Industry News | April 19, 2012 | QSR Exclusive Brief

Yum's Same-Store Sales Up 14% in China

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During his company’s first-quarter earnings call today, Yum! Brands CEO David Novak sounded a now-familiar refrain, once again lauding the company’s wildly successful international markets.

In China, Yum’s same-store sales shot up 14 percent from the previous quarter and are “performing at an unbelievable level,” Novak told investors. The international segment of Yum’s business now comprises more than 70 percent of its operating profit, he said.

Both KFC and Pizza Hut continue to curry favor in Asian markets, and Pizza Hut remains the No. 1 casual-dining brand in China, with 662 restaurants in the country, Novak said.

“Virtually all KFCs in China now serve breakfast, which accounts for about 6 percent of sales,” he said. “Nearly half of our KFC restaurants offer delivery service, and over half have 24-hour operations. These service and daypart extensions are all in the early phases of development, and provide tremendous growth potential for years to come as we further leverage our restaurant assets.”

Novak said his company is also “driving major growth in the continent of Africa, building off our base of 656 stores in South Africa.” He expects Yum to open stores in around 20 African countries by the end of 2012.

“With over a billion people throughout the continent, we know we’re just getting started,” he said. “Over 55 percent of our operating profit comes from high-growth, emerging markets.”

Yum is also performing well in the U.S. Same-store sales here increased 5 percent in the first quarter.     

The company is upbeat on Taco Bell’s prospects, Novak said.

“We take a lot of heart from the fact that our operating capabilities continue to get better and better,” he said. “We score on the top tier of our industry on speed of service and accuracy, so that foundation is there and improving.”

Novak said Taco Bell will expand on its relationship with Frito-Lay, through which it launched the popular Doritos Locos Tacos earlier this year.

“Obviously, Doritos has a number of other flavors,” he said. “We think we can generate innovation on the taco platform, which, frankly, we really hadn’t had for 50 years … until we made this innovation.”

By Jan Fletcher