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Yum Brands Financial Statement Analysis

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Background Yum Brands Incorporated is the world’s largest fast-food, or quick-service restaurant (QSR), company in terms of restaurants, which numbered over 37,000 at the end of 2010. It currently operates five restaurant chains, but by the end of 2011, that number will decrease to three: KFC, Pizza Hut, and Taco Bell. The remaining two chains, A&W and Long John Silver’s, will be sold in the 4th quarter of 2011 to companies formed by their franchise holders. As of November, 2011, Yum is in the process of purchasing a Chinese hot pot chain, Little Sheep. It has received government approval and is awaiting shareholder approval. Yum started as the restaurant division of food and beverage giant PepsiCo. In 1997, facing increasing …show more content…

Mexican QSR segment with 52% market share. The pizza QSR segment is a more crowded market, but Pizza Hut was still the leader with only 14% market share. Long John Silver’s easily led the seafood QSR segment with a 37% market share. A&W was the lone exception among the Yum portfolio, but with only 322 stores it is difficult to gain significant share, and it has been targeted as a failing brand by many analysts. Yum Brands current strategy can be summed up in one word, international. The U.S. QSR market is mature and heavily saturated, so instead of fighting for domestic market share, Yum is primarily focusing on expanding in emerging markets overseas. The primary market focus is , which has quickly become the top profit-producing segment for Yum Brands, with 26% profit growth in 2010. Outside of , Yum is also leveraging its franchising model to open hundreds of new stores, 4 per day in 2010, with little capital investment. One key to Yum’s success internationally is adaptation to the local market. In , you can enjoy spicy KFC chicken and paneer on your Pizza Hut pizza. In , the KFC menu includes local dishes such as congee and spicy tofu chicken rice. Pizza Hut has been branded as an upscale dine-in restaurant, offering items as diverse as scallop croquettes and escargot. Restaurants are also constructed using traditional building designs and restaurant managers are hired locally, instead of being brought from the as competitors have

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