BusinessWeek certainly caught our attention with this headline recently. Yum! brands, like Pizza Hut, KFC, and Taco Bell, are finding the U.S. market challenging as consumers focus on saving money and getting in shape. However, Yum! has taken the long view with regard to their international markets, and continue to enjoy success even as they shore up global market gains against competitors like McDonalds. 

Yum! Vision & Strategy

“Yum! Brands is committed to continuing the success realized during our first ten years. Our success has only just begun as we look forward to the future, one which promises a long runway for growth, especially on an international level. We maintain a consistent commitment to deliver at least 10% EPS growth annually. With more than 37,000 restaurants in over 110 countries and territories, Yum! Brands international growth sees no signs of stopping as we continue to enter international markets, introducing people around the world to our winning brands.” (Yum! website http://www.yum.com)

“Yum!’s is an amazing story about how they conquered China so much earlier than their main rivals,” says RJ Hottovy, an analyst at Morningstar. “Part of the reason is that they built up their supply chain and their distribution system quickly, and that is giving them a real competitive advantage. When you are setting up restaurants in new territories it is often difficult to procure packaging and to develop good relationships with suppliers, but Yum! now has a nice little edge.”

The Yum! story doesn’t stand out because they are a large, multinational company.  It stands out because Yum! has a defined international strategy and focus: they localize as needed, but more importantly they paid attention to supply chain and distribution – key, relevant factors in their industry  that would support sustainable growth and profitability in the long-run. It’s hard to argue with 10% EPS growth annually.

http://www.businessweek.com/globalbiz/content/jul2010/gb20100714_088544.htm

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