The story of the results of the second quarter of 2019

Mention the name "Yum Brands" to the man on the street here in the UK and I do not imagine many people know who they are.

But let's mention Taco Bell, KFC, Pizza Hut …. famous names here in the United Kingdom as well as the United States and Yum Brands? The parent company, which owns the three above-mentioned fast food franchise chains, operates more than 43,000 restaurants in more than 135 countries (of which about 95% are franchised, the rest owned by the company) and announced results for the second. quarter this week that has exceeded Wall Street expectations.

However, behind the good news this week, which saw the company's stock price rise by 6%, the Yum Brands story was not a mere regatta. A detail in the numbers still shows a continued travel ups and downs. In 2015, Yum announced its intention to split into two independent public trading companies, with the launch of Yum China. in In November 2016, the brand was already experiencing difficulties in China before the split. KFC is suffering in particular from bird flu and from a large-scale investigation on one of its former suppliers. It encourages Chinese consumers to avoid the chicken franchise. however Since it's become an independent entity, Yum China has grown phenomenally, thanks to its ability to stay agile and tailor its offerings to quickly respond to the ever-changing tastes and demands of Chinese consumers. With Joey Wat promoted to CEO position last year Yum China's second quarter 2019 numbers released this week show another set of strong results, particularly for KFC, which recorded a 5% increase in store sales, thanks in part to a program of renovations and renovations. stores, push on coffee sales and delivery operations of KFC China.

In the rest of the world, the 3 Yum brand names have had their own roller coaster rides. Taco Bell certainly keeps his crown as the best performance of the trio. The Mexican fast food giant is the king of innovative marketing awareness campaigns such as the #TacoEmojiEngine campaign, when the chain successfully asked for the introduction of a taco emoji. They were also quick to innovate with new products and sat down, became aware and responded to Millennial consumer demands, concerned about their health. Taco Bell is also a name that has not been afraid to compete with its competitors in a very competitive market, as evidenced by the new breakfast menu, which rivals that of the McDonald franchise. All that clearly contributes to another series of impressive results in the second quarter, with comparable sales growth 7% this quarter, while the expected increase was 3.75%. Taco Bell also wanted to capitalize on overseas potential as the US market could be gloomy and saturated, signing major franchise agreements last year with partners in Spain and Brazil and planning for growth plans. ambitious.

KFC is a partner of the parent company, a generally consistent player, but which nevertheless experienced a 6% growth in store sales this quarter, almost double what was expected. Along with his Mexican brother, KFC has also creatively adapted his menu, working tirelessly with large agribusiness development teams around the world to meet the changing tastes of different markets. Here in the UK, the vegan Imposter Burger has been sold all over the country in just 4 days! However, what is impressive is that, despite this great diversification, the brand of the franchise remains true to its core values ​​and the famous "secret mix" of herbs and spices that placed the chain on the map . In the end with KFC, as consumer you know what you will get, and that must be the secret to the continued success of your franchise.

However, the history of Pizza Hut is a little different. The pizzeria and the delivery chain has, over the past decade, seemed to be left standing by rivals such as Dominos and Papa Johns. This most recent set results are still stronger than expected – a 2% growth in sales by store – but the division that remains the worst performer remains that of Yum Brands. Last year, the franchise chain made considerable efforts to conquer more pizza delivery markets. Historically, customers did not seem to badociate Pizza Hut with food The brand has been striving to make its online delivery system more user-friendly, opening smaller delivery and fulfillment units, launching targeted marketing campaigns and becoming official sponsors of National Football. League. The pizza franchise brand is also halfway to a US restaurant renovation program, Yum Brands President David W. Gibbs, admitting that many of their establishments are "not in the right part of the commercial area, are outdated and might need to be remodeled. "In June, he also announced his return to the roots by reintroducing the old" Red Roof "logo. this program presents its own challenges. Remodeling costs money and if a franchisee is in financial difficulty, it may not be able to comply with the franchisor's redevelopment requests. Pizza Hut at have already confirmed their intention to restructure some of their franchisees' businesses to address issues such as over-indebtedness or lack of access to capital. And worryingly, NPC International, which operates nearly 1,200 outlets and is the largest franchisee in the pizza chain in the world, recorded significant levels of debt earlier this year. If a franchise operator of this size can not cooperate with Pizza Hut's turnaround plans, this could potentially have an extremely detrimental effect on the entire franchise network. Perhaps a food for thought for franchisers: putting several of your eggs in one basket could pose major problems for all brands if a dominant franchisee plunges into troubled waters.

Thus, although twelve difficult months are undoubtedly waiting for Yum Brands in a sector facing increasing labor and supply costs, a high staff turnover, a rapid evolution of the demand customers and low customer loyalty due to increased competition, that through continuous innovation and development, Yum seems to maintain its recipe for success. "The second quarter results kept the momentum of the beginning of the year and helped us to exceed our already high expectations for a strong first half of 2019," said Greg Creed, CEO of Yum Brands. "Our commitment to being a more focused, more franchised and efficient growth company positions us well for long-term success."