This company puts fast-food yummies in a whole lot of tummies. YUM! Brands is the largest fast-food operator in the world in terms of number of locations, with more than 37,000 outlets in about 120 countries. (It trails only hamburger giant McDonald's in sales.) The company's flagship chains include #1 chicken fryer KFC (with more than 17,400 units), top pizza joint Pizza Hut (more than 13,700), and quick-service Mexican leader Taco Bell (more than 5,900). YUM! sold the Long John Silver's seafood chain, along with several hundred A&W root beer and burger stands to two separate buyers in late 2011. Franchisees, affiliates, and licensed operators run about 75% of the company's restaurants.
Sales & Marketing
YUM! Brands has become a dominant player in the fast-food industry thanks in large part to its multi-concept strategy combined with strong marketing and franchising efforts. With its multiple chains, the company appeals to a wider variety of consumer tastes than single-concept operators such as McDonald's and Burger King. YUM! Brands can further refine its marketing to promote each chain to a different dining segment. Pizza Hut, for instance, appeals primarily to families and large groups, while Taco Bell targets the younger demographic and snacking segment.
With successful marketing campaigns and almost ubiquitous presence, YUM! Brands' flagship chains dominate their respective markets. Taco Bell holds more than 50% market share in the Mexican fast-food segment, while KFC commands more than 40% of the quick-service chicken business. Pizza Hut leads its fragmented segment with about 15% of the market.
Franchising has allowed YUM! Brands to expand its worldwide presence through a far-reaching network of local operators, eliminating much of expense involved in building such a large restaurant chain. In exchange for royalties and franchise fees, each franchisee is allowed to use the company's branding and other intellectual property. YUM! Brands maintains food quality consistency throughout its chain by centralizing where the restaurants buy food items. Distributor McLane Foodservice is the primary supplier for most of the company's restaurants in the US.
YUM! Brands has previously looked overseas for growth and the company has been specifically targeting the emerging market in China where it has more than 4,400 eateries. In 2011 the company's China division brought in about $5.6 billion in revenue. To tailor the eateries to local tastes in China, the company has been experimenting with fish and beef menu items, as well as afternoon tea.
In early 2012, YUM! Brands paid $584 million to acquire an additional 66% stake in Little Sheep Group, a Chinese restaurant company that operates a chain of 450 eateries specializing in Mongolian-style soup and lamb dishes. YUM! Brands now owns more than 90% of Little Sheep Group. YUM! Brands has also purchased several other smaller restaurant operators in China.