Quizno's Creates Lease-Renegotiation Program
In an effort to mitigate the impact of a sluggish economy, Quizno's is offering its franchisees a way to reduce their single largest expense—lease cost. The Denver sandwich chain has engaged three teams to renegotiate store leases into current market values, at no cost to franchise owners.

Since the teams have been in operation, Quiznos has renegotiated more than 40 leases, reducing lease payments by an average of 15% to 20%. The program lowers lease costs while extending the lease, and covers leases that are expired as well as those that have franchise owners paying rent out of proportion to current property values. One franchise owner in Michigan said he reduced his rent by more than 20%, saving more than $50,000 over the term of the lease—or nearly $500 a month in rent.

"Even a down economy can be an opportunity, and the current market for retail rent is an example of that," said Rick Schaden, the chain's founder. "My primary goal as CEO is for franchise owners to say one year from now they are better off than they are today." Schaden, who assumed the reins as CEO in February, is focusing Quiznos' 2009 business plan around maximizing profitability for franchisees in non-traditional ways. The 27-year-old company has 5,000 franchise units.

Yum! Buys Into China Restaurant Group
Yum! Brands Inc. is moving beyond its core fast-food base of American brands, agreeing to purchase a stake in a Chinese-based restaurant chain. Yum! will purchase 20% of the outstanding common shares of Little Sheep Group Ltd., which operates 375 Little Sheep Mongolian Hot Pot restaurants, mostly in China. The decade-old company is the market leader in Mongolian-style hot-pot cuisine, characterized by its soup base and Mongolian lamb specialties. The $63 million transaction will make Yum! the second-largest stakeholder in Little Sheep, but the company will not participate in day-to-day business administration. Little Sheep is headquartered in Baotou, Inner Mongolia. In addition to the 130 company-owned restaurants and 246 franchise stores in mainland China, there are more than 20 units in Hong Kong, Japan, Canada and the United States. After regulatory and other approvals, the deal is expected to be completed by this summer.

"Our strong position in China allows us to identify opportunities for strategic partners such as Little Sheep, a leading concept with strong branding and a nationwide network," said Sam Su, president of Yum! Restaurants China and vice chairman of Yum! Brands. "We look forward to working with Little Sheep as we continue to focus our own management on growing our existing portfolio of brands. China remains the biggest growth opportunity in the restaurant industry in the 21st century," Su said.

Yum! Brands is already well-established in the region. Yum! China Div., encompassing mainland China, Thailand and KFC Taiwan, includes 3,000 KFC and Pizza Hut units. During the past three years, the Shanghai-based division has opened nearly 1,500 new restaurants—at least one every day. Its operating profits of more than 30% have made Yum! China Div. the highest margin and highest return business in Yum!'s global portfolio.

Yum!, based in Louisville, Ky., has more than 36,000 restaurants in more than 110 countries and territories.