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Tag: Yum Brands

  • KFC Opens First Muse Flagship in Dubai Ahead of Seoul Rollout

    KFC Opens First Muse Flagship in Dubai Ahead of Seoul Rollout

    KFC opened its first flagship under a new design concept called KFC Muse at Jumeirah Beach Residence in Dubai on October 31, 2026. The two-story restaurant serves as the testing ground for a planned global refit across the chain’s network of more than 34,000 outlets in over 150 countries.

    Americana Restaurants, the Middle East and North Africa franchisee run by chairman Mohamed Alabbar, developed the site in partnership with KFC parent Yum Brands. The property drops the standard fast-food format in favour of longer visits, larger floor plates and separate product stations designed to lift customer ticket sizes.

    Beverage lines and chicken customization

    Inside the JBR location, the operator built out an international beverage counter branded as KWENCH by KFC. The dedicated station sells hand-crafted specialty drinks outside regular lunch and dinner rush hours, including Boba Refreshers, Krunch Shakes, sparkling lemonades and iced coffees.

    Beside the drink counter, the outlet debuts KFC MIX’D, a service line where diners pick chicken cuts, add sauces and choose seasoning sprinkles before mixing them in a container. The floor plan organizes customer flows around what the company calls a Kinetic Bucket, a central media installation using synchronized lighting, sound and screens that shift throughout the day.

    The shift to quality experience formats

    Yum Brands is repositioning its chicken network toward what executive management describes as quality experience restaurants. Standard fast-food economics rely on tight margins, kitchen speed and high patron turnover. That operational model faces margin pressure across major markets as ingredient and labour expenses mount, pushing fast-food chains to fight coffee shops, bubble tea chains and casual dining spaces for afternoon traffic.

    Directing foot traffic into specialized beverage counters gives quick-service operators a higher-grossing product category that requires minimal kitchen equipment compared to frying lines. Specialty drinks also shield operators from raw poultry price swings while generating higher margins per transaction.

    Franchisee returns and regional risks

    For franchise partners like Americana, heavy capital expenditures on experimental interior builds bring clear financial exposure. Flagship locations in prime beachfront shopping districts like JBR carry elevated occupancy overheads that neighborhood drive-thru stores avoid. Replicating multi-level digital fit-outs across suburban restaurant estates will prove far harder to finance unless beverage sales show sustained double-digit gross margin gains.

    Rival chicken chains and local brands across Asia and the Middle East already compete heavily in the customizable chicken segment. South Korean operators in particular have dominated flavored, shaken and glazed fried chicken for years, meaning the concept will face immediate local competition when it lands in East Asia.

    “As we set the standard for the modern chicken QSR, we’re disrupting conventions, moving from QSR, quick service restaurant, to QXR: quality experience restaurant,” said Scott Mezvinky, Global CEO of KFC.

    Expansion plans set for Seoul

    The Dubai opening serves as the initial trial ahead of an immediate rollout into East Asia. Yum Brands confirmed that a second KFC Muse location will open its doors in Seoul before the end of the year.

    Both the Dubai and Seoul outlets will determine whether KFC scales the experiential layout, the KWENCH beverage counters and the MIX’D preparation tables into ongoing remodels across its broader 34,000-unit estate worldwide.

  • McDonald’s Uses AI to Guide Menu Prices Across Global Markets

    McDonald’s Uses AI to Guide Menu Prices Across Global Markets

    McDonald’s is increasingly deploying artificial intelligence to guide menu prices across the US and international markets, according to reports in September 2026.

    The system supercharges pricing models by estimating how much each store’s patrons are willing to pay, a move designed to lift headquarters’ profit.

    How the Pricing Engine Operates

    However, the extensive use of AI risks alienating customers and attracting antitrust scrutiny, while franchisees report mounting corporate pressure over local pricing decisions.

    Price gaps between nearby outlets have widened under the algorithm. In Fresno, California, a company-owned branch listed a Big Mac at $5.69. Another company store two miles away charged $6.89. That is a 21 percent price premium for the same product.

    Franchise Rules and Compliance Tracking

    Corporate executives maintain that operators retain legal discretion over menu pricing. Even so, store owners report institutional pressure to adopt the algorithmic recommendations. Internal documentation from June confirms headquarters logs specific instances where franchisees deviate from recommended figures.

