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Taco Bell Will Open Its First Restaurant in China Later This Year

Taco Bell Will Open Its First Restaurant in China Later This Year


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The city of Shanghai will be home to the first Taco Bell in China, opening by the end of 2016

Yum! Brands, which also owns KFC and Pizza Hut, will finally bring its third restaurant to China this year.

Taco Bell will open its first restaurant in China by the end of 2016, executives for parent company Yum! Brands have announced.

The company’s two other chains, KFC and Pizza Hut, have expanded well in China, and KFC just opened its first location in Tibet — becoming the first Western chain to do so.

The China Taco Bell will be located in Shanghai, the country’s largest city by population, with an estimated 24 million people.

“This will be the beginning of what could be a huge potential idea for China,” said Greg Creed, CEO of Yum! Brands. “We’ll know quickly” if Chinese markets are receptive to Taco Bell, Creed added.

Last year, Yum! Brands announced plans to spin off its operations in China into a separate company called Yum! China, which will oversee operations at all three Yum! restaurants. Franchisees of KFC, Pizza Hut, and Taco Bell will only pay three percent of revenue to Yum!, while franchisees in other countries pay six percent.


Is Yum! Brands About to Repeat Its Mistakes in China?

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time. Having made the streets safe for Truth, Justice, and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. His coverage reflects his passion for motorcycles, booze, and guns (though typically not all exercised at the same time), but his writing also covers the broader sectors of consumer goods, technology, and industrials. So follow along as he tries to break down complex topics to make them more understandable and useful to the average investor. Have a story idea? Contact Rich here. I may not be able to respond to every suggestion, but I do read them all! Think an article needs a correction? Reach Rich here.

Yum! Brands wants China to step up to the chalupa. It plans to open its first Taco Bell in the country by the end of 2016.

Didn't Yum! Brands (NYSE:YUM) just resolve to reduce its exposure risk in China by agreeing to spin off the division that operates its KFC and Pizza Hut restaurants in the country? So what's it doing expanding the Taco Bell chain there? The restaurant operator just said that about the time it finishes calving off its China unit at the end of this year, it will open its first Mexican restaurant there.

There's no doubt that China has been an important market for Yum! Brands. The region accounts for 53% of total revenue and 39% of operating profits. The restaurateur has about 6,900 restaurants in the country, about 5,000 of which are KFCs.

By contrast, Taco Bell, which has some 6,400 restaurants in 20 countries and has been making big pushes in emerging markets (primarily India), is absent from China.

Yum! Brands has been plagued by food-quality issues in China last year, it suffered its second such crisis there in as many years. It had just managed to start winning back customers after the first debacle when the second one hit, and it's finding that regaining that lost ground a second time is a much slower process.

The successive scandals caused hedge fund Corvex Management to take a position in Yum! Brands and advocate offloading its China division as a means of reducing its exposure. The restaurant operator subsequently appointed the hedge fund's CEO to its board of directors, and only days later announced it would be spinning off the China unit.

Successive food quality scandals have made business difficult for Yum! Brands, which is spinning off its China division later this year.

But Yum! Brands isn't alone in feeling the need to minimize the risks associated with running a business in Asia. McDonald's (NYSE:MCD) has reportedly also been looking to calve off its Asian business, which was hammered by the same supplier-related food quality scandal that afflicted Yum! Brands the second time. The main difference was that it was the Golden Arches ' Japanese division that got hit. McDonald's owns about half of that business, and the damage led to it reporting its first loss in over a decade.

While both restaurant operators have been fabulously successful with their forays into the Orient, the fact they've largely been the only fast food chains to accomplish that speaks to how difficult it is for a multinational to run a business there. For example, Wendy's has no presence in China, while Burger King's parent Restaurant Brands International (NYSE:QSR) has a modest 450 restaurants in the country, though it does have an expansion plan in place.

So it may have been more surprising that Yum! Brands was "exiting" China by spinning off the division than that Taco Bell would be opening its first restaurants there. Perhaps the real question that should be asked is: What took them so long?

Despite the difficulties and setbacks Yum! Brands has faced recently in the country, it has had decades of successful operations there. While the food scandals have been frustrating for the company and investors, its long record in China suggests further commitment to the market is warranted.

And even with the spinoff, Yum! Brands is not severing all ties the new company will operate as a franchisee for the parent. That may have been the biggest different between the restaurant operator's business there and its chains here. In the U.S., it's an almost wholly franchised business in China, it was almost entirely company-owned. The franchise model generally has been slow to take hold in China, but we may see it grow there in the future.

Taco Bell has enjoyed great success wherever its opened its doors (with the exception of India, where it continues to lag horribly and same-store sales seem to continuously go from bad to worse), s o rather than viewing this move as a mistake, investors should commend Yum! Brands for making sure it still has a direct connection to China.


