GO
Loading...

Yum Looks to Slim Down on Ownership

By Insert Byline
Thursday, 6 Dec 2007 | 5:12 PM ET

Yum Brands, owner of the Pizza Hut, Taco Bell and KFC fast-food chains, said Thursday it aims to own fewer than 10 percent of its U.S. restaurants by the end of 2010, down from about 20 percent currently.

In a statement, the company also said it expects earnings per share to increase at least 10 percent in 2008, in line with its long-term targets.

For several years, Yum has been selling off hundreds of its U.S. restaurants to franchisees. Refranchising restaurants reduces company sales, but improves profit margins because the company collects more in franchise fees without having to operate the restaurants.

Yum said it will concentrate on refranchising its Pizza Hut, KFC and Long John Silver's brands, and added that it would provide the expected financial impact of the refranchising at an investor meeting next week.

Yum's U.S. business has struggled this year in part because an E. coli outbreak linked to Taco Bell, the company's most profitable U.S. chain, a year ago hampered those sales.

Yum, based in Louisville, Kentucky, said it aimed to "dramatically improve U.S. brand positions, consistency and returns." The company said sales at company-owned U.S. restaurants open at least a year are expected to rise between 2 percent and 3 percent next year.

In China, where Yum has been expanding its KFC chain at a rapid clip, the company expects to open at least 425 restaurants next year. Operating profit growth in that business is expected to be at least 20 percent.

Yum has nearly 35,000 restaurants worldwide, including about 18,000 in the United States.

  Price   Change %Change
YUM
---

Featured

Contact Earnings Central

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More