Yum! Brands

Yum! Brands, Inc. (or Yum!), formerly Tricon Global Restaurants, Inc., is an American fast food corporation listed on the Fortune 1000. Yum! operates the brands KFC, Pizza Hut, Taco Bell, The Habit Burger Grill, and WingStreet worldwide, except in China, where the brands are operated by a separate company, Yum China. Prior to 2011, Yum! also owned Long John Silver's and A&W Restaurants.

Yum! Brands, Inc.
Formerly
Tricon Global Restaurants (1997–2002)
Public
Traded asNYSE: YUM
S&P 500 Component
ISINUS9884981013 
IndustryRestaurants
FoundedMay 30, 1997
Headquarters
Louisville, Kentucky
,
U.S.
Area served
Worldwide
Key people
Revenue US$5.597 billion (FY December 31, 2019)[1]
US$1.930 billion (FY December 31, 2019)[1]
US$1.294 billion (FY December 31, 2019)[1]
Total assets US$5.231 billion (FY December 31, 2019)[1]
Total equity −US$8.016 billion (FY December 31, 2019)[1]
Number of employees
34,000 (FY December 31, 2019)[1]
Subsidiaries
Websitewww.yum.com

Based in Louisville, Kentucky, it is one of the world's largest fast food restaurant companies in terms of system units. In 135 nations and territories worldwide, they operate 43,617 restaurants, including 2,859 that are company-owned and 40,758 that are franchised.[2]

History

PepsiCo fast food division

The company's history traces back to 1977, when PepsiCo entered into the restaurant business by acquiring Pizza Hut. A year later, PepsiCo purchased Taco Bell.[3] In July 1986, R. J. Reynolds sold KFC to PepsiCo[3] in order to pay off debt from its recent purchase of Nabisco. In 1990, Hot 'n Now was acquired via Taco Bell, [4] but the company would later be sold in 1996.[5] In 1992, PepsiCo acquired California Pizza Kitchen. In 1993, it acquired Chevys Fresh Mex,[6] D'Angelo Grilled Sandwiches,[7] and Canadian chain East Side Mario's. However these chains would later be sold when PepsiCo exited the restaurant business.[8][9][10] In 1997, PepsiCo sold Pepsico Food Systems restaurant-supply unit to Ameriserve Food Distribution Inc.[11]

Tricon Global Restaurants

Yum! was created on May 30, 1997, as Tricon Global Restaurants, Inc. from PepsiCo's fast food division as the parent corporation of KFC, Pizza Hut and Taco Bell restaurant companies.[12][13] Several years before changing its name to "Yum! Brands", Tricon Global was spun off in late 1997. Tricon selected Louisville as its headquarters, near the KFC Restaurant Support Center from the Pepsi HQ in Purchase, New York, by early 1998.[13]

In 2000, Tricon Global tested multi-branded locations with Yorkshire Global Restaurants. By March 2002, the Tricon-Yorkshire multibranding test consisted of 83 KFC/A&Ws, six KFC/Long John Silver's and three Taco Bell/Long John Silver's and was considered successful by the companies.[14]

In 2001, KFC started test restaurants in Austin, Texas, called "Wing Works", a chicken wing line sold with one of a few flavored sauces. KFC also hired a consultant to develop a breakfast menu.[15]

Yum! Brands

In March 2002, Tricon announced the acquisition of Lexington, Kentucky-based Yorkshire Global Restaurants, owner of the Long John Silver's and A&W Restaurants[16] chains and its intention to change the company's name to Yum! Brands, Inc. to match its NYSE ticker symbol. The acquisition was finalized on May 8, 2002, and the name change became effective on May 22, 2002[17] On June 6, 2002, Yum! executed a two-for-one stock split.[18] Shortly afterwards, due to Yum!'s lifetime contract with Pepsi, Long John Silver's and A&W Restaurants (which previously served Coca-Cola products) began switching to Pepsi products, with A&W Restaurants retaining A&W Root Beer from a separate deal with Dr Pepper/Seven Up (now Dr Pepper Snapple Group).

