Friday, February 4, 2011

Yum Brands Has Big Growth Plans For 2011

Yum Brands — The world's largest restaurant company: KFC, Pizza and Taco Bell
The parent company of Taco Bell, KFC and Pizza Hut has big growth plans for 2011, especially in China and other emerging markets, but executives said during a conference call that they expect hurdles, such as commodities inflation and the effect of lapping a particularly successful 2010, to keep them on their toes.

Yum is coming off a strong year, with fourth-quarter profit up 27% over the prior year. Chief Financial Officer Richard Carucci said Yum estimates its 2011 commodities costs will be up 4% in the U.S., 5% in China, and 3% in its international division, YRI.

While Yum's commodities contracts have it fairly locked in for the year, Carucci said, if food costs don't come down, the company has about $40 million of further exposure: $25 million in China and $15 million in the U.S.

Yum recently raised prices in China, to offset both commodities and wage inflation in the country, and said sales remain strong. Other companies, such as McDonald's Corp. (MCD), Yum's biggest fast-food competitor, have also been forced to increase their prices in China.Thanks to strong sales in China, the restaurant operator's fourth-quarter earnings climbed 26% to 63 cents a share, beating views for 60 cents. Total sales grew 6% to $3.56 billion, also above expectations.

In the U.S., Yum said it plans to grow its Taco Bell locations to 8,000 from 5,000.Yum! Brands, Inc., based in Louisville, Ky., is the world's largest restaurant company in terms of system restaurants with more than 37,000 restaurants in over 110 countries and territories and more than 1 million associates. Yum! is ranked #216 on the Fortune 500 List, with nearly $11 billion in revenue in 2009. Four of our restaurant brands – KFC, Pizza Hut, Taco Bell and Long John Silver's – are the global leaders of the chicken, pizza, Mexican-style food and quick-service seafood categories.

Article published by the Wall st Journal.-By Annie Gasparro, Dow Jones Newswires; 212-416-2244;

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