Yum! Brands, owner of the Pizza Hut and KFC fast-food chains, is betting on growth in China despite health scares there that hurt profit.
Yum has 6,700 restaurants in China, including 4,800 KFC locations, and plans to triple that number, Sam Su, chief executive officer of the company’s China operation, said today at an investor conference in New York. Yum said it has added menu items at KFC restaurants in China and is bringing breakfast to more than half of its 1,300 Pizza Huts in the country.
Yum cut its profit forecast for 2014 this week and said same-store sales in China would be negative for the year. The company, which was still recovering from a supply-chain investigation in China that started in 2012, was hit by another food scare in the country in July when vendor OSI Group LLC was probed by the government for altering expiration dates on meat.
The company’s operating profit in China fell 60 per cent in the second half of this year, Chief Financial Officer Patrick Grismer said today. Same-store sales in China fell 15 per cent in November as the fallout from the meat scare lasted longer than expected, particularly for the KFC brand. The Chinese government hasn’t yet issued an official report on its investigation into the supply scare, which also ensnared McDonald’s, and the delay has hampered Yum’s ability to regain the trust of consumers.
“It will give us a chance to tell the story better,” Su said, adding that he hoped the government report would be issued soon. “Hopefully we can get that trust back.”
Yum’s shares gained 2.1 per cent to $72.02 at the close in New York. They have dropped 4.7 per cent this year.
Bloomberg News, edited by Hospitality Ireland