Yum! Brands, Inc. (NYSE: YUM), parent of KFC, Pizza Hut and Taco Bell, announced today that it has agreed to purchase 20 percent of the outstanding common shares of Little Sheep Group Limited, headquartered in Inner Mongolia.
Little Sheep is the leading brand in China’s “Hot Pot” restaurant category with 375 restaurants, primarily in China as well as Hong Kong, Japan, Canada, and the U.S.
The concept specializes in Mongolian-style hot pot cuisine characterized by its proprietary soup base and Mongolian lamb specialties for lunch and dinner. The restaurant concept was established in 1999.
“Our strong position in China allows us to identify opportunities for strategic partners such as Little Sheep, a leading concept with strong branding and a nationwide network,” said Sam Su, President, Yum! Restaurants China and Vice Chairman, Yum! Brands, Inc. “We look forward to working with Little Sheep as we continue to focus our own management on growing our existing portfolio of brands. China remains the biggest growth opportunity in the restaurant industry in the 21st Century,” said Su.
Yum! Brands has a long track record of success in China with its popular KFC and Pizza Hut brands. The company has also introduced the East Dawning and Pizza Hut Home Service brands. The China Division includes 3,000 restaurants and opens over one new restaurant every day.
Over the past three years, Yum! China Division has opened nearly 1,500 new restaurants and has generated a compounded annual growth rate of 29 percent for system-sales and 31 percent for operating profit. Yum! China Division is the highest margin and highest return business in Yum’s global portfolio.
The purchase price for the transaction is approximately $63 million. The transaction is subject to regulatory and other approvals and is expected to be completed by this summer.