Yum! Brands
Encyclopedia
Yum! Brands, Inc. or Yum! is a United States-based Fortune 500
corporation
. Yum! operates or licenses Taco Bell
, KFC
, Pizza Hut
, and WingStreet
restaurants worldwide.
Based in Louisville, Kentucky
, it is the world's largest fast food
restaurant
company in terms of system units—nearly 38,000 restaurants around the world in more than 110 countries and territories. In 2010, Yum!'s global sales
totaled more than US$
11 billion.
from PepsiCo
, which owned and franchised the KFC, Pizza Hut, and Taco Bell brands worldwide. Because of the company's previous relationship with Pepsi
, Yum! Brands has a lifetime contract with PepsiCo, with notable exceptions being the contract of A&W Restaurants with Dr Pepper Snapple Group
to be the exclusive restaurant provider of A&W Root Beer
, and the contracts of franchisees such as HMSHost and college-operated locations with Coca-Cola
which override Yum's lifetime PepsiCo contract, along with some scattered KFC franchises across the United States which continue to maintain Coke fountain rights.
-based Yorkshire Global Restaurants, owner of the Long John Silver's
and A&W All-American Food chains and its intention to change the company's name to Yum! Brands, Inc. On May 16, 2002, the name change became effective after a vote during the company's annual shareholders meeting, and on June 17, 2002, Yum! executed a two-for-one stock split
. Shortly afterwards, due to Yum!'s lifetime contract with Pepsi, Long John Silver's and A&W Restaurants (both of which previously served Coca-Cola
) switched to Pepsi
products once their franchise
contracts expired, with A&W retaining A&W Root Beer
from a separate deal with Dr Pepper Snapple Group
.
In 2003, Yum! launched WingStreet
as a hybrid combo unit with an existing Pizza Hut franchise. The Pasta Bravo concept was acquired in 2003 from Pasta Bravo, Inc. of Aliso Viejo, Calif for $5 million to pair with Pizza Hut. An East Dawning test cafeteria-style restaurant was opened in Shanghai in 2004. After failing, Yum! Brands chose the KFC business model (KFC is the most successful Western chain in China) and found greater success.
As of year-end 2010, more than 20 East Dawning restaurants were in operation. In 2007 and 2008, a thousand WingStreet stores a year were opened. On October 19, 2009, Company president Scott Bergren publicized WingStreet's national launch.
In January 2011, Yum! announced its intentions to divest itself of its Long John Silver's and A&W brands to focus on its core brands of KFC, Pizza Hut and Taco Bell. For the decade leading up to the company's announcement, major growth had relied on international expansion. With little presence outside the US and Canada, the two chains no longer fit in the company's long-term growth plans. The foreign expansion—particularly that of Taco Bell, KFC and Pizza Hut—was cited in the firm's January 18, 2011 announcement of its intention to sell the A&W and Long John Silver's chains. Both of those chains also suffered from poor sales, and had fewer locations compared to the other chains in the Yum! Brands portfolio. In September 2011, Yum! announced they had found buyers for the A&W and LJS chains. A Great American Brand LLC will buy A&W, and LJS will be acquired by LJS Partners LLC. Yum! Brands had originally purchased the parent company of Long John Silver's and A&W brands in 2003 for $320 million.
In May of 2011, Yum agreed to purchase mainland Chinese hotpot chain Little Sheep for HK$4.56 billion. The deal spent more than 4 months in anti-trust review by the Chinese Ministry of Commerce, to determine whether or not the transaction would result in a monopolistic positioning of Yum in the country's restaurant industry. The Ministry approved the deal in November of 2011, according to Little Sheep representatives.
of Yum! Brands is David C. Novak
. Novak is a director of J.P. Morgan Chase and became CEO of predecessor firm Tricon Global on January 1, 2000, and chairman of the board
on January 1, 2001. He is also a member of the Yum! executive/finance committee.
Since 2006, Yum! Brands has served as the corporate sponsor of the Kentucky Derby
.
