Yum Brands has split off its Chinese company — and that could be great news for the business.
While the parent company to KFC, Taco Bell, and Pizza Hut has seen US and international sales rise in recent years, the Chinese business has consistently been troubled.
Now, Yum Brands’ main and Chinese businesses will be two separate, publicly-traded companies.
Sales have been tanking for more than three years in China, in many cases in the double digits.
So what caused the decline?
KFC has been plagued by food safety scandals. Last year, a supplier was shut down after a news report showed factory workers using expired meat.
As more Western brands like Starbucks and McDonald’s expand in China, the brand experiences stiffer competition, according to a report by Citi Group.
The brand has also falsely been accused of using mutant chickens, leading to an erosion of trust among Chinese consumers.
But the prospect of Yum’s China business still might appeal to many investors, given the company’s reach.
KFC is the largest restaurant chain in China, with more than 4,500 locations.
The company says it plans to take advantage of growth opportunities in China, where a rising middle class is seeking out Western fast food chains..
Yum China will be led by Micky Pant, who was appointed CEO in August, while Greg Creed will continue to lead Yum Brands.
KFC’s US business has been performing well.
The brand resurrected Colonel Sanders, the brand’s founder and mascot, after a 21-year hiatus. The brand is also selling a $US5 value meal that has been driving sales.
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