Is Yum! Brands About to Repeat Its Mistakes in China?

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time. Having made the streets safe for Truth, Justice, and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. His coverage reflects his passion for motorcycles, booze, and guns (though typically not all exercised at the same time), but his writing also covers the broader sectors of consumer goods, technology, and industrials. So follow along as he tries to break down complex topics to make them more understandable and useful to the average investor. Have a story idea? Contact Rich here. I may not be able to respond to every suggestion, but I do read them all! Think an article needs a correction? Reach Rich here.

Yum! Brands wants China to step up to the chalupa. It plans to open its first Taco Bell in the country by the end of 2016.

Didn't Yum! Brands (NYSE:YUM) just resolve to reduce its exposure risk in China by agreeing to spin off the division that operates its KFC and Pizza Hut restaurants in the country? So what's it doing expanding the Taco Bell chain there? The restaurant operator just said that about the time it finishes calving off its China unit at the end of this year, it will open its first Mexican restaurant there.

There's no doubt that China has been an important market for Yum! Brands. The region accounts for 53% of total revenue and 39% of operating profits. The restaurateur has about 6,900 restaurants in the country, about 5,000 of which are KFCs.

By contrast, Taco Bell, which has some 6,400 restaurants in 20 countries and has been making big pushes in emerging markets (primarily India), is absent from China.

Yum! Brands has been plagued by food-quality issues in China last year, it suffered its second such crisis there in as many years. It had just managed to start winning back customers after the first debacle when the second one hit, and it's finding that regaining that lost ground a second time is a much slower process.

The successive scandals caused hedge fund Corvex Management to take a position in Yum! Brands and advocate offloading its China division as a means of reducing its exposure. The restaurant operator subsequently appointed the hedge fund's CEO to its board of directors, and only days later announced it would be spinning off the China unit.

Successive food quality scandals have made business difficult for Yum! Brands, which is spinning off its China division later this year.

But Yum! Brands isn't alone in feeling the need to minimize the risks associated with running a business in Asia. McDonald's (NYSE:MCD) has reportedly also been looking to calve off its Asian business, which was hammered by the same supplier-related food quality scandal that afflicted Yum! Brands the second time. The main difference was that it was the Golden Arches ' Japanese division that got hit. McDonald's owns about half of that business, and the damage led to it reporting its first loss in over a decade.

While both restaurant operators have been fabulously successful with their forays into the Orient, the fact they've largely been the only fast food chains to accomplish that speaks to how difficult it is for a multinational to run a business there. For example, Wendy's has no presence in China, while Burger King's parent Restaurant Brands International (NYSE:QSR) has a modest 450 restaurants in the country, though it does have an expansion plan in place.

So it may have been more surprising that Yum! Brands was "exiting" China by spinning off the division than that Taco Bell would be opening its first restaurants there. Perhaps the real question that should be asked is: What took them so long?

Despite the difficulties and setbacks Yum! Brands has faced recently in the country, it has had decades of successful operations there. While the food scandals have been frustrating for the company and investors, its long record in China suggests further commitment to the market is warranted.

And even with the spinoff, Yum! Brands is not severing all ties the new company will operate as a franchisee for the parent. That may have been the biggest different between the restaurant operator's business there and its chains here. In the U.S., it's an almost wholly franchised business in China, it was almost entirely company-owned. The franchise model generally has been slow to take hold in China, but we may see it grow there in the future.

Taco Bell has enjoyed great success wherever its opened its doors (with the exception of India, where it continues to lag horribly and same-store sales seem to continuously go from bad to worse), s o rather than viewing this move as a mistake, investors should commend Yum! Brands for making sure it still has a direct connection to China.


Is Yum! Brands About to Repeat Its Mistakes in China?

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time. Having made the streets safe for Truth, Justice, and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. His coverage reflects his passion for motorcycles, booze, and guns (though typically not all exercised at the same time), but his writing also covers the broader sectors of consumer goods, technology, and industrials. So follow along as he tries to break down complex topics to make them more understandable and useful to the average investor. Have a story idea? Contact Rich here. I may not be able to respond to every suggestion, but I do read them all! Think an article needs a correction? Reach Rich here.

Yum! Brands wants China to step up to the chalupa. It plans to open its first Taco Bell in the country by the end of 2016.

Didn't Yum! Brands (NYSE:YUM) just resolve to reduce its exposure risk in China by agreeing to spin off the division that operates its KFC and Pizza Hut restaurants in the country? So what's it doing expanding the Taco Bell chain there? The restaurant operator just said that about the time it finishes calving off its China unit at the end of this year, it will open its first Mexican restaurant there.

