Yum! Brands – Pizza Hut, and KfcEssay Preview: Yum! Brands – Pizza Hut, and KfcReport this essayYum! Brands, Pizza Hut, and KFCYum! Brands, Inc., was the worlds largest fast-food company in 2004 operating more than 33,000 KFC, Pizza Hut, Taco Bell, Long John Silvers, and A&W restaurants worldwide. It was the market leader in the chicken, pizza, Mexican, and seafood segments of the U.S. fast food industry and operated more than 12,000 restaurants outside the United States. KFC and Pizza Hut combined for more than 96% of the companys international restaurant base and managed restaurants in 116 countries.
Problems/Opportunities:Should Yum! Brands continue growth in China where they have been the fastest growing quick service restaurant, or focus on correcting the issues in the United States where sales are slowing relating to a smaller market share?
Should Yum! Brands penetrate other new growth markets before competitors such as France or Germany or stay focused in China where there is an established brand recognition and rapid expansion?
Should Yum Brands maintain their current nutritional values which are poor, or increase the number of health conscious menu options?Relevant Facts:Only two of Yum Brands five brands were U.S. market leaders in 2003, Pizza Hut and KFC.Pizza Hut had approximately 5 billion in sales with a -1.3% growth rate.KFC had approximately 4.9 billion in sales with a 2.8% growth rate.Taco Bell had approximately 5.3 billion in sales with a 2.8% growth rate.Long John Silvers and A&W had 777 million and 200 million in sales respectively.Costs of chicken increased dramatically from 2001 to 2003 from $1.20 per pound to $2.50 per pound.Long John Silvers was the only Yum! Brand not on the worlds 35 largest fast food chains in 2004.KFC has more success in Asia and Latin America where chicken is a traditional dish.57.1% of KFC restaurants are internationally based as of 2004.Mexican countries were already accustomed to the fast food concept.Recommendations:Yum! Brands should employ different strategies in its Unites States Division, International Division, and China Division in order to improve performance and continue expansion. First, as a general strategy, Yum! Brands should continue to focus on its Chinese and international markets. Although Yum! Brands could attempt to capture a larger market share in the United States, it seems that the United States fast food industry is already well established and difficult to penetrate. Not only has McDonalds been able to maintain the largest share of the fast food market for years, but the industry itself is already oversaturated with thousands of different other brands.
Focusing on the United States division, Yum! Brands should make efforts to sustain its position as the second leading brand in the United States market. It should focus on continuing to build its brand reputation. Domestic sales have been declining in recent years, possibly due to the current economic situation. Yum! Brands is bouncing back from the recession fairy quickly. To maintain and increase its revenue, it is vital that the company focuses on sustaining its position in the fast food industry rather than driving aggressive growth. Investing in fast expansion in the domestic market may actually hurt Yum! Brands. In terms of geographic location, there would not be a benefit to increasing the number of restaurants in any given area of the United States as most Americans already have a McDonalds, KFC, Pizza Hut, or Taco Bell within a few miles radius of their residence.
In the China market, Yum! Brands should employ a different strategy. The company should strive to maintain dominance in China as the number one, largest and fastest growing fast food brand in the country. Compared to the United States, where Taco Bell is the leading brand, KFC and Pizza Hut are the branches that have been thriving in China. Yum! Brands also have a first mover advantage as it was the first corporation to introduce quick service, pizza, pizza delivery, and casual dining to China. It must maintain its competitive advantage by continuing to grow at a rapid rate. It seems they have already kept this in mind by pursuing nonstop expansion. Because China has a huge population, the potential for building a strong customer base is substantial. By introducing a new brand that sells traditional Chinese cuisine, Yum! Brands can capture the older generation of Chinese consumers.
Although the companys strategy in the United States has shifted towards targeting an older crowd and the working population, consumer tastes in China may be had to alter from traditional Chinese cuisine. Therefore, Yum! Brands will have more success by focusing on a new generation of consumers. KFC and Pizza Hut need to establish a strong reputation with the younger population, which has greater exposure to and knowledge of Western culture. This will help the company to build up its brand reputation and recognition in China. A solid brand reputation will allow Yum! Brands to continue to push forward with rapid expansion and development. Yum! Brands are able to maintain control over its Chinese restaurant units by limiting the number of franchised stores. The number of franchises has actually decreased in the past few years, possibly so that the company can better control its brand impression in
Frequently Asked Questions About Yum! Brands
Will I be able to purchase their meals onsite?
Yum! Brands’ online operations will continue to have some limited access to local outlets.
What kinds of food do they cook?
Fried pork dishes are made out of real pork.
Do I have to order from a restaurant to order my food?
The majority of Yum! Brands locations are located on an all-natural farm near a scenic lake. They have no animal feed or antibiotics. Yum! Brands uses a proprietary, organic method for making the food.
My husband ordered his food from Yum! Brands on a Sunday and still didn’t like it. Why?
In a typical year, Yum! Brands will add a large number of new restaurants and will create a new, growing family of chefs.
Does Yum! Brands have a long-term plan to expand overseas?
No. The Company currently is limited to an estimated 90,000 restaurants in the U.S. and its domestic locations will reach 1.6 billion by the end of 2015.
I ordered my first product and the store was sold out at the last minute. How will customer satisfaction improve?
Yum! Brands is committed to giving customers the best possible experience and best service ever.
Can I add a new restaurant to my list?
You can do so via their new location listings. Once a new location has been added, the restaurant information will appear on the Yum! Brands’ restaurant e-commerce site.
Yum! Brands will still have locations in China only under their own control, so you’ll have to rely on your own network of friends and family if you want to reach one of the world’s leading restaurants.
Can I sell my food at Yum! Brands stores?
Yes, and in the absence of the Yum! Brands headquarters, Yum! Brands’ stores can also operate under their own name for free. This means that only the stores inside of stores will sell food for sale online.
How do I access the Yum! Brands menu?
Yum! Brands’ Menu will be updated as Yum! Brands expands the food and beverage menu in China. In addition, Yum! Brands sells an online ordering service that allows you to directly order as many Yum! Brands foods as you could, but the menu changes will be tied to your location-specific order preferences and restaurants.
When can I make my own food from a Yum! Brands product line?
Yum! Brands will allow you to customize your order with specific ingredients. In addition, Yum! Brands will automatically process your order based on product information displayed on the restaurant pages.
What are the plans with Yum! Brands food trucks in China?
The Yum! Brands brand has established a growing presence in China. Yum! Brands has plans to expand abroad by expanding its restaurants in more and more cities across North America and Asia.
Do Yum! Brands restaurants cater specifically to specific U.S. and European customers?
Yum! Brands does cater to people who are looking for something new, different and fresh. We don’t serve fast food, pizzas or food carts to customers in Taiwan, so we don’t typically cater to the general customer base. Yum! Brands also will allow you to order for a limited time with your chosen brand and you will be able to select the menu that will best suit your needs and tastes.