In 2002, Yum! began testing co-branding locations pairing Pizza Hut with Pasta Bravo, Back Yard Burgers, and A&W.[19] The Pasta Bravo concept was acquired in 2003 from Pasta Bravo, Inc. of Aliso Viejo, California for $5 million to pair with Pizza Hut.[20]

In 2003, Yum! launched WingStreet as a hybrid combo unit with an existing Pizza Hut franchise.[21] In 2007 and 2008, a thousand WingStreet stores a year were opened. On October 19, 2009, Company president Scott Bergren publicize WingStreet's national launch.[21]

An East Dawning test cafeteria-style restaurant was opened in Shanghai in 2004. After initially failing, Yum! Brands chose the KFC business model (KFC is the most successful Western chain in China) and found greater success.[22] As of September 30, 2007, eight East Dawning restaurants were in operation.[23]

International focus
A single Yum! restaurant facility co-branded as Taco Bell and KFC in San Francisco, California
Another cobranded KFC and Taco Bell in Oscoda, Michigan

In January 2011, Yum! announced its intentions to divest itself of its Long John Silver's and A&W brands to focus on its core brands of KFC, Pizza Hut and Taco Bell. For the decade leading up to the company's announcement, major growth had relied on international expansion. With little presence outside North America, the two chains no longer fit in the company's long-term growth plans.[24] The foreign expansion—particularly that of Taco Bell, KFC and Pizza Hut—was cited in the firm's January 18, 2011 announcement of its intention to sell the A&W and Long John Silver's chains. Both of those chains also suffered from poor sales, and had fewer locations compared to the other chains in the Yum! Brands portfolio. In September 2011, Yum! announced they had found buyers for the A&W and Long John Silver's chains. A Great American Brand will buy A&W, and Long John Silver's will be acquired by LJS Partners LLC.[16]

In May 2011, Yum! agreed to purchase Chinese hot pot chain Little Sheep for HK$4.56 billion.[25] The deal spent more than 4 months in antitrust review by the Chinese Ministry of Commerce, to determine whether or not the transaction would result in a monopolistic positioning of Yum! in the country's restaurant industry. The Ministry approved the deal in November 2011, according to Little Sheep representatives.[26]

In 2012, a KFC opened in Ramallah and became the first American fast food restaurant to operate in the West Bank; a Pizza Hut is also planned.[27]

In 2013, a few KFC locations in China supplied chicken found to contain "excess levels of chemical residue". Yum! had lost 6% of sales from publicity in China as of January 25th, 2013.[28]

The company opened its first restaurant in Ulaanbaatar, Mongolia, in May 2013. For Mongolia, KFC is the first western fast food to open its doors in the country. The company is planning to open 15 more restaurants in Ulaanbaatar in the next 5 years, including the country's first drive-thru service.[29] Yum! Brands has also opened Taco Bell and Pizza Hut restaurants in newer Target stores.

Yum! Brands opened its 40,000th store in Calangute, Goa, India in October 2013.[30]

In 2013, its KFC subsidiary opened a fast casual version, KFC eleven, test location in Louisville on Bardstown Road.[31] In the third quarter of 2013, Yum! Brands had to book an impairment of the goodwill resulting from the takeover of Little Sheep in 2011 in the amount of $222 million, which reduced profits for 2013.[32]

In 2014, Yum! launched a number of additional restaurant test concepts, Super Chix, U.S. Taco Co. and Banh Shop.[33] Yum! opened Super Chix in Central Arlington, Texas, a restaurant similar in format to Chick-fil-A, on April 9, 2014.[34] In the summer of 2014, Yum!'s Taco Bell subsidiary launched its U.S. Taco Co and Urban Tap Room fast-casual taco concept restaurant in Huntington Beach, California, to take on fast casual restaurants like Chipotle and Panera.[35]

In the first quarter of 2015, Third Point Management and Corvex Management separately acquired an unspecified stake in the company.[36] The sole KFC Eleven was closed in April 2015.[31] A second Chix unit opened in May 2015 with additional menu items. Super Chix was sold to founder Nick Ouimet and an investment group in August 2015.[33]

In 2017, Yum! announced plans to open 10 Pizza Hut restaurants in Ethiopia, after signing a franchise with the country's Belayab Foods and Franchise PLC.[37]

In January 2020, Yum! announced they were acquiring Irvine, California-based The Habit Burger Grill, for $375 million; the transaction has completed on March 18, 2020.[38][39]

