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Yum! Brands splits to accommodate entire Chinese franchise

By RJ Whitehead

- Last updated on GMT

Yum! Brands splits to accommodate entire Chinese franchise

Related tags Pizza hut China

American fast-food operator Yum! Brands will separate into two independent, publicly-traded companies—one of which will consist of its entire China operation.

The new entity, Yum! China, which currently runs around 6,900 KFC and Pizza Hut restaurants in the country and is on track to have opened 700 new outlets in 2015, has the potential to grow to 20,000 restaurants, the company says.

Following the separation, each standalone company will be able to intensify focus on its distinct commercial priorities, allocate its own resources to meet the needs of its business, and pursue distinct capital structures and capital allocation strategies​,” said Greg Creed, chief executive of Yum! 

Yum! Brands will have a more stable earnings stream typical of a franchise company powered by industry-leading brands, while also benefiting from the development of the China business as a unique growth engine​. 

In turn, our China business is self-sufficient and scalable with strong leadership in place, and is well-positioned to realise its full potential as a standalone business to capture the compelling opportunities in China​.” 

Upon completion of the separation following regulatory approvals and directors’ consent, Yum! China will be led by Micky Pant, who was named its chief executive in August, and comprise of a predominantly Chinese leadership team based in Shanghai. The devolved company will then operate under a franchise agreement. 

The China business delivered annual revenue of US$6.9bn in 2014—roughly half of the overall company’s income—and has a substantial free cash flow, with no significant debt, the company said. 

From January, Yum!’s India business will integrate its brands into the global KFC, Pizza Hut and Taco Bell divisions of Yum! Brands in America, as the company moves to organisational alignment by brand, rather than by geographic location. 

DSM expands glean gum site

DSM’s hydrocolloids business unit has begun expansion to its gellan gum site in Tongxiang, Zhejiang province, its only global business unit based in China. 

Produced by a natural and sustainable fermentation process, gellan gum plays a critical role as a stabilising and texturising agent in a wide variety of foods and beverages. 

The site expansion is DSM Hydrocolloids’ answer to customers’ repeated calls for a secure and sustainable supply of high quality gellan gum​,” said Ronnie Yuan, innovation director.

Xiangwei Gong, hydrocolloids business unit director said the move would strengthen the company’s ability to meet demand while widening its hydrocolloid product portfolio.

Other news from China

33 hit in suspected food poisoning outbreak

One person has died and 32 others were hospitalised amid a suspected food poisoning outbreak in central China's Hubei Province.

The local government said the 33 people, which were employees of a fishery, complained of vomiting after eating at the work canteen in Xiantao City.

The city's major officials have called for an investigation into the incident to find out the cause of the suspected food poisoning.

Fried rice record attempt quashed by Guinness

A world record attempt involving a group of 300 people in Yangzhou who cooked 4 tonnes of fried rice failed because the food they cooked was put to waste.

Guinness World Records confirmed that under the regulations of the attempt, all food must subsequently be supplied to humans, whereas some went to waste. This decision came after reports that the rice was used as pig feed.

"We held back on publicising the results because we had been reviewing the information submitted by the organiser​," Sharon Yang, Guinness Greater China’s marketing director, told Xinhua, the country’s official news agency.

"The organiser admitted that 150kg of the rice was handled improperly. The products created in any record attempt involving food must be given to people and not wasted. Hereby, we have notified the organiser that the record was revoked​," she said.

The record attempt featured as part celebrations for Yangzhou city’s 2,500th anniversary this year. The rice friers spent four hours cooking 4.19 tonnes of Yangzhou fried rice.

The organiser of the event had said that the fried rice would be distributed to students of four schools, Xinhua reported.

Related topics Business Supply chain China East Asia

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