What is in this article?:
- Yum: China sales setbacks to intensify in 2013
- U.S., YRI to lead for a change
Growth targets remain unchanged for Taco Bell, KFC and Pizza Hut parent despite plummeting sales in China
U.S., YRI to lead for a change
Though the China division drove more than 40 percent of the company’s profit last year but would drag results this year, Yum officials said it expected the United States and YRI to contribute to operating profit growth as they have in the company’s long-term model for the past several years.
“I am optimistic that YRI will have a strong 2013,” said Yum’s president, Rick Carucci. “It should benefit from strong development momentum, from reaching scale in some key markets and from some improvements in our ownership portfolio.”
YRI’s goal is to open 950 locations in 2013, much of it in emerging markets, Carucci added. He pointed to Russia and Africa as prime examples of developing markets with potential.
Germany and France are two other targets for Yum where the economies certainly have developed, but Yum is underpenetrated, with only 150 KFCs in France and 100 in Germany, he said. Carucci added that Germany now has enough scale to advertise nationally on TV, a move that produced a 10-percent sales lift in France a few years ago.
Recent moves to divest the Pizza Hut business to franchisees in the United Kingdom and to acquire the 100-unit franchisee in ’s operations should improve YRI’s overall returns, Carucci said.
He also was optimistic for continued strengthening of sales in the United States. In fiscal 2012, the U.S. division’s full-year same-store sales increase of 5 percent comprised gains of 8 percent at Taco Bell, 3 percent at Pizza Hut and 3 percent at KFC.
“While the [U.S.] economy is not robust, it is strong enough [for us] to control our own destiny,” Carucci said. “We believe the U.S. is set up for success in 2013 because Taco Bell has momentum, new units are now working in our favor, and we have meaningful innovation planned at all three of our brands.”
In 2012, Taco Bell sold 325 million units of its Doritos Locos Tacos that debuted last March, he noted, and the Cantina Bell line of products boosted customer’s perceptions of Taco Bell.
“What’s important is that our 2012 Taco Bell successes should pay dividends again in 2013,” Carucci said. “Cool Ranch Doritos Locos Tacos will be introduced in March, and Cantina Bell innovation is also coming. All of this will be backed with solid operations and more media weight.”
Taco Bell is shifting all advertising paid for by franchisee contributions to a marketing fund to national TV ads, Carucci said, and the brand will target new-unit growth in more rural areas with a smaller store prototype and a rural-development incentive for franchisees. Pizza Hut had similar success opening about 150 new stores in 2012 thanks to its “Del-Co Light” store design, and the brand is aiming for a similar number of openings in 2013.
Yum operates or franchises more than 39,000 restaurants in more than 120 countries and territories.
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