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How “YUM Foods is reaching for a bigger slice of the Fast Food Pie”

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How “YUM Foods is

reaching for a bigger

slice of the Fast Food

Pie”

What YUM Brands have to say about India

YUM Brands is investing big time in “KFC & TACO Bell” to ensure it becomes the No.1

restaurant company in India

India is the opportunity of a

Lifetime .By 2030,India will b the

largest consumer market, ahead of US,

China

YUM Brands-A Brief Profile

oOrigin-Louisville, Kentucky

oNo of Restaurants-40,000

oPresence-Over 125 countries

oAwards

-Ranked #216 (FORTUNE 500)

-was named the ‘100 Best Corporate

Citizens’ by Corporate Responsibility

Magazine

oYum Brands Restaurants

(a)KFC

(b)Pizza Hut

(c)Taco Bell

The Power of YUM

4,800,000,000 Transactions

1,900,000,000 dollars in

franchise fees

1,500,000 associates

1,952 new international

restaurants

KFC Issue before 20 years which affected YUM Brands

When KFC Made its entry in India there were protests over Globalisation,small farmers

rights,environment & foreign investors were already at fever pitch when the entry of a brand

owned by PepsiCo

The outlet was picketed & ransacked repeatedly & charges of unacceptable levels of

monosodium glutamate made consumers hesitate even as they turned up their noses at the

bland recipes & lack of add-ons in the menu

After 20 Years

Today YUM Brands is currently the world

largest fast-food company as well as fastest

growing restaurant in India

YUM Brands outlets over the Years

Market Share of Foreign Brands

• YUM Brands too had been relying on franchises for expansion over the years but now has changed trajectory investing heavily in opening company owned outlets in an all-out bid to get the reach & growth it is seeking

Expansion

• YUM has an impressive war-chest to ensure its success-$100 million(Rs.600 Crores) to be invested over the next 3-4 years

Investment

YUM Brands Strategies

Separation of Indian entityThe parent company ‘YUM Brands’ had carved out the Indian division as a separate entity in

2011(China is the only other standalone international market-a telling indicator of how important success

in the Indian market is for the Parent company. In 2011 India had around 466 YUM restaurants compared

with 4493 in China)

The company now has direct reporting relationship with the CEO of the company & direct sponsorship

from the company on investment & resources required to bring the opportunity(From 2007-2009,YUM

Brands has opened around 276 restaurants in India even as the China division added 1,750 to its portfolio)

KFC & Pizza Hut which launched in

1996 didn’t exactly set the Indian market

on fire. In 2005,there were just 5 KFC

outlets in India against 240 outlets of

McDonalds

Even Pizza Hut lost its fist place to rival

Dominos because it failed to adopt home

delivery strategy in timeKFC V/s Pizza Hut V/s McDonalds V/s Dominos

YUM Brands Franchise

YUM Major Franchisees in India

(1)Devyani International

(2)Dodsal Group

(3)Hansa Zone

Concept of Equity Leadership

-This means company began investing its own money to open stores in emerging markets(The first company

owned Pizza Hut restaurant opened in Mumbai in 2012

-The average investment in a KFC/Pizza Hut store is Rs.2-3 Crores & it takes 3-4 years to get a positive return

-There are around 172 company owned outlets (mostly KFC’s) & 517 Franchisee owned stores as of today

Devyani Operations in India

-Devyani currently operates 203 Pizza Hut stores & 57 KFC restaurants

-A news report in April 2014 states that Devyani International is in the fray to

buy Pizza Hut franchise rights in South & West India(Currently ‘DodsalGroup’ is holding these rights is

seeking a buyer).But there is no clarity whether YUM Brands would continue to offer these markets to franchisees or

open its own outlets

Why YUM Brands has opted Equity Leadership Model?

(1)Equity Investments by the company helps in;

-Brand Building

-Marketing

-People Capabilities

-Back-up Infrastructure building etc

-YUM Brands Vice President(Finance) said “Our equity investment in India was the catalyst for exponential growth in our KFC Brand”

YUM Brands expansion

-Yum Brands India will open 1000 outlets of Pizza Hut,KFC & Taco Bell by 2015(Of

this roughly Half will be KFC’s & other half Pizza Hut Restaurants)

-By 2020 the company will open around 2000 outlets(100 Taco Bell & 900 equally

divided between KFC & Pizza Hut)

-Half of the KFC ‘s & Pizza Huts will be developed by Franchisee based system

-The company targets 60% of its stores in tier 2 cities because costs are lower &

there’s pent-up demand to ensure high returns

Devyani International office is

covered with trophies & plaques

from YUM over the past 18 years

-Transformers Award Action

Hero(This was presented by YUM

Brands Global Head Mickey pant

in 2012

- Another award Kangaroo-The

Great Leap

The Taco Bell Profile

Pizza Hut Delivery(PHD) was hived off as a

separate division in 2010 & there are currently

171(out of 373) outlets that focus exclusively on

delivery

The company also plans to do similar strategy to

Taco Bell as well

KFC is YUM Brands lead opportunity but Taco

Bell could have a bigger potential in the long term

based on the ‘huge population of vegetarian

consumers’.

