Yum! Brands Investor Relations Material
Fast Food Conglomerate
Yum! Brands, Inc. is a global giant in the fast-food industry, operating a suite of well-known restaurant brands. Established in 1997 following a spin-off from PepsiCo, the company has since expanded its footprint to more than 150 countries and territories around the world. The company primarily operates through franchises, something that is relatively common in the fast food industry. Yum! Brands boasts over 50,000 restaurants worldwide, and a majority of these are run by its franchisees.
Yum! brands act as a conglomerate and ownership group of several large multinational fast food chains. The core of their business is centered around three well-known brands: KFC, Pizza Hut, and Taco Bell. Yum Brands also has a history of owning smaller restaurant chains mainly focused on casual dining.
The Spin-off from PepsiCo
Yum! Brands has its roots in the 1997 spin-off from PepsiCo. Before becoming an independent entity, its primary restaurant chains – KFC, Pizza Hut, and Taco Bell – were integral parts of PepsiCo's portfolio. The decision to separate these restaurant businesses from PepsiCo was strategic, aiming to allow both entities to focus on their core strengths. Post-spin-off, Yum! Brands embarked on an aggressive global expansion, successfully establishing a presence in over 150 countries and territories. The company's growth wasn’t just organic; it was also marked by acquisitions, like the purchase of the casual dining chain, Long John Silver's and A&W Restaurants. However, these were later divested in 2011 to refocus on their primary brands.
Franchises and Franchisees
Yum! Brands operates primarily on a franchising model, a strategy that has significantly fueled its global reach in the industry. By franchising its core brands the company can swiftly expand without the substantial capital outlay of opening restaurants in new locations. This approach allows local entrepreneurs to adapt offerings to regional tastes and preferences, ensuring the brand's relevance and success in diverse markets. Around 90% of Yum! Brands' restaurants worldwide are operated by independent franchisees. This is nothing unique in the fast food industry, and chains like McDonald's and Restaurant Brands International operate through a franchising model.