Fortune 500
The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks the top 500 U.S. closely held and public corporations as ranked by their gross revenue after adjustments made by Fortune to exclude the impact of excise taxes companies collect. The list includes publicly and...
corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
. Yum! operates or licenses Taco Bell
Taco Bell
Taco Bell is an American chain of fast-food restaurants based in Irvine, California. A subsidiary of Yum! Brands, Inc., which serves American-adapted Mexican food. Taco Bell serves tacos, burritos, quesadillas, nachos, other specialty items, and a variety of "Value Menu" items...
, KFC
KFC
KFC, founded and also known as Kentucky Fried Chicken, is a chain of fast food restaurants based in Louisville, Kentucky, in the United States. KFC has been a brand and operating segment, termed a concept of Yum! Brands since 1997 when that company was spun off from PepsiCo as Tricon Global...
, Pizza Hut
Pizza Hut
Pizza Hut is an American restaurant chain and international franchise that offers different styles of pizza along with side dishes including pasta, buffalo wings, breadsticks, and garlic bread....
, and WingStreet
WingStreet
WingStreet is a restaurant chain specializing in chicken. It is owned by Yum! Brands, which also owns its sister franchise Pizza Hut. As of September 2008, there were close to 1,600 locations in the U.S., Canada, and Australia. They are almost always co-located with Pizza Hut.-History:Pizza Hut...
restaurants worldwide.
Based in Louisville, Kentucky
Louisville, Kentucky
Louisville is the largest city in the U.S. state of Kentucky, and the county seat of Jefferson County. Since 2003, the city's borders have been coterminous with those of the county because of a city-county merger. The city's population at the 2010 census was 741,096...
, it is the world's largest fast food
Fast food
Fast food is the term given to food that can be prepared and served very quickly. While any meal with low preparation time can be considered to be fast food, typically the term refers to food sold in a restaurant or store with preheated or precooked ingredients, and served to the customer in a...
restaurant
Restaurant
A restaurant is an establishment which prepares and serves food and drink to customers in return for money. Meals are generally served and eaten on premises, but many restaurants also offer take-out and food delivery services...
company in terms of system units—nearly 38,000 restaurants around the world in more than 110 countries and territories. In 2010, Yum!'s global sales
System sales
System sales is a business term used in the franchising industry. Franchisors provide supplies, marketing and administration services to franchisees in return for a part of the franchisees' revenues. Some franchisors also operate some outlets directly. System sales represents the total sales of all...
totaled more than US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
11 billion.
Tricon Global
Yum! was created on October 7, 1997, as Tricon Global Restaurants, Inc. an independent company, as a result of a spin-outSpin out
A spin-out, also known as a spin-off or a starburst, refers to a type of corporate action where a company "splits off" sections of itself as a separate business....
from PepsiCo
PepsiCo
PepsiCo Inc. is an American multinational corporation headquartered in Purchase, New York, United States, with interests in the manufacturing, marketing and distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company...
, which owned and franchised the KFC, Pizza Hut, and Taco Bell brands worldwide. Because of the company's previous relationship with Pepsi
Pepsi
Pepsi is a carbonated soft drink that is produced and manufactured by PepsiCo...
, Yum! Brands has a lifetime contract with PepsiCo, with notable exceptions being the contract of A&W Restaurants with Dr Pepper Snapple Group
Dr Pepper Snapple Group
Dr Pepper Snapple Group Inc. is an American soft drink company, based in Plano, Texas.It was spun off from Britain's Cadbury Schweppes, on May 5, 2008, with trading in its shares starting on May 7, 2008...
to be the exclusive restaurant provider of A&W Root Beer
A&W Root Beer
A&W Root Beer is a brand of root beer, primarily available in the United States and Canada, that was started in 1919 by Roy Allen. In 1922, Allen partnered with Frank Wright. They combined their initials to create the brand "A&W" and inspired a restaurant chain which was founded 1922. The first A&W...
, and the contracts of franchisees such as HMSHost and college-operated locations with Coca-Cola
Coca-Cola
Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending machines in more than 200 countries. It is produced by The Coca-Cola Company of Atlanta, Georgia, and is often referred to simply as Coke...
which override Yum's lifetime PepsiCo contract, along with some scattered KFC franchises across the United States which continue to maintain Coke fountain rights.
