Foodservice Equipment Reports

Yum! Rolls Out $185 Million For KFC, Sees Comeback In China

KFC is spiffing up its stores and image in the U.S. with a $100 million investment this year in its kitchens and remodeling programs as well as another $85 million in 2016-17, according to top Yum! Brands executives. The financial package also includes $20 million a year in advertising.

In an April 22 call with investors, CEO Greg Creed said the chain will invest in back-of-house equipment to enable more operators to serve KFC’s full menu line and provide incentives to franchisees to speed up remodeling plans. The investment comes as part of a deal with franchisees that will give the Louisville, Ky.-based franchisor control over domestic marketing.

The deal signals a cooperative mood between KFC and its operators just as the chain’s U.S. sales are improving; after a years-long slump, the chain’s domestic same-store sales rose 7% in the first quarter ended March 21. KFC has 4,370 locations in the U.S., a drop of more than 8% since 2011, when the company had 4,780 locations.

Yum! has close to 41,000 restaurants in 125 countries, and its comeback continues in China. Although same-store sales fell 12% there during the quarter as the aftereffects of last year’s food-safety scare continue, KFC is surging with a strategy to establish a footprint in the country’s lower-tier cities, which offer the same sales volume for a far lower investment. More than 170 KFC stores opened in the first quarter, an average of three per day in China’s two-month first quarter (January-February) alone.

Yum!’s Pizza Hut division has struggled, especially in the U.S., but executives pointed to a  turnaround in the global market. Seventy Pizza Hut stores opened in the first quarter, half of them overseas, and executives project it will grow the concept’s footprint to 600 international stores this year.

In further news, Yum! has promoted Niren Chaudhary, President of KFC India operations since 2011, to President-Global Operations, giving him additional responsibilities for KFC operations in Thailand, Asia Franchise Business Unit, Canada, Latin America and the Caribbean. He will report to KFC CEO Micky Pant.



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