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April 27, 2005
China Tastes Great for Yum! Brands
Starting in 2005, Yum! Brands, owner of fast food brands such as KFC, Taco Bell, and Pizza Hut, begins reporting information from its international business in two separate operating segments. Because of its importance in this company’s overall results, the China Division (which includes Thailand and KFC Taiwan in addition to mainland China) will be reported separately from the rest of the International Division. (A recently released detailed presentation on Yum’s China Division be found by following this link.)
The information which has been released so far is revealing. Yum’s operating profit in their China Division has expanded by 39% compounded since 1999, growing from $39 million to $206 million in fiscal 2004.
In the just reported first quarter of 2005, the company reported China Division sales of $235 million with operating profit of $53 million. By contrast, in the Untied States, Yum’s roughly 18,400 stores generated only $1.3 billion in revenue and operating profit of $162 million.
In other words, although the China Division has 90% fewer stores than Yum’s U.S. operations, it is already one-third the size of the U.S. operation, measured by operating profit, and gaining rapidly.
It’s little wonder that Yum plans to open about a store a day in China (over 350) during 2005.
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