There's no doubt that China has been an important market for Yum! Brands. The region accounts for 53% of total revenue and 39% of operating profits. The restaurateur has about 6,900 restaurants in the country, about 5,000 of which are KFCs.

By contrast, Taco Bell, which has some 6,400 restaurants in 20 countries and has been making big pushes in emerging markets (primarily India), is absent from China.

Yum! Brands has been plagued by food-quality issues in China last year, it suffered its second such crisis there in as many years. It had just managed to start winning back customers after the first debacle when the second one hit, and it's finding that regaining that lost ground a second time is a much slower process.

The successive scandals caused hedge fund Corvex Management to take a position in Yum! Brands and advocate offloading its China division as a means of reducing its exposure. The restaurant operator subsequently appointed the hedge fund's CEO to its board of directors, and only days later announced it would be spinning off the China unit.

Successive food quality scandals have made business difficult for Yum! Brands, which is spinning off its China division later this year.

But Yum! Brands isn't alone in feeling the need to minimize the risks associated with running a business in Asia. McDonald's (NYSE:MCD) has reportedly also been looking to calve off its Asian business, which was hammered by the same supplier-related food quality scandal that afflicted Yum! Brands the second time. The main difference was that it was the Golden Arches ' Japanese division that got hit. McDonald's owns about half of that business, and the damage led to it reporting its first loss in over a decade.

While both restaurant operators have been fabulously successful with their forays into the Orient, the fact they've largely been the only fast food chains to accomplish that speaks to how difficult it is for a multinational to run a business there. For example, Wendy's has no presence in China, while Burger King's parent Restaurant Brands International (NYSE:QSR) has a modest 450 restaurants in the country, though it does have an expansion plan in place.

So it may have been more surprising that Yum! Brands was "exiting" China by spinning off the division than that Taco Bell would be opening its first restaurants there. Perhaps the real question that should be asked is: What took them so long?

Despite the difficulties and setbacks Yum! Brands has faced recently in the country, it has had decades of successful operations there. While the food scandals have been frustrating for the company and investors, its long record in China suggests further commitment to the market is warranted.

And even with the spinoff, Yum! Brands is not severing all ties the new company will operate as a franchisee for the parent. That may have been the biggest different between the restaurant operator's business there and its chains here. In the U.S., it's an almost wholly franchised business in China, it was almost entirely company-owned. The franchise model generally has been slow to take hold in China, but we may see it grow there in the future.

Taco Bell has enjoyed great success wherever its opened its doors (with the exception of India, where it continues to lag horribly and same-store sales seem to continuously go from bad to worse), s o rather than viewing this move as a mistake, investors should commend Yum! Brands for making sure it still has a direct connection to China.


Is Yum! Brands About to Repeat Its Mistakes in China?

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time. Having made the streets safe for Truth, Justice, and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. His coverage reflects his passion for motorcycles, booze, and guns (though typically not all exercised at the same time), but his writing also covers the broader sectors of consumer goods, technology, and industrials. So follow along as he tries to break down complex topics to make them more understandable and useful to the average investor. Have a story idea? Contact Rich here. I may not be able to respond to every suggestion, but I do read them all! Think an article needs a correction? Reach Rich here.

Yum! Brands wants China to step up to the chalupa. It plans to open its first Taco Bell in the country by the end of 2016.

Didn't Yum! Brands (NYSE:YUM) just resolve to reduce its exposure risk in China by agreeing to spin off the division that operates its KFC and Pizza Hut restaurants in the country? So what's it doing expanding the Taco Bell chain there? The restaurant operator just said that about the time it finishes calving off its China unit at the end of this year, it will open its first Mexican restaurant there.

There's no doubt that China has been an important market for Yum! Brands. The region accounts for 53% of total revenue and 39% of operating profits. The restaurateur has about 6,900 restaurants in the country, about 5,000 of which are KFCs.

By contrast, Taco Bell, which has some 6,400 restaurants in 20 countries and has been making big pushes in emerging markets (primarily India), is absent from China.

Yum! Brands has been plagued by food-quality issues in China last year, it suffered its second such crisis there in as many years. It had just managed to start winning back customers after the first debacle when the second one hit, and it's finding that regaining that lost ground a second time is a much slower process.

The successive scandals caused hedge fund Corvex Management to take a position in Yum! Brands and advocate offloading its China division as a means of reducing its exposure. The restaurant operator subsequently appointed the hedge fund's CEO to its board of directors, and only days later announced it would be spinning off the China unit.

Successive food quality scandals have made business difficult for Yum! Brands, which is spinning off its China division later this year.

