KFC and Pizza Hut owner to spin off Chinese business
Yum! Brands, the parent company of KFC, Pizza Hut and Taco Bell, is to split in to two seperate companies in China to give it "greater stability" as it looks to revive its struggling business in the region.
Yum! China will become a seperatley traded franchisee with exclusive rights to KFC, Pizza and Taco Bell, although the latter has yet to launch in the country.The decision to create two independent businesses follows a strategic review of the company's options conducted over the past year and the transaction is expected to be completed by the end of 2016.
No debt will be placed on Yum! China to allow the business take advantage of growth opportunities which Yum! Brands claims could see the 6,900 restaurants in the country grow to 20,000.
The move comes as the company aims to have 95 per cent of its 41,000 restaurants owned and operated by franchisees by the end of 2017.
Greg Creed, chief executive officer said: “Following the separation, each standalone company will be able to intensify focus on its distinct commercial priorities, allocate its own resources to meet the needs of its business, and pursue distinct capital structures and capital allocation strategies. This will provide a clear investment thesis and visibility to attract a long-term investor base suited to each business.
“Yum! Brands will have a more stable earnings stream typical of a franchise company powered by industry-leading brands, while also benefiting from the development of the China business as a unique growth engine. In turn, our China business is self-sufficient and scalable with strong leadership in place, and is well-positioned to realize its full potential as a standalone business to capture the compelling opportunities in China.”
In January, the company will integrate its India divison's three major restaurant brands into the global KFC, Pizza Hut and Taco Bell divisions of Yum! Brands, as it moves to organisational alignment by brand, rather than by geographic location.