    Under business standards enacted in January, franchise operators must constructively engage with corporate-approved pricing consultants and digital tools. McDonald’s defended the system as an advisory tool rather than a mandate, designed to help operators navigate varying overheads and distinct trade areas.

    Operator Margins and Market Friction

    Centralized algorithmic models shift pricing control away from local store operators. Across developed Asian markets like Japan, Australia and Singapore, automated yield management tests consumer tolerance. Franchise networks in these markets already face elevated labor and supply chain costs.

    Quick-service brands risk swift pushback whenever digital systems create visible price gaps across nearby postal codes. Rival chains Wendy’s and Burger King confirmed they do not use automated artificial intelligence tools to alter menu pricing. Both chains are positioning themselves against algorithmic adjustments.

    The Race Toward Automated Restaurant Tech

    Fast-food conglomerates have accelerated investments in predictive automation over the past two years. The goal is protecting gross margins while testing value propositions for cost-conscious diners. Yum Brands, operator of KFC and Taco Bell, has similarly expanded artificial intelligence deployments across its global store network to streamline operational decisions.

    Presentations from corporate executives show earlier affordability initiatives aimed at retaining traffic among lower-income demographics. Investor filings show headquarters views the technology as essential to defending systemwide volume without sacrificing royalty receipts.

    Regulators and consumer protection bodies continue to review dynamic and algorithmically generated pricing structures across retail sectors. Attention now shifts to fourth-quarter store profitability reports and franchisee compliance metrics as operators evaluate how local foot traffic responds to neighborhood price adjustments.

  • Lavazza launches with a strong partner with with Yum Brands

    Lavazza launches with a strong partner with with Yum Brands

    Fast-food and QSR-restaurant operator Yum China has partnered with Italian coffee company Lavazza to develop a network of coffee shops across the country.

    The companies have opened a Lavazza Flagship store in Shanghai, first outside Italy, as the first step in the new partnership.

    The flagship is located in Jing’an, Shanghai’s historic downtown district, offering what the companies describe as “an immersive Italian coffee shop experience that is almost identical to what they could expect to find in Italy”. High ceilings, artistic murals and marble furnishings help deliver the Italian ‘feel’ and the coffee is complemented with a “gastronomic cafe” serving traditional Italian-inspired snacks.

    “We see great potential for coffee in China and Lavazza shares this enthusiasm,” said Joey Wat, CEO of Yum China. “Leveraging our deep understanding of Chinese consumers, we look forward to working together with Lavazza to explore the coffee market in China.

    Antonio Baravalle, CEO of Lavazza Group, described Yum China as “a prestigious partner with in-depth knowledge of the market and the needs of Chinese consumers”.

    “China is an important market with huge untapped potential for coffee consumption. We have been searching for the right opportunities to establish Lavazza in China and Asia, and this partnership is an important first step,” he said.

    The 125-year-old family-owned Lavazza positions itself as a premium brand offering high-quality coffee. It has a strong presence across Asia at the retail level and as a supplier of beans to independent cafes, which must meet strict standards of coffee-making to be allowed to serve the brand.

    Lavazza has created a blend exclusively for the China market: Bel Paese Coffee, which it says offers tastes from across the different regions of Italy, including using historic espresso recipes and local interpretations.

    A range of ‘Coffee Design’ specialty coffees is also available at the Lavazza Shanghai Flagship Store.

    The food menu was created in partnership with an unnamed Michelin-starred chef to provide an authentic Italian offer.

    Yum China says its brands – including Pizza Hut, KFC and a growing portfolio of Chinese food chains – sold 130 million cups of coffee to consumers last year

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  • Yum China to face challenges this year

    Yum China to face challenges this year

    An aggressive store rollout program is helping Yum China achieve sales growth, but its Pizza Hut business continues to struggle. In year-end results released overnight, Yum China said fourth-quarter system sales rose 6 per cent in constant currency, but same-store sales rose by a more modest 2 per cent. The company, which owns the Chinese operations of KFC and Pizza Hut, opened 819 new stores last year, taking its combined network to 8484 stores across more than 1200 cities. The company plans between 600 and 650 additional stores this calendar year.