But Yum! Brands isn't alone in feeling the need to minimize the risks associated with running a business in Asia. McDonald's (NYSE:MCD) has reportedly also been looking to calve off its Asian business, which was hammered by the same supplier-related food quality scandal that afflicted Yum! Brands the second time. The main difference was that it was the Golden Arches ' Japanese division that got hit. McDonald's owns about half of that business, and the damage led to it reporting its first loss in over a decade.

While both restaurant operators have been fabulously successful with their forays into the Orient, the fact they've largely been the only fast food chains to accomplish that speaks to how difficult it is for a multinational to run a business there. For example, Wendy's has no presence in China, while Burger King's parent Restaurant Brands International (NYSE:QSR) has a modest 450 restaurants in the country, though it does have an expansion plan in place.

So it may have been more surprising that Yum! Brands was "exiting" China by spinning off the division than that Taco Bell would be opening its first restaurants there. Perhaps the real question that should be asked is: What took them so long?

Despite the difficulties and setbacks Yum! Brands has faced recently in the country, it has had decades of successful operations there. While the food scandals have been frustrating for the company and investors, its long record in China suggests further commitment to the market is warranted.

And even with the spinoff, Yum! Brands is not severing all ties the new company will operate as a franchisee for the parent. That may have been the biggest different between the restaurant operator's business there and its chains here. In the U.S., it's an almost wholly franchised business in China, it was almost entirely company-owned. The franchise model generally has been slow to take hold in China, but we may see it grow there in the future.

Taco Bell has enjoyed great success wherever its opened its doors (with the exception of India, where it continues to lag horribly and same-store sales seem to continuously go from bad to worse), s o rather than viewing this move as a mistake, investors should commend Yum! Brands for making sure it still has a direct connection to China.


Is Yum! Brands About to Repeat Its Mistakes in China?

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time. Having made the streets safe for Truth, Justice, and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. His coverage reflects his passion for motorcycles, booze, and guns (though typically not all exercised at the same time), but his writing also covers the broader sectors of consumer goods, technology, and industrials. So follow along as he tries to break down complex topics to make them more understandable and useful to the average investor. Have a story idea? Contact Rich here. I may not be able to respond to every suggestion, but I do read them all! Think an article needs a correction? Reach Rich here.

Yum! Brands wants China to step up to the chalupa. It plans to open its first Taco Bell in the country by the end of 2016.

Didn't Yum! Brands (NYSE:YUM) just resolve to reduce its exposure risk in China by agreeing to spin off the division that operates its KFC and Pizza Hut restaurants in the country? So what's it doing expanding the Taco Bell chain there? The restaurant operator just said that about the time it finishes calving off its China unit at the end of this year, it will open its first Mexican restaurant there.

There's no doubt that China has been an important market for Yum! Brands. The region accounts for 53% of total revenue and 39% of operating profits. The restaurateur has about 6,900 restaurants in the country, about 5,000 of which are KFCs.

By contrast, Taco Bell, which has some 6,400 restaurants in 20 countries and has been making big pushes in emerging markets (primarily India), is absent from China.

Yum! Brands has been plagued by food-quality issues in China last year, it suffered its second such crisis there in as many years. It had just managed to start winning back customers after the first debacle when the second one hit, and it's finding that regaining that lost ground a second time is a much slower process.

The successive scandals caused hedge fund Corvex Management to take a position in Yum! Brands and advocate offloading its China division as a means of reducing its exposure. The restaurant operator subsequently appointed the hedge fund's CEO to its board of directors, and only days later announced it would be spinning off the China unit.

Successive food quality scandals have made business difficult for Yum! Brands, which is spinning off its China division later this year.

But Yum! Brands isn't alone in feeling the need to minimize the risks associated with running a business in Asia. McDonald's (NYSE:MCD) has reportedly also been looking to calve off its Asian business, which was hammered by the same supplier-related food quality scandal that afflicted Yum! Brands the second time. The main difference was that it was the Golden Arches ' Japanese division that got hit. McDonald's owns about half of that business, and the damage led to it reporting its first loss in over a decade.

While both restaurant operators have been fabulously successful with their forays into the Orient, the fact they've largely been the only fast food chains to accomplish that speaks to how difficult it is for a multinational to run a business there. For example, Wendy's has no presence in China, while Burger King's parent Restaurant Brands International (NYSE:QSR) has a modest 450 restaurants in the country, though it does have an expansion plan in place.

So it may have been more surprising that Yum! Brands was "exiting" China by spinning off the division than that Taco Bell would be opening its first restaurants there. Perhaps the real question that should be asked is: What took them so long?

Despite the difficulties and setbacks Yum! Brands has faced recently in the country, it has had decades of successful operations there. While the food scandals have been frustrating for the company and investors, its long record in China suggests further commitment to the market is warranted.

