growth shouldn’t be seen as substantial as their EBITDA looks to continue to grow. They are financially in good health with an outstanding current ratio of 1.42 and a total-asset turnover of 1.95 that both lead amongst competitors. The graphs below illustrate Yum China’s financial competency compared to its industry and competitors.
Macroeconomic Factors
China is the second leading global economy and represents the world’s largest economic growth in recent years.
China has already overtaken Japan to become the world`s second-largest economy in recent five years. “However, such economic
The Chinese president is looking to boost consumption and import as part of efforts to restructure its economy (Hu Looks to Boost China's Consumption, Imports, (April 15, 2011). The Chinese energy consumption has been predicted to soar to 68% higher than that of the USA by the year 2035(China, India to lead energy consumption, (September 20, 2011). Investment spending is also set to increase from $12,633 billion (2011, 48% of GDP) to $29,628 billion by 2030 (38% of GDP) (CHINA - Gross fixed investment (% of GDP) from 2011 to 2030, EIU Country Data). In 2006 China had a rating of 5.00 and was seen ranked at 101st in terms of the degree of economic freedom as measured
Since the reform and opening up, the economy of China grows significantly, as an emerging economy, China's economy has made tremendous contributions to the global economy, and Renminbi has become one of the most important currency in the world. According to the survey conducted by China National Bureau of Statistics found that from 1979 to 2012, China has attained an annual average growth rate of 9.8% for its national economy, while the annual average growth of the world economy is only 2.8 % during the same period. In past 30 years, China's GDP surpassed Japan’s, China became the world 's second largest economy, in addition, the huge total volume of trade makes China become the world 's largest trading nation. The contribution of China’s
Today’s China is the most populous country in the world and is so one of the most important political and economical forces in the world.
In 2008, the Global Financial Crisis broke out; both the American economy and the economy in the West suffered a hard blow. However, a big economy system in the East emerged unexpectedly. China is now able to challenge the America’s decades-long dominant position in economic area. Started during the middle of 1990s, China’s manufacturing industry developed rapidly that billions of exports were floating out, and China was given the title of “the world’s factory”(BBC). By the end of 2010, China with a GDP of $5.8 trillion, surpassed Japan’s GDP of $5.48 trillion, became the world’s second largest economy system (BBC). China also exceeded Japan became America’s largest foreign securities holder. Since then, China has been seen as the US’s
China considered one of the largest economies in the world, it also has a vast emerging
In 2016 the majority of Yum shares are held by U.S.-based institutional investors including Vanguard Group, Corvex Management and State Street Corporation”. (Wong, 2016) The idea was to provide the company with better access to capital markets and to attract investors willing to pay for a piece of this lucrative pie. This fast food chain at the time had “17,000 outlets and more than $900 million cash on hand”. In September of 2016, yum sold a combined $460 million stake to Alibaba affiliate. A Beijing-based investment firm founded by former
The rise in China from a poor, stagnant country to a major economic power within a time span of twenty-eight years is often described by analysts as one of the greatest success stories in these present times. With China receiving an increase in the amount of trade business from many countries around the world, they may soon be a major competitor to surpass the U.S. China became the second largest economy, last year, overtaking Japan which had held that position since 1968 (Gallup). China could become the world’s largest economy in decades.
Yum! Brands started out as Tricon Global Restaurants in 1997 as the result of a separation from PepsiCo, and became owners of the KFC, Pizza Hut and Taco Bell brand names worldwide. Yum! Brands is now a Fortune 500 company based out of Louisville, Kentucky and the world’s largest restaurant company in the world in terms of system restaurants. With over 37,000 restaurants in over 110 countries, Yum! Brands dominates four sectors of the quick-service food industry: Mexican with the Taco Bell name, chicken with the world famous Kentucky Fried Chicken brand, pizza with the Pizza Hut chain, and seafood with their Long John Silver’s restaurants. Yum! Brands also owns A&W Restaurants, the longest running franchise chain in the
YUM states that it is a company with a heart and makes food accessible to the hungry (YUM, n.d.). YUM participates in the World Hunger Relief in which the company has donated more than $35 million in cash and food donations, provided 140 million meals and more than a billion impressions globally (YUM, n.d.). YUM also tries to raise awareness by using an approximate value of nearly $500,000 in public service announcements, advertising, public relations, web-based communications and in-restaurant promotional materials (YUM, n.d.). YUM also participate in many nonprofit organizations events as volunteers and encourage its employees to
In the short-term the key to YUM’s success is its foothold in the Chinese market as scare resources continue to flow into the country with xxxx restaurant openings planned in 2016. If the success that YUM has enjoyed in China begins to subside than the overall expansion plans for YUM could be
operates several fast food brands in Australia. KFC is the major brand that Yum runs. The main product of KFC is made by chicken meat. Therefore, the strength and the weakness of KFC are obviously. People who like chicken meat will highly be attracted by KFC. However, it gives customer who like fast food a limited choice. Just use the one kind of meat will make the brand to be more professional. But it also will narrow its potential markets.
Sales had been flat for the first five years of the 2000s and were in decline. "In 2007, Kraft Foods China was an unprofitable, $100 million business that was not growing," noted Sanjay Khosla, Kraft Foods’ president of developing markets, in an interview published by the Boston Consulting Group. Kraft was even thinking of pulling the product out of the Chinese market completely, due to poor sales.
Providing customers with the best of both worlds: west meets east. In addition to its radical strategic approach of localization with regard to its food, they extended that viewpoint when selecting their management team. By hiring Chinese executives, Yum! Brands is able to build relationships with the local suppliers more easily and quickly. It definitely helps with their competitive advantage that chicken is a staple meat in China. Given these factors, it is clear that KFC has a competitive advantage in this market. However, taking a closer look at the industry and thinking longer-term, the competitiveness is undesirable but there is still potential to improve profitability. See the analysis
Pizza Hut is one of the flagship brands of Yum! Brands, Inc., which also has KFC, Taco Bell, A&W and Long John Silver’s under its umbrella. Pizza Hut is the world’s largest pizza chain with over 12,500 restaurants across 91 countries