    For the full year, total system sales grew 5 per cent over 2017, with a solid 7 per cent growth at KFC partially offset by a 1 per cent decline at Pizza Hut, (excluding foreign exchange impacts). Same-store sales increased 1 per cent overall, up 2 per cent at KFC and down 5 per cent at Pizza Hut.

    Full-year revenue reached US$8.42 billion with net Income up 78 per cent to $708 million, from $398 million.

    Joey Wat, CEO of Yum China, said the results marked the ninth consecutive quarter of system sales growth since the company was spun off from former US parent Yum! Brands.

    “This strong growth was led by accelerated new store openings and a robust performance at KFC, which delivered 3 per cent same-store sales growth and 9 per cent system-sales growth during the quarter. Although Pizza Hut’s sales remained soft, we are pleased to see same-store traffic growth of 1 per cent and positive trends in customer feedback.”

    Wat said the aggressive store rollout program last year further strengthened the company’s market position, laying a solid foundation for growth.

    “While the macro backdrop is relatively soft, with our resilient business model and leadership in digital and delivery, we are confident that we have the right strategy and capabilities to maintain our growth trajectory and capitalise on the long-term potential of the China market,” she said.

    Among the highlights of last year was exceeding 160 million members of the company’s KFC loyalty program and 50 million members of the Pizza Hut program, increases of 50 million and 15 million, respectively.

    Mobile payments accounted for 65 per cent of the company’s sales in the fourth quarter, an increase of 11 percentage points year on year. Digital payments accounted for more than 86 per cent of company sales in the quarter, an increase of 14 percentage points.

    And delivery services – now offered in 1118 cities – accounted for 19 per cent of sales in the fourth quarter of 2018, an increase of three percentage points year on year.

  • Taco Bell reveals massive expansion plan in Asia

    Taco Bell reveals massive expansion plan in Asia

    US Mexican-themed dining chain Taco Bell says it plans to drive growth by expanding its presence in Asian markets. The brand intends to double its number of overseas restaurants to more than 500 outlets within the next few years. Taco Bell’s previous rollouts in Asian markets have occasionally been unsuccessful. An early franchise operation in Japan closed in the 1980s, although it reappeared in the territory four years ago. The brand also withdrew from Singapore in 2009.

    “Consumers weren’t ready in terms of awareness and the brand wasn’t positioned right at the time”, said president of Taco Bell International Liz Williams. The brand now expects to fare well in the territory with its more international young population and “heightened awareness” of Mexican food.

    A new store opening in Thailand this week will be modified for the market, including a spicier salsa recipe to suit local tastes. Forty more Thai locations are planned to open under local franchise partner Thoresen Thai Agencies.

    Taco Bell, operated by Yum! Brands, has 7000 restaurants in the US.

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  • Yum! appointed new leader for Pizza Hut Asia Pacific

    Yum! appointed new leader for Pizza Hut Asia Pacific

    Pizza Hut International on Tuesday announced that Unnat Varma, Managing Director, Pizza Hut India Subcontinent has been elevated to the position of Managing Director, Pizza Hut Asia Pacific effective 1 January 2019. In his new role, he will be responsible for steering Pizza Hut to the next phase of growth across the Asia Pacific region. Varma will be based in Pizza Hut APAC headquarters at Singapore and will report to Vipul Chawla, President, Pizza Hut International. As part of the APAC growth strategy, Pizza Hut India-Subcontinent will now be inducted under the Asia Pacific Business Unit. In total, Varma will oversee over 5500 stores across 22 countries.

    With Varma at the helm since 2015, Pizza Hut India-subcontinent has achieved strong business results with 10 successive quarters of positive Same Store Sales Growth. The brand has also expanded its physical store footprint – having recently launched its 500th physical store in the Indian Subcontinent.

    Under his stewardship, Pizza Hut has also pioneered the Fast-Casual Delco (FCD) concept in India, which offers a seamless integration of dine-in, takeaway and delivery channels, all under one roof and also upgraded all its digi-tech assets including the website, m-site and mobile app.

    These initiatives have enabled Pizza Hut to deliver on the promise of providing the Easiest, Fastest and the Tastiest pizza experience to consumers in India. As a result, Pizza Hut has been voted the most trusted brand in India for the 12th time in a row (as per a reputed media house) and was awarded the prestigious EFFIE Gold in the Foods and Confectionery category in 2018 for its outstanding consumer-centric performance.