Corporate
The KFC Yum! Center, Louisville's largest arena

The current executive chairman of Yum! Brands is David Gibbs. Former CEOs include Greg Creed and David C. Novak.[40] Novak became CEO of predecessor firm Tricon Global on January 1, 2000, and chairman of the board on January 1, 2001.[41] Greg Creed replaced Novak in his role as CEO on January 1, 2015.[42] At the AGM in May 2016, Robert D. Walter became non-executive chairman. At the end of 2019 Greg Creed will retire as CEO and the current COO (David Gibbs) will be Creed's replacement.[43]

Since 2006, Yum! Brands has served as the corporate sponsor of the Kentucky Derby.[44]

On October 20, 2015, Yum! Brands, Inc., announced that it intended to separate into two independent, publicly traded companies.[45] Yum China was spun off on November 1, 2016.[46]

Brands

Current

Former
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See also

References
  1. Yum! Brands, Inc. Form 10-K for 2019. U.S. Securities and Exchange Commission (Report). Retrieved March 25, 2020.
  2. "Yum! Brands 2016 10-K". yum.com. Retrieved June 19, 2017.
  3. Millman, Nancy (January 24, 1997). "PEPSICO TO SPIN OFF RESTAURANTS". Chicago Tribune. Retrieved June 25, 2019.
  4. Johnson, Greg (April 26, 1995). "Taco Bell Cools on Hot 'n Now Burger Chain". Los Angeles Times. Retrieved September 8, 2016.
  5. Richardson, James M. (December 7, 1998). "No Quiero Taco Bell: Did new parent drive its Hot 'n Now drive-through burger chain into the ground with bad ideas, or did franchise fail to keep up?". Miami Daily Business Review. Archived from the original on January 31, 2009. Retrieved June 13, 2008.
  6. Woodyard, Chris (May 19, 1993). "Taco Bell to Acquire Chevys Full-Service Chain : Restaurants: The Irvine-based fast-food giant hopes to expand the 37-unit company to 300 eateries within five years and use its bulk-buying power and financial resources to help it succeed". Los Angeles Times. Retrieved June 25, 2019.
  7. "Pizza Hut to Acquire D'Angelo Sandwich Shop Chain". AP News. November 9, 1993. Retrieved June 25, 2019.
  8. Howe, Kenneth (May 1, 1997). "Pepsi Decides to Sell Chevys Restaurants". SFGate. Retrieved June 25, 2019.
  9. "Papa Gino's to acquire D'Angelo's Sandwich Shops". Boston Business Journal. American City Business Journals, Inc. August 13, 1997. Retrieved April 11, 2007.
  10. PepsiCo, Inc. -- Company History. St. James Press. 2001. p. Vol. 38.
  11. Collins, Glenn (May 26, 1997). "Pepsico Reaches Deal to Sell Restaurant-Supply Business". The New York Times. Retrieved June 25, 2019.
  12. "Yum! Brands Inc (YUM) Company Profile". Reuters.com. Reuters. Retrieved October 3, 2014.
  13. Johnson, Greg (August 1, 1997). "Taco Bell's Parent to Be Based in Louisville, Ky". Los Angeles Times. Retrieved November 9, 2015.
  14. "Tricon Global Restaurants announced it has signed a definitive agreement to acquire Long John Silver's and A&W All American Food Restaurants, owned by Yorkshire Global Restaurants" (Press release). Tricon Global Restaurants. Bison.com. March 2002. Retrieved November 9, 2015.
  15. "KFC taps 'Seinfeld' star, starts 'Wing Works' test". Nation's Restaurant News. Lebhar-Friedman. August 6, 2001. Archived from the original on July 16, 2012. Retrieved January 26, 2011.
  16. "Yum Sells 2 Fast-Food Chains". New York Times. September 22, 2011.
  17. "Tricon to Change Name to Yum! Brands Inc". Entrepreneur. Business Wire. May 20, 2002. Retrieved October 28, 2017.
  18. "Bulletin Business: Tricon finalizes purchase, plans 2-for-1 stock split". Star Bulletin. May 8, 2002. Retrieved October 28, 2017.
  19. "Pizza Hut, Pasta Bravo Test Co-Branding". Entrepreneur. Nation's Restaurant News. August 6, 2002. Retrieved November 10, 2015.