Taco Bell is localizing a lot of menu in order

to build its brand

Out of 2000 outlets planned by the

company to launch worldwide by

2020,atleat 100 will be in India

Taco Bell India Stores(5 Stores)

-Bengaluru(4 stores)

-Mumbai(1 Store)

Why Taco Bell has slow expansion in

India

-The company had to understand how the

Taco Bell model works in India & has

taken 3-4 years to fix the shortcomings

-The company is learning “store-by-store”

- The company is developing their vendor

base with a lot of handholding

Taco Bell strategy for menu offeringsoTaco Bell called a TEAM from US which

diagnosed that the wheat quality was to blame

when Taco Bell’s offerings were not turning out

the way they had been planned in India .After

much experimentation, the TEAM identified a

variety from Madhya Pradesh that was suitable

Three factors that make YUM Brands optimistic about its

prospects in India

(1)40% of the population is vegetarian while the rest also eat

vegetarian food most of the time(Taco Bell’s 75-item menu has a

variety of vegetarian items)

(2)The Taco Bell Chain serves spicy food with familiar

ingridi3nts such as beans,rice & flatbreads that will appeal to

Indian palates

(3)Taco Bell Indian menu starts at a loss making @Rs.25.This

strategy has proved a success for the Taco Bell. The fast food

chain doubled their sales from the time of the launch. The

company states “The higher you want to go, the lower should

be the price”

Four Stages of Building Brands (According to YUM Brands)

At the ‘concept

stage', one must

not think of

making money.

That happens in

stage four

YUM Brands do not

want to expand in a big

way in the concept stage

of Taco Bell stores. The

company is planning to

open around 35-40

stores in five to six

cities over the next 2-3

years. There are already

enquiries from small

centers such as ‘Navsari

& Bharuch’

Multiple Brands

Jubilant Food Works has 2

brands under its portfolio

(1)Dominos license in India(726

stores)

(2)Dunkin Donuts(29 stores)

YUM Brands in India has 3

brands under its portfolio

(1)Pizza Hut(373 stores)

(2)KFC(341 stores)

(3)Taco bell(5 stores)

The acceptability of Burger & Chicken as well as

Pizzas has been tested across the country. The

combination can give YUM Brands a good

advantage

The Pizza Hut is a higher ticket item than KFC &

the consumer class is also different, so there is no

cannibalization between the two

Having ‘multiple brands’ also ensures savings on

the backend in terms of rentals & economies of

scale because the same chgicken,cheese & flour is

used in both formats

YUM Brands Menu Offerings

Over the past several years the menu at Pizza Hut & KFC has

adapted to Indian tastes & preferences.YUM Brands wants Pizza

Hut,KFC & Taco bell to be youthful & inspirational

YUM Strategy in Menu Offerings

(1)First strategy is to be seen as inclusive brands

(2)To make sure that brand is relevant to India

-The company needs to get inspired by local eating out habits but

do it in unique way that YUM can own at prize points that are very

penetrable

Ex 1:Over the past 12 months Pizza Hut conducted an infromal

study called “India-to-Bharath” to understand what & how

consumers are eating so that Pizza Hut can adapt that into their

menu

Ex 2:Indians love carbohydrates more than protein,so more rice &

wheat options in YUM Brands menu

Ex 3:Indians want more “sauces”,so YUM Brands increased the

gravy in the food

At KFC,the focus is on Vegetarian options

•KFC’s-’So Veg,So Good’ ad campaign

emphasizes its Veg & Paneer offerings to

reach a wider customer base.KFC has also

intoduced dishes such as Veg Rice Bowl &

Veg Zinger Burger

•YUM Brands decision to stay affordable

-YUM Brands see their competition as street

food & not branded food & therefore the

company wants to make their food affordable

at street food prices. Why should a customer

stand & eat in the heat when YUM Brands

offer a world-class restaurant, air

condtioned,hygenic,aspirational place with

safe food

Prices starts at Rs.30 at KFC,

Rs.50 at Pizza Hut & Rs.300 for

the PAN Pizza

Competition

McDonalds

-McDonalds is grappling with internal problems in the North & East. “The company is adding 15-20 stores a year hardly”

-McDonalds are looking at reaching consumers in Tier 2 & 3 markets because of huge shift in lifestyle & purchasing power of people(Currently over 60% of McDonalds restaurants are in top six cities

-McDonalds plans to invest Rs.800-1000 Crores to add another 200-300 restaurants & 75-150 McCafe’s in India in the next five years