    Varma is a respected and credible leader with over 24 years of industry experience. He joined Yum! in February 2006 and was elevated to Director Marketing, KFC, India Subcontinent in 2008. In February 2011, he took over the role of General Manager – Taco Bell and was responsible for launching the brand as the next growth engine for Yum! in India.

    After successfully establishing a strong foundation for KFC and Taco Bell, Varma was appointed as General Manager – Pizza Hut, India Subcontinent in December 2015and thereafter promoted as Managing Director – Pizza Hut, India Subcontinent in February 2016.

    Varma is also the Chairman of FICCI Task Force on Food Service Retail. Prior to joining Yum!, he worked with Gillette in India for 12 years across sales and marketing functions.

  • KFC Thailand benefits from transforming franchise model

    KFC Thailand benefits from transforming franchise model

    Fast-food restaurant chain KFC Thailand is on track to achieve double digit year-end sales growth since transforming itself into a 100-per-cent franchised model, exceeding business expectations.The largest restaurant chain in Thailand is also set to accomplish a record high of 75 new outlet openings this year, 39 per cent above target and pushing the total number of outlets in Thailand past 700, including 65 drive-through branches.

    GM for KFC, Yum Restaurants International (Thailand) Waewkanee Assoratgoon said Yum Thailand has successfully transformed itself into a 100-per cent franchisor business in only one year.

    “Our organisation is now in a good shape with an effective structure so that we can expect the most efficiency within the entire business operation.”

    KFC Thailand franchise operator Yrit secured the No 1 position and top-of-mind QSR brand as surveyed by Thai business magazinesMarketeer and Brandage, as well as picking up awards for social media penetration.

    Thailand is KFC’s eighth largest international market.

  • Taco Bell to open store in Bangkok

    Taco Bell to open store in Bangkok

    Taco Bell Thailand is scheduled to launch in Bangkok early next year. Thoresen Thai Agencies, which also holds the Thailand franchise for Taco Bell’s sister brand Pizza Hut, is planning to open the restaurant in Mercury Ville mall on the BTS Chidlom stop. The firm has already begun scouting for employees for the outlet.

    Taco Bell’s International president Liz Williams is leading the franchise on a broad expansion campaign, with progress currently being made in India, Brazil, and Spain among others where the brand has strong franchisees.

    Thoresen Thai’s CEO Chalermchai Mahagitsiri said that Taco Bell Thailand should do well in the territory as “the strong flavours meet the palate of Asian people.”

    Taco Bell’s owner Yum Brands operates around 7000 restaurants worldwide, predominantly based in the US, bringing in US$10 billion sales per year.

  • Strong first quarter for Yum China

    Strong first quarter for Yum China

    Sales, profits and margins all grew, along with store expansion, for Yum China Holdings in its unaudited results for its first quarter to the end of February.

    Same-store sales grew 1 per cent, including growth of 1 per cent at KFC and 2 per cent at Pizza Hut Casual Dining. Total system sales grew 4 per cent (3 per cent at KFC and 9 per cent at Pizza Hut).

    The group opened 133 restaurants during the quarter.

    Total restaurant margin increased 3.7 points to 23 per cent, mainly helped by retail tax structure reform implemented on May 1.

    Operating profit grew 22 per cent and 27 per cent excluding foreign exchange, which negatively impacted operating profit by $12 million.

    Net income increased 21 per cent to $175 million, while adjusted pre-tax earnings rose 14 per cent to $320 million.
    Yum China has more than 7600 restaurants, with a two-to-one lead over the nearest Western quick-service restaurant competitor and an approximate six-to-one lead over the nearest Western casual-dining restaurant competitor in China, says CEO Micky Pant.

    “We are especially gratified with the progress made on two key drivers of growth – digital and delivery,” he says. “More than 4400 restaurants in our system offer deliveries, and we believe we have established an infrastructure for continued growth.

    “In the first quarter, delivery represented about 12 per cent of our company sales. With about 93 million loyalty program members between KFC and Pizza Hut Casual Dining, we believe we have unprecedented insights into consumer behaviour and have been engaging with them across the digital eco-system: from pre-order to payment.

    “We remain confident in our ability to deliver 550 to 600 new builds while delivering double-digit growth in operating profit, excluding foreign exchange, this year.”