  20. "Yum buys Pasta Bravo rights for P. Hut pairings". Nation's Restaurant News. Lebhar-Friedman. April 14, 2003. Archived from the original on July 10, 2012. Retrieved January 26, 2011.
  21. Cyrek, Christopher (October 20, 2009). "Pizza Hut going after wings market". Dallas Business Journal. Dallas, Texas: American City Business Journals, Inc. Retrieved January 26, 2011.
  22. Adamy, J. (October 20, 2006). "One U.S. Chain's Unlikely Goal: Pitching Chinese Food in China". The Wall Street Journal.
  23. "Yum! Brands – Defining Global Company that Feeds the World".
  24. "Yum puts A&W, Long John Silver's up for sale". NBC News. Associated Press. January 18, 2011. Retrieved January 20, 2011.
  25. Jin, Tony (October 27, 2011). "Uncertainty Surfaces Over Yum's Takeover of Little Sheep". China Perspective. Retrieved November 11, 2015.
  26. Guang, Yin (November 8, 2011). "China Corporate News: Yum's Little Sheep Takeover Review Cleared". China Perspective. Retrieved November 11, 2015.
  27. American fried chicken comes to the Palestinian territories, Los Angeles Times, February 4, 2012, access date February 20, 2012
  28. "Yum Brands' chicken in China contained excessive chemical levels, report says". Business First. January 25, 2013. Retrieved January 26, 2013.
  29. "Yum! Brands expands to Mongolia, plans more growth". Business First. May 29, 2013. Retrieved May 30, 2013.
  30. Narayan, Adi (October 23, 2013). "Yum to Invest $10 Billion With Partners in Emerging Markets Push". Bloomberg. Retrieved November 19, 2013.
  31. Elson, Martha (April 29, 2015). ""What now?" after Highlands KFC eleven closes". The Courier-Journal. Retrieved November 11, 2015.
  32. Hoang, Anh (October 26, 2013). "Should Investors Worry About Yum! Brands' Sluggish Third Quarter Results?". The Motley Fool. Archived from the original on August 10, 2016. Retrieved August 10, 2016.
  33. Ruggless, Ron (August 14, 2015). "Super Chix founder, investors buy concept from Yum". Nation's Restaurant News. Penton Restaurant Group. Retrieved November 11, 2015.
  34. Daniels, Lauren Drewes (April 10, 2014). "The First Super Chix, a Fast-Food Chicken Joint from KFC's Owners, Opens in Arlington". Dallas Observer. Retrieved November 10, 2015.
  35. Dockterman, Eliana (April 24, 2014). "Taco Bell for Foodies". Time. Time Inc. Retrieved November 11, 2015.
  36. Herbst-Bayliss, Svea (May 1, 2015). "Third Point takes stake in Yum! Brands, stock climbs". Reuter. Thomson Reuters. Retrieved November 11, 2015.
  37. "Yum to open 10 Ethiopian Pizza Huts in African expansion". Reuters. April 25, 2017. Retrieved April 25, 2017.
  38. "Yum Brands to Buy Habit Burger Grill". Wall Street Journal. January 6, 2020. Retrieved January 6, 2020.
  39. "Yum! Brands Completes Acquisition of The Habit Restaurants, Inc" (Press release). PR Newswire. March 18, 2020.
  40. "Yum! Brands, Form 8-K, Current Report, Filing Date Feb 10, 2000". secdatabase.com. Retrieved February 16, 2013.
  41. "Yum! Brands, Form 10-K, Annual Report, Filing Date Mar 28, 2001" (PDF). secdatabase.com. Retrieved February 16, 2013.
  42. "Yum! Brands – Defining Global Company that Feeds the World".
  43. Luna, Nancy (August 12, 2019). "Yum Brands CEO Greg Creed announces retirement". Nations Restaurant News. Retrieved August 17, 2019.
  44. "Kentucky Derby including Yum Brands in its name – May. 5, 2006".
  45. "Yum! Brands announced that it intends to separate into two independent, publicly-traded companies." Company news release, October 20, 2015.
  46. "Yum! Brands, Inc. (NYSE: YUM) today announced that it has completed the separation of Yum China Holdings, Inc. ("Yum China") from Yum! Brands, creating two powerful, independent, focused growth companies."
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