Dominos Pizza

-Dominos Pizza wants to pursue growth through restaurants addition in new & existing cities backed by an upgraded & expanded commissary network with a target to launch 150 new Dominos Pizza restaurants by FY15

YUM India posted sales of $ 57 million

in Q1 of 2014 compared with $58

million in the previous year. The

operating losses stood at $3 million in

Q1 FY15 compared with $4 million in

FY14.So,YUM India is yet to send back

profits from India to its parent company

Dominos Pizza is in a more mature

stage which made losses for a long time

& YUM is still in the investment stage

By 2020,YUM India will start

contributing to YUM Global

YUM Restaurants China

Yum! Brands is focused on

building leading brands in China in

every significant category

China is the best restaurant opportunity of the 21st Century with a consuming class that is expected to double from 300

million to more than 600 million people by 2020

YUM Restaurants China-A Brief Profile

Total Restaurants-6400 in 950 cities

Expansion Plans-To open 700 restaurants in 2014

KFC entry into China-1987 (KFC was the first quick-service

restaurant chain to enter China)

No of KFC Restaurants-4600(out of 6400)

KFC Menu@China Market-Beef, seafood, rice dishes, fresh

vegetables, soups, breakfast, desserts, and many other delicious

products. We’re also leveraging our restaurants throughout the day

with breakfast, delivery and 24-hour operations

Pizza Hut entry into China-Pizza Hut was the first restaurant

chain to introduce pizza and Western-style casual dining to China

in 1990

No of Resturants-1200 in 305 cities

Pizza Hut Menu@China-pizzas, entrees, pasta, rice dishes,

appetizers, beverages and desserts.

YUM Brands China investment

(1) Pizza Hut Home Service- Yum! Brands introduced pizza delivery to China in 2001 and there are

over 200 Pizza Hut Home Service units in 26 cities

(2)East Dawning- Yum! China created and is testing East Dawning, a quick-service restaurant concept

with nearly 30 stores serving Chinese food to Chinese consumers

(3)Little Sheep- Yum Brands acquired Little Sheep in 2012, the leading hot-pot brand in Chinese casual

dining with over 350 restaurants.

YUM Brands CSR activities

YUM Contribution to World Hunger Relief

Yum! brands had a longstanding commitment to hunger

relief in the U.S. through a initiative called “Harvest

program”, contributing on average $50 million worth of

prepared meals to 3,000 hunger relief agencies across the

country each year and now with nearly one billion people in

the world facing hunger and malnutrition

In October 2007, YUM associates, franchisees and

suppliers in more than 100 countries joined forces to bring

awareness and action to this global crisis as they launched

World Hunger Relief (WHR)–an annual initiative leveraging

the power of our global restaurant system to address hunger

through awareness, volunteerism and fundraisings

This global movement is now the world's largest private sector hunger relief effort in history benefiting the United Nations World Food Programme (WFP).

WFP is the world's largest humanitarian agency fighting hunger worldwide, feeding on average more than 90 million people in over 70 countries each year

Harvest Program(world’s largest

prepared food donation program)

•KFC, Pizza Hut and Taco Bell restaurants donate more than 10

million pounds of food annually to partner agencies nationwide

•Since 1992, the Yum! system has contributed more than 169 million pounds of product to over 3,000

nonprofit organizations—a fair market value of $763.5 million

•Partner agencies include a diverse mix of nonprofits committed to hunger

relief including women’s shelters, food banks, soup kitchens and religious and

community organizations

• Each year, these organizations serve more than 10 million meals of brand

donated food to those in need in cities all across the country

• In its 30th year, the Pizza Hut BOOK IT!® program is the longest-lasting and largest children’s literacy program in the United States

• Each year, the BOOK IT!® program makes reading fun for more than 14 million children in more than 630,000 classrooms

• The ‘REACH Educational Grant Program’ helps KFC restaurant hourly Team Members and Shift Supervisors pursue their educational dreams

• These $2,000 grants help Team Member recipients attend accredited four-year and two-year educational institutions, as well as trade/vocational schools

• KFC Foundation provides hundreds of thousands of dollars in scholarships and grants to hundreds of deserving students across the country –($11.5 million since 2006)

• Since 2012, nearly $1.5 million of that was awarded to 808 KFC Team Members via the “REACH Educational Grant Program”

• Taco Bell Foundation for teens has provided education & job training support to more than 2 million people though Public-Private-Partnership in association with organization like Get Schooled & Boys & Girls Clubs of America Taco Bell

Foundation for teens

KFC Foundation

Pizza Hut-”Book It

Program”

“REACH Educational

Grant Program”

Since 1985, Pizza Hut has invested

nearly $500 million in the program and

has awarded nearly 200 million

Personal Pan Pizzas to students who

have met their monthly “BOOK IT”

reading goals.

YUM Brands CSR Initiative Results

Anup George Rebello

Asst.Manager

The Catholic Syrian Bank Ltd