    Members in the loyalty programs increased to about 70 million for KFC and 23 million for Pizza Hut.
    Mobile payments reached about 30 per cent of company sales, with more than $500 million in sales paid via cashless payment methods.

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  • Profits rises for Yum China Holdings

    Profits rises for Yum China Holdings

    Yum China’s full-year operating profit of US$640 million was up 31 per cent led by margin expansion and restaurant openings.

    Its CEO describes it as a “momentous” year for the group, licensee of Yum! Brands in Mainland China. It has exclusive rights on the mainland to KFC, Pizza Hut and Taco Bell, which opened its first restaurant in China at the end of the year. Yum China also owns the East Dawning and Little Sheep concepts outright.

    Total system sales for the year grew 5 per cent, including growth of 6 per cent at KFC and 3 per cent at Pizza Hut Casual Dining, excluding foreign currency translation (F/X).

    Same-store sales were flat, with an increase of 3 per cent at KFC offset by a decline of 7 per cent at Pizza Hut.

    Yum China opened 575 restaurants during the year, representing 5 per cent growth, taking its total to more than 7500 outlets.

    Currency impact

    While retail tax structure reform helped profit growth, this was negatively impacted to the tune of $36 million by foreign currency translation. Excluding F/X and special items, operating profit grew 37 per cent.

    For its fourth quarter, Yum China’s total system sales grew 4 per cent, including growth of 4 per cent at KFC and 6 per cent at Pizza Hut, excluding F/X.

    Same-store sales were flat, rising 1 per cent at KFC and offset by a 3 per cent decline at Pizza Hut.
    The group opened 302 restaurants during the quarter.

    Foreign currency translation negatively impacted operating profit by $5 million.

    CEO Micky Pant says Yum China became an independent, publicly traded company while simultaneously improving its business performance and investing for future growth.

    “We continue to focus on our long-term growth formula: new unit development, same-store sales growth, and continued restaurant margin improvement. Right now, our top priority is consistently delivering positive same-store sales growth.”

    Digital engagement

    There was a focus on product innovation during the year, as well as restaurant refurbishing and digital engagement with customers.
    Pant says it was a groundbreaking year in digital and delivery.

    “Our loyalty programs have more than 80 million members –  ranked number one in the restaurant industry worldwide in terms of number of members.

    “Total delivery sales reached about $700 million, and we were number one among restaurant operators in terms of online sales in China. Cashless payment accounted for about 30 per cent of our company sales.”
    Pant says this year marks the 30th anniversary of the launch of KFC in China, and he believes most the company’s restaurants in China are yet to be built.

    Members in the loyalty programs grew to more than 60 million for KFC and more than 20 million for Pizza Hut.

    Mobile payments reached about 17 per cent of company sales for the year, while cashless payment methods were used for more than $2 billion in company sales.

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  • Taco Bell China launches in Shanghai

    Taco Bell China launches in Shanghai

    Mexican-inspired restaurant chain Taco Bell has opened its first outlet in China, near Shanghai’s landmark Oriental Pearl Tower in the Lujiazui business district.

    The restaurant has opened in conjunction with Yum China Holdings, which is the licensee of Yum! Brands in Mainland China.

    “Leveraging our deep insights into Chinese consumer preferences, developed from close to 30 years working in this market, we researched and fine-tuned the Taco Bell menu for China, and the initial response from customers is very encouraging,” says Yum China CEO Micky Pant.

    Favourite items on the brand’s menu have been adapted to local tastes, plus sauces have been developed. Items such as the Shrimp and Avocado Burrito will be offered only in China Taco Bells, and the Crunchy Taco Supreme now has Taco Bell’s signature nacho cheese sauce while the Volcano Chicken Burrito features spicy Sriracha sauce.

    Customers can order shared plates featuring seasoned nacho chips, spicy fried chicken and Mexican fries. Drinks available include cold draft beer and specialty cocktails such as the Margarita and the Mojito.

    There is an open kitchen so customers can see their food being made to order. There are also self-order kiosks.

    The restaurant has been officially launched following a soft opening during which customers have been sharing their experience of the brand through social-media posts, blogs and videos. More than 1000 people took part in a selfie soft-opening promotion.

    taco-bell-shanghai-inside

    California inspiration

    “Built around the concept of ‘Live Mas’, which literally means ‘Live More’, Taco Bell encourages its customers to try new things,” says Pant. “I look forward to creating experiences that surprise and delight people as we expand the Taco Bell brand in China.”

