Yum Posts Strongest Growth Overseas

LOUISVILLE, KY-Yum Brands Inc., the owner of KFC, Pizza Hut and Taco Bell, continues to post strong overseas growth. The company posted third-quarter same-store-sales gains of 11% in China and 7% in the rest of its international operations year over year.

The fast-food giant is also sporting its strongest new-restaurant expansion in other countries. In China alone, executives say they see the potential for 20,000 units, up from the 2,300 there now. Of that total nearly 2,000 are in the KFC chain, while the remainder are Pizza Huts.

For the current fiscal year, Yum’s management is planning 375 new restaurants in China, and 750 in other countries, which are now home to about 12,000 stores across the three chains. “There is plenty of room to drive brand awareness even deeper into the consumer base,” said David Novak, the company’s chairman and chief executive officer, during a conference call.

The picture in the US is not as robust. Same-store sales at the nearly 22,000 stores here inched up 1% year over year in the third quarter, with company-owned units falling 1%. Yum was mainly hurt by a 6% comparable-sales drop at its Taco Bell restaurants.

Yum is stepping up its franchising program in the US, with plans to sell 1,500 units to franchisees through 2008, increasing ownership to those entities from 78% to 83%. So far 670 of those transactions were completed, 218 of them so far this fiscal year.

Yum’s earnings per share were 50 cents during the quarter, an increase of 20%. Management upped its full-year growth forecast from 12% to 13%, predicting that earnings will come in at $1.65 per share over the 12 months.