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Darden Restaurants, Yum! Brands, Dunkin’ Brands,and Mexican Grill reveal growth plans at the Robert W. Baird & Co. 2013 Growth Stock Conference.
Yum: An eye on India
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For the balance of 2013, Yum! Brands Inc. would focus on shoring up its once high-flying China division, as that system recovers from negative publicity surrounding the country’s supply of chicken and fears of avian flu, both of which hurt sales at , said Steve Schmitt, vice president of investor relations.
But the Louisville, Ky.-based operator or franchisor of , KFC and has several growth stories to tell, Schmitt said, including its India division.
Yum created a separate division for India last year, envisioning the same kind of rapid growth for the China division, and while China has often been cited as the model for Yum’s expansion in India, Schmitt noted a few differences.
Major profit growth is still several quarters away for the division, as Yum focuses on unit growth and system sales growth in India, Schmitt said. Same-store sales declined 3 percent in the first quarter in India, “but that should improve significantly,” he noted.
He added that India’s first 1,000 restaurants would be spread more evenly among KFC, Pizza Hut and Taco Bell, unlike China, where KFC is by far the dominant brand, Pizza Hut is steadily growing and there are no Taco Bells.
“Because of the growth opportunity we see [in India], we don’t want to cut the growth short for any of these brands,” Schmitt said. “We love the way KFC is positioned in India, and we like how the casual-dining Pizza Hut brand is positioned but have some work to do yet on delivery. But if there’s one market where we’d bet on Taco Bell succeeding internationally, it’s India. With the form of our products, the spiciness of our food and our vegetarian offerings, we really believe we can grow four brands in India in a significant way.”
He added that the innovation on Taco Bell’s domestic menu — especially Doritos Locos Tacos — has driven much of Yum’s recent profit success in the United States.