    The Shanghai restaurant showcases Taco Bell’s classic California-inspired look and design. It features surfboards hanging from the ceiling as well as guitars and graffiti art. It also integrates advanced technology throughout, including free Wi-Fi, digital ordering kiosks, digital menu boards and a range of payment options.

    “Building restaurants in new international markets is a key component to the overall growth and evolution of Taco Bell, and we’ve just scratched the surface of our global unit expansion potential,” says CEO Brian Niccol. “The opening of this restaurant in China is an exciting milestone for the brand, as this market holds tremendous growth potential.”

    Taco Bell has more than 7000 restaurants, more than 300 of them in 26 countries outside of the US. It aims to reach 1000 restaurants internationally by 2022.

    Yum China Holdings, with executive offices in Shanghai, has exclusive rights in mainland China to KFC and Pizza Hut as well as Taco Bell. Yum China also owns the East Dawning and Little Sheep concepts. With more than 7300 restaurants and 400,000-plus employees in more than 1100 cities, Yum China generated more than $8 billion in system sales in 2015.

    Taco Bell, a subsidiary of Yum! Brands, was the first quick-service restaurant to offer American Vegetarian Association (AVA) certified menu items. Taco Bell’s 350-plus franchise organisations serve more than 42 million customers each week through 7000 restaurants across the US, as well as through its mobile, desktop and delivery ordering services.

    Based in Louisville, Kentucky, Yum! Brands has nearly 43,000 restaurants in 135 countries and territories. Worldwide, it opens more than six new restaurants a day on average.

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  • Yum China seeking delivery deal

    Yum China seeking delivery deal

    Fast-food giant Yum China Holdings is looking at buying food-delivery services firm Daojia.com.

    Discussions are at an early stage, but a deal could be worth up to US$200 million, as reported.

    Established in 2010, Daojia.com focusses on online food orders and delivery services targeting the middle class urbanites in 10 Chinese cities. With a 3000-strong logistics team, it works with more than 6000 restaurants.

    Food-delivery apps are becoming more popular in China with services being offered by Baidu Inc’s Waimai, Alibaba Group Holding’s Meituan and Tencent Holdings’ Ele.me.

    China’s second-largest eCommerce fim JD.com and Macquarie Capital were investors in a $50 million round of fundraising by Daojia two years ago.

    Yum China was spun off from US-based fast Yum Brands Inc 12 months ago. The company’s brands include KFC and Pizza Hut.

    CEO Micky Pant says that while only 10 per cent of the company’s sales are delivered, deliveries are growing at double digits and will be an important driver of growth.

    Yum China secured a $460 million investment from Primavera Capital and Alibaba affiliate Ant Financial before its spin-off. Yum China already is the biggest user of Ant’s Alipay mobile payments service. The restaurant company is also investing in its mobile ordering system and loyalty programs.

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  • Starbucks plans to double its stores in China to 5000 by 2021, opening a new one every day

    Starbucks plans to double its stores in China to 5000 by 2021, opening a new one every day

    Starbucks announced that it plans to double the number of its stores in China from more than 2,300 to 5,000 by 2021. According to CNN, Starbucks says that it will open more than one new store a day for the next five years.

    To oversee this task (which Starbucks also hinted at in January), the company promoted Belinda Wong to Starbucks China CEO. According to the company’s official statement, Wong will also be in change of “digital and e-commerce opportunities across China,” as well as the opening of Starbucks’ first international Roastery and Reserve Tasting Room in Shanghai in 2017.

    belinda_wang.jpgAs Starbucks China’s former president, Wong led a team that drove the company’s growth in China from 400 stores in 2011 to more than 2,300 stories currently, operating in over 100 cities.

    The 45-year-old Starbucks Coffee Company opened its first store in China 17 years ago. In an interview with CNN, Starbucks CEO Howard Schultz discussed the initial road bumps the company encountered in the tea-obsessed country. “We had to educate and teach many Chinese about what coffee was — the coffee ritual, what a latte was… So in the early years, we did not make money,” Schultz said.

