Yum! Brands Inc. announced its plans to place its Long John Silver’s and A&W All-American Food Restaurants for sale, and has begun a process to identify a buyer. The company is sharpening its long-term growth focus on building leading brands in every significant category in China, driving aggressive international expansion, and improving its U.S. brand positions by building new dayparts and sales layers at Taco Bell, Pizza Hut, and KFC.
“Over the past decade, Yum has delivered annual EPS growth of 13 percent, exceeding our 10 percent annual growth target. This has been driven by aggressively building restaurants in China and Yum! Restaurants International at a pace of nearly four new restaurants every day of the year. We do not believe Long John Silver’s and A&W-All American Food restaurants fit into our long-term growth strategy,” says David C. Novak, Yum! Brands Inc. chairman and CEO. “Accordingly, we have decided to put these two great brands up for sale and we will complete the sale only once the right buyer or buyers have been identified and we can ensure a seamless transition.” The company does not expect the eventual sale to have a material impact to its ongoing earnings or cash flow.
In 1998, when Yum! Brands was spun-off from PepsiCo, 22 percent of its profits were sourced internationally. Today, about 65 percent of the company’s profits are from the China and Yum! Restaurants International divisions, and the company expects that percentage to grow to 75 percent by 2015. In the U.S., Taco Bell accounts for approximately 60 percent of the company’s profits, followed by Pizza Hut and KFC. The Long John Silver’s and A&W All-American Foods Brands account for a total of 1,630 restaurants, all of which are owned and operated by franchisees.
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