Yum! Brands (owner of popular fast food joints like KFC, Taco Bell, Pizza Hut) reported earlier that same-store sales in China fell 19%. The firm does indeed have an enormous presence in China.
Unlike competitor McDonald’s, which I think is still flashing a worrisome chart, YUM is up in today’s trading and even bull flagging on the daily, seen below.
The firm is also making a push with Pizza Hut in China. (source)
Big in China: Jumbo shrimp pizza and green tea Oreos
While in the U.S. the majority of business is takeout and delivery, China’s Pizza Hut Casual Dining is all about the sit-down meal. “It’s positioned as ‘the best Western casual dining experience,'” says Steve Schmitt, Yum! Brands vice president of investor relations. “We don’t go for a local-type experience, but it’s skewed toward local preferences.” The delivery arm in China, Pizza Hut Home Service, is still an emerging brand there.
The broad menu in China sees 25% of its items change twice a year. In addition to pizza and pasta, offerings include appetizers like escargot, entrees such as steak, and a selection of rice dishes. Pizza at the sit-down locations makes up 30% of sales, vs. 70% in the U.S., with toppings focused more on seafood — Atlantic Salmon pizza or Stuffed Crust Jumbo Shrimp Crown pizza. Yum! is also working on utilizing the restaurants all day. Tea time is big, and the company is testing Western-style breakfasts.
At any rate, China bulls might point to YUM‘s green reaction today to the bad numbers as evidence the emerging market swoon is overdone. It may very well be grasping at straws–I do not have a position yet in the emerging market complex. But the weakness there is now certainly getting a ton of play in the financial media and is becoming quite obvious.
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