Corporate Finance

Yum Sales Beat Estimates Despite Food-Safety Scandal

China remains its biggest growth target

China remains its biggest growth target


Yum! Brands Inc., owner of the KFC and Pizza Hut fast-food chains, revealed its fourth-quarter revenue, which indicated sales in China slid less than analysts’ predictions after food-safety investigation in the country.

Indicated in a company statement, Yum’s sales fell by only 4.4% to approximately $4 billion, better than analysts’ previous estimates of $3.94 billion.

Yum’s business in China has been severely affected by a series of food-scare problems. Apart from the supply-chain investigation in 2012, Yum was hit by another food-safety scandal in June 2014, in which its vendor, OSI Group LLC, was probed due to altering expiration dates on meat products.

Despite scandals and poor sales, Yum has no intention to slow down its Chinese investment. Yum generates more than 40% of operating profits and more than half sales from its KFC and Pizza Hut business in China. Yum currently has approximately 6,700 restaurants in China, including 4,800 KFC locations, and plans to triple that number, according to Sam SU, CEO of Yum’s China operations.


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