    Since then, excluding some meat scandals, Starbucks China’s business has been doing quite well. The South China Morning Post reports that “Starbucks’ second-quarter sales rose 18% in China, a faster pace than the company’s worldwide revenue increase of 9% over the same period.” Starbucks’s growth is even more impressive given that China’s economic growth was just 6.7% this quarter (again).

    Compared to Starbucks, other Western brands have not fared so well in China. Disappointed with its poor profits and earnings for the third quarter this year, the CEO of Yum Brands, which owns KFC and Pizza Hut, has pointed blame at the South China Sea ruling. This rise and fall of Western food brands is also apparent in retail brands.

    Hopefully customers will show as much loyalty to the company as one “Starbucks uncle” during the recent flooding in Hong Kong.

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  • McDonald’s Malaysia, Singapore ‘buyer found’

    McDonald’s Malaysia, Singapore ‘buyer found’

    Twenty-year franchise rights for McDonald’s Malaysia and Singapore outlets have been conditionally sold to a Saudi Arabian group for up to US$400 million.

    Reza Food Services, which owns McDonald’s restaurants in Saudi Arabia, is seeking finance from Malaysian bank CIMB to finance the transaction, insiders say.

    McDonald’s is moving to bring in partners as it switches to a less capital-intensive franchise model in Asia, and has said it wants regional family-owned groups and local tycoons as long-term partners.

    Insiders say the basic terms of the agreement with Reza have been finalised, with the deal expected to be completed by the end of the year.

    McDonald’s, which has about 260 restaurants in Malaysia and about 120 in Singapore, is also selling its China and Hong Kong outlets, and has received final bids from at least three groups.

  • Yum China has ‘huge potential’

    Yum China has ‘huge potential’

    Yum China is set to exploit “huge potential” after its spin-off from its US parent, says Neil Saunders, CEO of Conlumino.

    Commenting on the parent company’s latest results, the US-based retail commentator said  while the China division once again delivered “an anemic performance” with total system sales declining by 3 per cent over the prior year, the best is yet to come.

    Revenue at both Pizza Hut and KFC fell on a same-restaurant basis.

    “This means that in the year to date, in real terms the China operation has posted no real sales growth. Fortunately, changes to value-added tax in the country allowed Yum! to ease up operating profits across the quarter,” said Saunders.

    “The position of China as a business which has huge potential once it gets through the current patch of slow growth, largely justifies its imminent spin-off into a completely separate operation. The divorce from the rest of the Yum! operation will allow both sides to focus more on their respective priorities and opportunities.”

    He said the overall global result for Yum! Brands suggest the company is making good headway in an increasingly challenging market.

    “However, the reality is far more mixed – mostly because Yum!’s growth figures are flattered by the fact the company strips out exchange rate fluctuations. When these are put back in, total revenue experienced a shrink of 3 per cent over the prior year – a far less impressive outcome.

    “In terms of the core business, the main focus needs to be Pizza Hut which has become something of a problem child for Yum! Over the quarter system sales shrank by 2 per cent in real terms, underpinned by a 1 per cent decline in same-restaurant sales. While there are some markets in which the brand is performing well, these continues to be overshadowed by the US which accounts for the majority of Pizza Hut’s revenue.”

    Saunders said that while admittedly the overall casual dining market, in which Pizza Hut loosely falls, saw customer traffic and spend decline over the third quarter.

    “However, our data also show that Pizza Hut is losing customer share to delivery services like Papa John’s and Domino’s. A defection to cheaper fast-food alternatives, especially among younger families, has also been unhelpful. This is an uncomfortable position and underlines the fact that Pizza Hut still has much work to do in terms of reinvigorating its brand.”

    Taco Bell, meanwhile, had a better quarter with a 5 per cent system-sales growth and 3 per cent same-restaurant growth.

    “While Taco Bell has benefitted from challenges at Chipotle, in our view most of the success is down to a change in marketing which is now more relevant to the younger millennial audience. Menu simplification and focus on popular lines has also helped to drive growth. We think these steps should be seen as part of a longer term upswing in the brand’s fortune.”

    Saunders said that while KFC had a much better quarter than the previous one, especially in the US, Conlumino still harbors concerns about the brand’s longer term growth prospects as younger upstarts like Chick-Fil-A or Popeyes Louisiana Kitchen continue to gain traction.

    “As such, we see KFC’s latest upswing as part of a more turbulent longer term picture.”

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