Foodservice Equipment Reports

Yum! Plans Bid For Asian Chain Little Sheep

Yum! Brands announced its intent in late April to acquire all outstanding shares of Little Sheep, which owns and operates casual-dining hot-pot concept restaurants, primarily in Asia. Little Sheep, based in Baotou, Inner Mongolia, operates about 480 restaurants serving Mongolian hot pot, a cook-it-yourself concept in which customers cook meats and vegetables in broth at their tables. The chain has stores in Canada, Japan and the United States, including six stores in California and one in Texas.

The move signals that Yum!, which has 3,800 KFC and Pizza Hut outlets in China, is looking to establish its own presence in the rapidly growing market for Chinese casual dining. Yum! bought a 20% stake in Little Sheep in 2009 and increased its holdings to 27.2% last year. Yum! has not released details of its proposal and said there is no assurance the company will make a formal offer, which also would depend upon regulatory approvals.

China accounted for 54% of Yum!'s overall profit of $264 million in the first quarter of this year. It already has nearly 38,000 restaurants in more than 110 countries and territories. Most of Yum!’s outlets in the world's fastest-growing major economy are KFC units. Revenue from China rose 28% in the first quarter, with sales at existing restaurants up 13%. During the quarter, it opened 92 new restaurants there.

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