Expansion
In March 2002, Tricon announced the acquisition of Lexington, KentuckyLexington, Kentucky
Lexington is the second-largest city in Kentucky and the 63rd largest in the US. Known as the "Thoroughbred City" and the "Horse Capital of the World", it is located in the heart of Kentucky's Bluegrass region...
-based Yorkshire Global Restaurants, owner of the Long John Silver's
Long John Silver's
Long John Silver's, Inc. is a United States-based fast-food restaurant that specializes in seafood. The name and concept were inspired by Robert Louis Stevenson's book Treasure Island. Formerly a division of Yum! Brands, Inc., the company was divested to a group of franchisees in 2011.-History:The...
and A&W All-American Food chains and its intention to change the company's name to Yum! Brands, Inc. On May 16, 2002, the name change became effective after a vote during the company's annual shareholders meeting, and on June 17, 2002, Yum! executed a two-for-one stock split
Stock split
A stock split or stock divide increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur. Options and warrants are included....
. Shortly afterwards, due to Yum!'s lifetime contract with Pepsi, Long John Silver's and A&W Restaurants (both of which previously served Coca-Cola
Coca-Cola
Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending machines in more than 200 countries. It is produced by The Coca-Cola Company of Atlanta, Georgia, and is often referred to simply as Coke...
) switched to Pepsi
Pepsi
Pepsi is a carbonated soft drink that is produced and manufactured by PepsiCo...
products once their franchise
Franchising
Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb....
contracts expired, with A&W retaining A&W Root Beer
A&W Root Beer
A&W Root Beer is a brand of root beer, primarily available in the United States and Canada, that was started in 1919 by Roy Allen. In 1922, Allen partnered with Frank Wright. They combined their initials to create the brand "A&W" and inspired a restaurant chain which was founded 1922. The first A&W...
from a separate deal with Dr Pepper Snapple Group
Dr Pepper Snapple Group
Dr Pepper Snapple Group Inc. is an American soft drink company, based in Plano, Texas.It was spun off from Britain's Cadbury Schweppes, on May 5, 2008, with trading in its shares starting on May 7, 2008...
.
In 2003, Yum! launched WingStreet
WingStreet
WingStreet is a restaurant chain specializing in chicken. It is owned by Yum! Brands, which also owns its sister franchise Pizza Hut. As of September 2008, there were close to 1,600 locations in the U.S., Canada, and Australia. They are almost always co-located with Pizza Hut.-History:Pizza Hut...
as a hybrid combo unit with an existing Pizza Hut franchise. The Pasta Bravo concept was acquired in 2003 from Pasta Bravo, Inc. of Aliso Viejo, Calif for $5 million to pair with Pizza Hut. An East Dawning test cafeteria-style restaurant was opened in Shanghai in 2004. After failing, Yum! Brands chose the KFC business model (KFC is the most successful Western chain in China) and found greater success.
As of year-end 2010, more than 20 East Dawning restaurants were in operation. In 2007 and 2008, a thousand WingStreet stores a year were opened. On October 19, 2009, Company president Scott Bergren publicized WingStreet's national launch.
International growth
The growth of Yum! Brands throughout the United States has slowed from its previous rapid expansion because the chain has saturated most of the domestic market. The future growth of Yum! Brands is targeted mainly at other countries; China in particular has a large population and is enjoying increases in income.In January 2011, Yum! announced its intentions to divest itself of its Long John Silver's and A&W brands to focus on its core brands of KFC, Pizza Hut and Taco Bell. For the decade leading up to the company's announcement, major growth had relied on international expansion. With little presence outside the US and Canada, the two chains no longer fit in the company's long-term growth plans. The foreign expansion—particularly that of Taco Bell, KFC and Pizza Hut—was cited in the firm's January 18, 2011 announcement of its intention to sell the A&W and Long John Silver's chains. Both of those chains also suffered from poor sales, and had fewer locations compared to the other chains in the Yum! Brands portfolio. In September 2011, Yum! announced they had found buyers for the A&W and LJS chains. A Great American Brand LLC will buy A&W, and LJS will be acquired by LJS Partners LLC. Yum! Brands had originally purchased the parent company of Long John Silver's and A&W brands in 2003 for $320 million.
