Yum China to focus on speed, simplicity ahead of spin-off
By Lisa Baertlein
DALLAS, Dec 10 (Reuters) - Yum Brands Inc's China division is simplifying menus, speeding up service and increasing convenience ahead of next year's planned spinoff that aims to tee up the business to eventually triple in size.
"We're going to double down on easy," Yum Chief Executive Officer Greg Creed told Reuters in an interview, saying that the company plans to make ordering, payment and delivery more seamless for customers and employees. Creed was in Dallas where Yum hosted its annual investor and analyst meeting.
China has been the main driver of growth at Yum since the restaurant operator was spun out of Pepsico in 1997. But the last two years have been a roller coaster ride for the division, due to food safety scandals, marketing mishaps, intensifying local competition and cooling economic growth.
Those disappointing results helped fuel the decision to make Yum China a separate, publicly held franchisee that will pay a more predictable royalty stream to its sister company. Yum described details for the split on Thursday.
Yum China in turn aims to recruit more franchisees to fuel expansion. There are currently only about 100 franchisees operating Yum restaurants in China, said Yum China CEO Micky Pant.
High-volume KFC restaurants, such as those in Shanghai's high-speed rail station, have improved results by simplifying ordering with pared-down menus that offer just a handful of meal bundles, Pant said. A move to accept Alibaba Group Holding Ltd's Alipay mobile payment service also has sped service.
"If the line is long, they leave for somewhere else," said Pant, who added that faster service boosted same-store sales.
Yum executives said they are investing in online ordering and trying to cut the number of keystrokes required to enter a customer order.
China economic pressure also has led the company to offer more items that are "easy on my pocket," said Creed. China's more upscale Pizza Hut Casual Dining restaurants are switching away from special offers of premium items such as steak.
Yum China, with 6,900 restaurants, aims to grow to 20,000, long term, mostly through new KFCs and Pizza Huts, said Pant. Next year, Yum China plans to build 600 new restaurants, 100 fewer than in 2015.
Nevertheless, China is preparing another test for Yum's Taco Bell chain. The move comes about a decade after the country's unsuccessful experiment with "Taco Bell Grande," which featured mariachi and servers sporting sombreros.
(Reporting by Lisa Baertlein; Editing by Lisa Shumaker)