And even with the spinoff, Yum! Brands is not severing all ties the new company will operate as a franchisee for the parent. That may have been the biggest different between the restaurant operator's business there and its chains here. In the U.S., it's an almost wholly franchised business in China, it was almost entirely company-owned. The franchise model generally has been slow to take hold in China, but we may see it grow there in the future.

Taco Bell has enjoyed great success wherever its opened its doors (with the exception of India, where it continues to lag horribly and same-store sales seem to continuously go from bad to worse), s o rather than viewing this move as a mistake, investors should commend Yum! Brands for making sure it still has a direct connection to China.


Is Yum! Brands About to Repeat Its Mistakes in China?

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time. Having made the streets safe for Truth, Justice, and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. His coverage reflects his passion for motorcycles, booze, and guns (though typically not all exercised at the same time), but his writing also covers the broader sectors of consumer goods, technology, and industrials. So follow along as he tries to break down complex topics to make them more understandable and useful to the average investor. Have a story idea? Contact Rich here. I may not be able to respond to every suggestion, but I do read them all! Think an article needs a correction? Reach Rich here.

Yum! Brands wants China to step up to the chalupa. It plans to open its first Taco Bell in the country by the end of 2016.

Didn't Yum! Brands (NYSE:YUM) just resolve to reduce its exposure risk in China by agreeing to spin off the division that operates its KFC and Pizza Hut restaurants in the country? So what's it doing expanding the Taco Bell chain there? The restaurant operator just said that about the time it finishes calving off its China unit at the end of this year, it will open its first Mexican restaurant there.

There's no doubt that China has been an important market for Yum! Brands. The region accounts for 53% of total revenue and 39% of operating profits. The restaurateur has about 6,900 restaurants in the country, about 5,000 of which are KFCs.

By contrast, Taco Bell, which has some 6,400 restaurants in 20 countries and has been making big pushes in emerging markets (primarily India), is absent from China.

Yum! Brands has been plagued by food-quality issues in China last year, it suffered its second such crisis there in as many years. It had just managed to start winning back customers after the first debacle when the second one hit, and it's finding that regaining that lost ground a second time is a much slower process.

The successive scandals caused hedge fund Corvex Management to take a position in Yum! Brands and advocate offloading its China division as a means of reducing its exposure. The restaurant operator subsequently appointed the hedge fund's CEO to its board of directors, and only days later announced it would be spinning off the China unit.

Successive food quality scandals have made business difficult for Yum! Brands, which is spinning off its China division later this year.

But Yum! Brands isn't alone in feeling the need to minimize the risks associated with running a business in Asia. McDonald's (NYSE:MCD) has reportedly also been looking to calve off its Asian business, which was hammered by the same supplier-related food quality scandal that afflicted Yum! Brands the second time. The main difference was that it was the Golden Arches ' Japanese division that got hit. McDonald's owns about half of that business, and the damage led to it reporting its first loss in over a decade.

While both restaurant operators have been fabulously successful with their forays into the Orient, the fact they've largely been the only fast food chains to accomplish that speaks to how difficult it is for a multinational to run a business there. For example, Wendy's has no presence in China, while Burger King's parent Restaurant Brands International (NYSE:QSR) has a modest 450 restaurants in the country, though it does have an expansion plan in place.

So it may have been more surprising that Yum! Brands was "exiting" China by spinning off the division than that Taco Bell would be opening its first restaurants there. Perhaps the real question that should be asked is: What took them so long?

Despite the difficulties and setbacks Yum! Brands has faced recently in the country, it has had decades of successful operations there. While the food scandals have been frustrating for the company and investors, its long record in China suggests further commitment to the market is warranted.

And even with the spinoff, Yum! Brands is not severing all ties the new company will operate as a franchisee for the parent. That may have been the biggest different between the restaurant operator's business there and its chains here. In the U.S., it's an almost wholly franchised business in China, it was almost entirely company-owned. The franchise model generally has been slow to take hold in China, but we may see it grow there in the future.

Taco Bell has enjoyed great success wherever its opened its doors (with the exception of India, where it continues to lag horribly and same-store sales seem to continuously go from bad to worse), s o rather than viewing this move as a mistake, investors should commend Yum! Brands for making sure it still has a direct connection to China.


Is Yum! Brands About to Repeat Its Mistakes in China?

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time. Having made the streets safe for Truth, Justice, and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. His coverage reflects his passion for motorcycles, booze, and guns (though typically not all exercised at the same time), but his writing also covers the broader sectors of consumer goods, technology, and industrials. So follow along as he tries to break down complex topics to make them more understandable and useful to the average investor. Have a story idea? Contact Rich here. I may not be able to respond to every suggestion, but I do read them all! Think an article needs a correction? Reach Rich here.