In May of 2011, Yum agreed to purchase mainland Chinese hotpot chain Little Sheep for HK$4.56 billion. The deal spent more than 4 months in anti-trust review by the Chinese Ministry of Commerce, to determine whether or not the transaction would result in a monopolistic positioning of Yum in the country's restaurant industry. The Ministry approved the deal in November of 2011, according to Little Sheep representatives.
Corporate
The current chairman and chief executive officerChief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
of Yum! Brands is David C. Novak
David C. Novak
David C. Novak is an American businessman. He is the current Executive Chairman, Chief Executive Officer, and President and Chairman of the Executive & Finance Committee at YUM! Brands Inc. Novak has also served as Chief Operating Officer of Pepsi-Cola North America, and Executive Vice President...
. Novak is a director of J.P. Morgan Chase and became CEO of predecessor firm Tricon Global on January 1, 2000, and chairman of the board
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
on January 1, 2001. He is also a member of the Yum! executive/finance committee.
Since 2006, Yum! Brands has served as the corporate sponsor of the Kentucky Derby
Kentucky Derby
The Kentucky Derby is a Grade I stakes race for three-year-old Thoroughbred horses, held annually in Louisville, Kentucky, United States on the first Saturday in May, capping the two-week-long Kentucky Derby Festival. The race is one and a quarter mile at Churchill Downs. Colts and geldings carry...
.
Current
- KFCKFCKFC, founded and also known as Kentucky Fried Chicken, is a chain of fast food restaurants based in Louisville, Kentucky, in the United States. KFC has been a brand and operating segment, termed a concept of Yum! Brands since 1997 when that company was spun off from PepsiCo as Tricon Global...
(global) - Pizza HutPizza HutPizza Hut is an American restaurant chain and international franchise that offers different styles of pizza along with side dishes including pasta, buffalo wings, breadsticks, and garlic bread....
(global) - Taco BellTaco BellTaco Bell is an American chain of fast-food restaurants based in Irvine, California. A subsidiary of Yum! Brands, Inc., which serves American-adapted Mexican food. Taco Bell serves tacos, burritos, quesadillas, nachos, other specialty items, and a variety of "Value Menu" items...
(global) - WingStreetWingStreetWingStreet is a restaurant chain specializing in chicken. It is owned by Yum! Brands, which also owns its sister franchise Pizza Hut. As of September 2008, there were close to 1,600 locations in the U.S., Canada, and Australia. They are almost always co-located with Pizza Hut.-History:Pizza Hut...
(United States, Canada, Germany and Cyprus) - East Dawning (People's Republic of China)
- Wing Works
- Pasta Bravo
- China Wok (Latin America)
Acquisitions Pending Shareholder Approval
- Little Sheep (People's Republic of China), Hong Kong, Macau, Taiwan and also the United States, Japan and Canada
See also
- Priszm Income FundPriszmPriszm LP is the largest operator of Canadian fast food restaurants. The Priszm Income Fund, an income trust, owns 60.2% of Priszm.Priszm is one of the largest franchisees of Yum! Brands in the world, owning 446 restaurants of various Yum!-owned chains in Canada, namely KFC, Pizza Hut, Taco Bell,...
— owns the Canadian franchiseFranchisingFranchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb....
s for all Yum! divisions except for A&W (whose Canadian franchises are the property of a separate company) and Dong Fang Ji Bai (which does not operate outside of the People's Republic of China).
External links
- Diners Walk Through One Door and Visit Two Restaurants Article in The New York TimesThe New York TimesThe New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...
(July 11, 2005) on Yum!'s strategy of multibranding restaurants - Yum Brands and World Hunger Relief Week
- Fast food's yummy secret: America's second-biggest fast-food group is as successful as it is little known Special report in The EconomistThe EconomistThe Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
(August 27, 2005) on Yum! Brands