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FEATURE: Yum Brands Growing Faster Than Rivals in Emerging Markets

Source: FLEXNEWS
20/04/2010

20 April 2010 - Speaking to investors last week, Rick Carucci, CFO of Yum Brands, parent of the KFC, Taco Bell and Pizza Hut chains, said that his company has a competitive advantage over rival restaurant operators in emerging markets and sees significant growth opportunities.

"Today, we have nearly 10,000 units in the emerging markets, or roughly 55% of our total YRI and China units. We are the largest restaurant company in emerging markets, and we are growing at a faster rate than our major QSR competition", he said.




"With a five year period ending in 2009, we added about 4000 net new units in these markets, a 12% compound annual growth rate. This compares to a 1% compound annual growth rate in the balance of our international operations", added the CFO.

Citing the World Bank's definition of emerging markets, Carucci said that these generally includes countries whose gross national income per capita is less than $12,000, such as China, Indonesia, Malaysia, India, Russia, Vietnam, and Brazil. He reminded investors that these nations all have near or over 100 Yum! restaurants.

"The good news is that collectively, these emerging markets are growing their economies at a fast rate. With the booming middle class population in emerging markets, we strongly believe there is a long run rate for restaurant growth in those countries", argued Carcucci.


"As another benchmark, we currently have almost two times the number of emerging market units as McDonald's, and we have added more net units than McDonald's at a 3 to 1 rate during the past five years", continued the CFO.

He explained that most of Yum Brands' competitors are not trying to open restaurants in many of the emerging markets given that it usually takes about 10 years to get to 100 units in a new country.

"This is the point at which you could begin to scale a concept as you have a proven consumer proposition, a more efficient supply chain, and access to mass media such as television".

"Overall, for emerging markets, Yum! enjoys the combination of an existing lead in penetration, a higher growth rate, and the knowledge of the lead times it would take others to have a meaningful presence in these markets. This provides Yum! with an opportunity to increase our competitive advantage that will likely last for a very long time", concluded the CFO.



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