Yum! Brands wants China to step up to the chalupa. It plans to open its first Taco Bell in the country by the end of 2016.

Didn't Yum! Brands (NYSE:YUM) just resolve to reduce its exposure risk in China by agreeing to spin off the division that operates its KFC and Pizza Hut restaurants in the country? So what's it doing expanding the Taco Bell chain there? The restaurant operator just said that about the time it finishes calving off its China unit at the end of this year, it will open its first Mexican restaurant there.

There's no doubt that China has been an important market for Yum! Brands. The region accounts for 53% of total revenue and 39% of operating profits. The restaurateur has about 6,900 restaurants in the country, about 5,000 of which are KFCs.

By contrast, Taco Bell, which has some 6,400 restaurants in 20 countries and has been making big pushes in emerging markets (primarily India), is absent from China.

Yum! Brands has been plagued by food-quality issues in China last year, it suffered its second such crisis there in as many years. It had just managed to start winning back customers after the first debacle when the second one hit, and it's finding that regaining that lost ground a second time is a much slower process.

The successive scandals caused hedge fund Corvex Management to take a position in Yum! Brands and advocate offloading its China division as a means of reducing its exposure. The restaurant operator subsequently appointed the hedge fund's CEO to its board of directors, and only days later announced it would be spinning off the China unit.

Successive food quality scandals have made business difficult for Yum! Brands, which is spinning off its China division later this year.

But Yum! Brands isn't alone in feeling the need to minimize the risks associated with running a business in Asia. McDonald's (NYSE:MCD) has reportedly also been looking to calve off its Asian business, which was hammered by the same supplier-related food quality scandal that afflicted Yum! Brands the second time. The main difference was that it was the Golden Arches ' Japanese division that got hit. McDonald's owns about half of that business, and the damage led to it reporting its first loss in over a decade.

While both restaurant operators have been fabulously successful with their forays into the Orient, the fact they've largely been the only fast food chains to accomplish that speaks to how difficult it is for a multinational to run a business there. For example, Wendy's has no presence in China, while Burger King's parent Restaurant Brands International (NYSE:QSR) has a modest 450 restaurants in the country, though it does have an expansion plan in place.

So it may have been more surprising that Yum! Brands was "exiting" China by spinning off the division than that Taco Bell would be opening its first restaurants there. Perhaps the real question that should be asked is: What took them so long?

Despite the difficulties and setbacks Yum! Brands has faced recently in the country, it has had decades of successful operations there. While the food scandals have been frustrating for the company and investors, its long record in China suggests further commitment to the market is warranted.

And even with the spinoff, Yum! Brands is not severing all ties the new company will operate as a franchisee for the parent. That may have been the biggest different between the restaurant operator's business there and its chains here. In the U.S., it's an almost wholly franchised business in China, it was almost entirely company-owned. The franchise model generally has been slow to take hold in China, but we may see it grow there in the future.

Taco Bell has enjoyed great success wherever its opened its doors (with the exception of India, where it continues to lag horribly and same-store sales seem to continuously go from bad to worse), s o rather than viewing this move as a mistake, investors should commend Yum! Brands for making sure it still has a direct connection to China.


Is Yum! Brands About to Repeat Its Mistakes in China?

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time. Having made the streets safe for Truth, Justice, and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. His coverage reflects his passion for motorcycles, booze, and guns (though typically not all exercised at the same time), but his writing also covers the broader sectors of consumer goods, technology, and industrials. So follow along as he tries to break down complex topics to make them more understandable and useful to the average investor. Have a story idea? Contact Rich here. I may not be able to respond to every suggestion, but I do read them all! Think an article needs a correction? Reach Rich here.

Yum! Brands wants China to step up to the chalupa. It plans to open its first Taco Bell in the country by the end of 2016.

Didn't Yum! Brands (NYSE:YUM) just resolve to reduce its exposure risk in China by agreeing to spin off the division that operates its KFC and Pizza Hut restaurants in the country? So what's it doing expanding the Taco Bell chain there? The restaurant operator just said that about the time it finishes calving off its China unit at the end of this year, it will open its first Mexican restaurant there.

There's no doubt that China has been an important market for Yum! Brands. The region accounts for 53% of total revenue and 39% of operating profits. The restaurateur has about 6,900 restaurants in the country, about 5,000 of which are KFCs.

By contrast, Taco Bell, which has some 6,400 restaurants in 20 countries and has been making big pushes in emerging markets (primarily India), is absent from China.

Yum! Brands has been plagued by food-quality issues in China last year, it suffered its second such crisis there in as many years. It had just managed to start winning back customers after the first debacle when the second one hit, and it's finding that regaining that lost ground a second time is a much slower process.

