Why Yum! Brands’ division in India has been successful

Yum! Brands’ division in India

Yum! Brands’ (YUM) division in India includes its businesses in India, Nepal, Bangladesh, and Sri Lanka. Its revenues are combined from three brands—Kentucky Fried Chicken (or KFC), Pizza Hut, and Taco Bell.

As of June 2014, the company had a total of 714 restaurant units—or 2% of the total system restaurants in India. It generated $56 million in revenues for the six months ending in June 2014. The majority of the restaurants were KFC. KFC had more than 350 units. Pizza Hut also had more than 350 units.

In the above chart, we see that the company plans to grow the number of restaurants to 2,000 by 2020. Instead of having new restaurants that offer local food—like East Dawning and the Little Sheep in China—Yum! Brands introduced several vegetarian options in all three of its brands in India. The new options cater to the local taste.

Unique market

Unlike other markets, the market in India has a huge population of customers that prefers a non-meat diet. Yum! Brands reported that their sales increased by 10% by increasing the number of vegetarian items on the menu. We can see this theme among other brands as well. For example, McDonald’s (MCD), Domino’s Pizza (DPZ), and Papa John’s (PZZA) all have a wide variety of vegetarian items on their menu.

These restaurants are part of the Consumer Discretionary Select Sector SPDR (XLY).

With Pizza Hut, Yum! Brands runs two concepts—the full service sit-in casual dining restaurant and the delivery restaurants. This is similar to China. Yum! Brands also introduced Taco Bell in the Indian market. Taco Bell is at a very early stage in India.

Besides separating these two reporting segments, the company appointed individual leaders in each of the divisions in China and India. The divisions need focused attention to grow each of the brands in the region. In the next part of the series, we’ll focus on the individual brands—KFC, Pizza Hut, and Taco Bell.