Yum!

BY: Mark Nall – 10/28/08 – ENTP 6826
Abstract: The paper examines Yum! Brands, Incorporated’s strategy to drive profitable international growth for the company’s global portfolio by securing supply chains, increasing franchisees, and leading the world in restaurant multi-branding. Details of the importance of local context and the need to adhere to a global perspective on opportunities are discussed.
Citation: http://www.yum.com/
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Yum! Brands, Incorporated, based in Louisville, Kentucky, is the world’s largest restaurant company boasting more than 35,000 restaurants in more than 110 countries and territories. This global chain includes Yum! Brands, Inc.’s International Division, as well as China Division, which alone homes more than 3,100 restaurants. Yum! Brand restaurants- KFC, Long John Silvers, Pizza Hut, and Taco Bell are the global leaders of the chicken, quick-service seafood, pizza, and Mexican-style food categories. Along with its acquisition of the longest running quick-service franchise in America, A&W Restaurants, Yum! Brands, Inc.’s restaurants combined for more than $10 billion in total revenue in 2007, including food sales and franchise fees.
With a huge opportunity for growth due to tremendous scale and economics, the China Division has been reported separately since 2005 due to its size, strength, and importance. While the International Division realized 2007 operating profits of more than $480 million, the China Division, alone, enjoyed 2007 operating profits of $375 million, making China Yum! Brands number one market for new company restaurant development worldwide.
Yum! Brands, Inc. is a successful venture which has combined the entrepreneurial efforts of those who created the restaurants Yum! Brands markets. Dating back to 1919 when A&W mixed up its first batch of creamy root beer, through the 1930’s depression when Harland Sanders blended special herbs and seasonings for fried chicken, to the 50’s Taco Bell inception and the 1960’s introduction of Long John Silvers and Pizza Hut, quick-service restaurants have shaped the evolution of the American diet. Now, as the global market is diversifying to meet the needs of a changing world, Yum! Brands is also diversifying to meet the needs of international expansion by incorporating local operating cultures, as well as varying menu items to different markets.
After becoming a public company in 1997, Yum! Brands has built an empire of global franchises. Over the past eight years, the company has opened more than 700 new restaurants outside the U.S., while more than doubling its operating profits. The company’s international business is one of the key factors that make them unique in the restaurant industry.
In an effort to build a vibrant global business, Yum! Brands is focusing on the following key growth strategies: building leading brands across China in every significant category; driving aggressive international expansion and building strong brands everywhere; dramatically improving U.S. brand positions, consistency and returns; and drive industry-leading shareholder and franchisee value.
There are a few central ideas which will continually aid in Yum! Brands enhancement of it global portfolio. By analyzing local context, the frequency and form of where markets and countries are headed will aid the company in developing extended performance trends. As economies are strengthened due to increased globalization, Yum! Brands positioning in the market place will also strengthen. With the introduction of more stable economies, comes more work force and more hungry workers, hence more opportunity for restaurant development.
This leads to another central idea of maintaining a global perspective on opportunities, by management, to enhance the performance of the company’s international expansion. By adhering to a global perspective on access to resources utilized by the 35,000 plus restaurants and enhancing their deal structures, Yum! Brands will decrease its costs in the supply chain, thereby increasing their operating margin. Developing international supply chains will aid in the strengthening of international economies, thus providing for increased opportunities in these areas.
In developing an expansion strategy, Yum! Brands has become the worldwide leader in restaurant multi-branding. The company has increased its presence in the restaurant market by offering consumers more choice, convenience, and value at one location by combining two restaurant brands under one roof. “Yum!’s formula for success is centered on putting people capability first because when we do that, we satisfy our customers and generate more profits”. (http:yum) In implementing this formula, the company has come to offer more than 4,000 company and franchise-owned multi-brand restaurants worldwide. This unique style has become a hit with customers as the increased menu items reveal increased customer satisfaction.
In adhering to its fore mentioned growth strategies, Yum! Brands, Inc. has become one of the fastest growing retailers in the world by opening up about three new restaurant locations outside of the U.S. everyday. Their growth strategies have aided the company in becoming a large, growing, profitable, high-return international business with a market presence which promotes strong growth opportunity. This company has become a model for international expansion by creating international operating cultures which deliver outstanding customer service including cleanliness, hospitality, accuracy, maintenance, product quality, and speed which drives sales growth around the globe. I believe other companies venturing internationally will benefit from studying this model.