The successive scandals caused hedge fund Corvex Management to take a position in Yum! Brands and advocate offloading its China division as a means of reducing its exposure. The restaurant operator subsequently appointed the hedge fund's CEO to its board of directors, and only days later announced it would be spinning off the China unit.

Successive food quality scandals have made business difficult for Yum! Brands, which is spinning off its China division later this year.

But Yum! Brands isn't alone in feeling the need to minimize the risks associated with running a business in Asia. McDonald's (NYSE:MCD) has reportedly also been looking to calve off its Asian business, which was hammered by the same supplier-related food quality scandal that afflicted Yum! Brands the second time. The main difference was that it was the Golden Arches ' Japanese division that got hit. McDonald's owns about half of that business, and the damage led to it reporting its first loss in over a decade.

While both restaurant operators have been fabulously successful with their forays into the Orient, the fact they've largely been the only fast food chains to accomplish that speaks to how difficult it is for a multinational to run a business there. For example, Wendy's has no presence in China, while Burger King's parent Restaurant Brands International (NYSE:QSR) has a modest 450 restaurants in the country, though it does have an expansion plan in place.

So it may have been more surprising that Yum! Brands was "exiting" China by spinning off the division than that Taco Bell would be opening its first restaurants there. Perhaps the real question that should be asked is: What took them so long?

Despite the difficulties and setbacks Yum! Brands has faced recently in the country, it has had decades of successful operations there. While the food scandals have been frustrating for the company and investors, its long record in China suggests further commitment to the market is warranted.

And even with the spinoff, Yum! Brands is not severing all ties the new company will operate as a franchisee for the parent. That may have been the biggest different between the restaurant operator's business there and its chains here. In the U.S., it's an almost wholly franchised business in China, it was almost entirely company-owned. The franchise model generally has been slow to take hold in China, but we may see it grow there in the future.

Taco Bell has enjoyed great success wherever its opened its doors (with the exception of India, where it continues to lag horribly and same-store sales seem to continuously go from bad to worse), s o rather than viewing this move as a mistake, investors should commend Yum! Brands for making sure it still has a direct connection to China.


Is Yum! Brands About to Repeat Its Mistakes in China?

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time. Having made the streets safe for Truth, Justice, and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. His coverage reflects his passion for motorcycles, booze, and guns (though typically not all exercised at the same time), but his writing also covers the broader sectors of consumer goods, technology, and industrials. So follow along as he tries to break down complex topics to make them more understandable and useful to the average investor. Have a story idea? Contact Rich here. I may not be able to respond to every suggestion, but I do read them all! Think an article needs a correction? Reach Rich here.

Yum! Brands wants China to step up to the chalupa. It plans to open its first Taco Bell in the country by the end of 2016.

Didn't Yum! Brands (NYSE:YUM) just resolve to reduce its exposure risk in China by agreeing to spin off the division that operates its KFC and Pizza Hut restaurants in the country? So what's it doing expanding the Taco Bell chain there? The restaurant operator just said that about the time it finishes calving off its China unit at the end of this year, it will open its first Mexican restaurant there.

There's no doubt that China has been an important market for Yum! Brands. The region accounts for 53% of total revenue and 39% of operating profits. The restaurateur has about 6,900 restaurants in the country, about 5,000 of which are KFCs.

By contrast, Taco Bell, which has some 6,400 restaurants in 20 countries and has been making big pushes in emerging markets (primarily India), is absent from China.

Yum! Brands has been plagued by food-quality issues in China last year, it suffered its second such crisis there in as many years. It had just managed to start winning back customers after the first debacle when the second one hit, and it's finding that regaining that lost ground a second time is a much slower process.

The successive scandals caused hedge fund Corvex Management to take a position in Yum! Brands and advocate offloading its China division as a means of reducing its exposure. The restaurant operator subsequently appointed the hedge fund's CEO to its board of directors, and only days later announced it would be spinning off the China unit.

Successive food quality scandals have made business difficult for Yum! Brands, which is spinning off its China division later this year.

But Yum! Brands isn't alone in feeling the need to minimize the risks associated with running a business in Asia. McDonald's (NYSE:MCD) has reportedly also been looking to calve off its Asian business, which was hammered by the same supplier-related food quality scandal that afflicted Yum! Brands the second time. The main difference was that it was the Golden Arches ' Japanese division that got hit. McDonald's owns about half of that business, and the damage led to it reporting its first loss in over a decade.

While both restaurant operators have been fabulously successful with their forays into the Orient, the fact they've largely been the only fast food chains to accomplish that speaks to how difficult it is for a multinational to run a business there. For example, Wendy's has no presence in China, while Burger King's parent Restaurant Brands International (NYSE:QSR) has a modest 450 restaurants in the country, though it does have an expansion plan in place.

