Yum Brands Inc., the parent of fast food chains KFC, Taco Bell and Pizza Hut, plans to open at least 400 restaurants in China, 700 in its international division, the company’s chairman and chief executive said Thursday.
With more than 34,000 restaurants, Yum has more than any other company worldwide but trails rival McDonald’s Corp. in sales.
Speaking at the Louisville-based company’s annual shareholder meeting, CEO David Novak said that building dominant brands in China and international expansion were among the company’s top growth strategies.
Novak also said he was disappointed in the company’s share price last year despite solid earnings.
Novak predicted Yum would open at least 400 restaurants in China and 700 in its international division this year. In 2005, Yum opened 1,554 restaurants worldwide, including 409 in its China division — both records.
At the end of the first quarter, Yum had 1,602 KFCs and 243 Pizza Huts in its China division, which includes mainland China, Thailand and Taiwan. It had 11,378 restaurants in its international division, which includes operations outside the U.S. and the China division.
Yum’s goal is to achieve 20 percent operating profit growth in China and 10 percent to 15 percent growth in its international division, Novak said.
In the U.S., Novak predicted Yum would add at least 550 multibrand restaurants this year. The company now has more than 3,300 locations that include at least two Yum brands under one roof.
Yum’s brands also include Long John Silver’s and A&W All-American Food Restaurants, which have been key to the multibrand strategy.
Novak said Yum achieved earnings per share growth of 13 percent prior to special items in 2005, the fourth straight year of at least 10 percent growth. Last month, Yum raised its full-year earnings per share growth outlook for 2006 to at least $2.81, 11 percent growth prior to special items.
“Given our strong performance, I’m sure you’ll agree it was disappointing our share price declined by 1 percent in 2005,” he said, adding that Yum’s stock increased by 37 percent in 2004.
“As we continue to deliver consistent results, I’m confident the stock will take care of itself and you will continue to be rewarded,” he said.