So it may have been more surprising that Yum! Brands was "exiting" China by spinning off the division than that Taco Bell would be opening its first restaurants there. Perhaps the real question that should be asked is: What took them so long?

Despite the difficulties and setbacks Yum! Brands has faced recently in the country, it has had decades of successful operations there. While the food scandals have been frustrating for the company and investors, its long record in China suggests further commitment to the market is warranted.

And even with the spinoff, Yum! Brands is not severing all ties the new company will operate as a franchisee for the parent. That may have been the biggest different between the restaurant operator's business there and its chains here. In the U.S., it's an almost wholly franchised business in China, it was almost entirely company-owned. The franchise model generally has been slow to take hold in China, but we may see it grow there in the future.

Taco Bell has enjoyed great success wherever its opened its doors (with the exception of India, where it continues to lag horribly and same-store sales seem to continuously go from bad to worse), s o rather than viewing this move as a mistake, investors should commend Yum! Brands for making sure it still has a direct connection to China.


Is Yum! Brands About to Repeat Its Mistakes in China?

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time. Having made the streets safe for Truth, Justice, and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. His coverage reflects his passion for motorcycles, booze, and guns (though typically not all exercised at the same time), but his writing also covers the broader sectors of consumer goods, technology, and industrials. So follow along as he tries to break down complex topics to make them more understandable and useful to the average investor. Have a story idea? Contact Rich here. I may not be able to respond to every suggestion, but I do read them all! Think an article needs a correction? Reach Rich here.

Yum! Brands wants China to step up to the chalupa. It plans to open its first Taco Bell in the country by the end of 2016.

Didn't Yum! Brands (NYSE:YUM) just resolve to reduce its exposure risk in China by agreeing to spin off the division that operates its KFC and Pizza Hut restaurants in the country? So what's it doing expanding the Taco Bell chain there? The restaurant operator just said that about the time it finishes calving off its China unit at the end of this year, it will open its first Mexican restaurant there.

There's no doubt that China has been an important market for Yum! Brands. The region accounts for 53% of total revenue and 39% of operating profits. The restaurateur has about 6,900 restaurants in the country, about 5,000 of which are KFCs.

By contrast, Taco Bell, which has some 6,400 restaurants in 20 countries and has been making big pushes in emerging markets (primarily India), is absent from China.

Yum! Brands has been plagued by food-quality issues in China last year, it suffered its second such crisis there in as many years. It had just managed to start winning back customers after the first debacle when the second one hit, and it's finding that regaining that lost ground a second time is a much slower process.

The successive scandals caused hedge fund Corvex Management to take a position in Yum! Brands and advocate offloading its China division as a means of reducing its exposure. The restaurant operator subsequently appointed the hedge fund's CEO to its board of directors, and only days later announced it would be spinning off the China unit.

Successive food quality scandals have made business difficult for Yum! Brands, which is spinning off its China division later this year.

But Yum! Brands isn't alone in feeling the need to minimize the risks associated with running a business in Asia. McDonald's (NYSE:MCD) has reportedly also been looking to calve off its Asian business, which was hammered by the same supplier-related food quality scandal that afflicted Yum! Brands the second time. The main difference was that it was the Golden Arches ' Japanese division that got hit. McDonald's owns about half of that business, and the damage led to it reporting its first loss in over a decade.

While both restaurant operators have been fabulously successful with their forays into the Orient, the fact they've largely been the only fast food chains to accomplish that speaks to how difficult it is for a multinational to run a business there. For example, Wendy's has no presence in China, while Burger King's parent Restaurant Brands International (NYSE:QSR) has a modest 450 restaurants in the country, though it does have an expansion plan in place.

So it may have been more surprising that Yum! Brands was "exiting" China by spinning off the division than that Taco Bell would be opening its first restaurants there. Perhaps the real question that should be asked is: What took them so long?

Despite the difficulties and setbacks Yum! Brands has faced recently in the country, it has had decades of successful operations there. While the food scandals have been frustrating for the company and investors, its long record in China suggests further commitment to the market is warranted.

And even with the spinoff, Yum! Brands is not severing all ties the new company will operate as a franchisee for the parent. That may have been the biggest different between the restaurant operator's business there and its chains here. In the U.S., it's an almost wholly franchised business in China, it was almost entirely company-owned. The franchise model generally has been slow to take hold in China, but we may see it grow there in the future.

Taco Bell has enjoyed great success wherever its opened its doors (with the exception of India, where it continues to lag horribly and same-store sales seem to continuously go from bad to worse), s o rather than viewing this move as a mistake, investors should commend Yum! Brands for making sure it still has a direct connection to China.


Watch the video: Want Taco Bell Delivered? It Could Happen Soon - IGN News (July 2022).


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