Louisville, Kentucky-based restaurant giant,
Yum! Brands Inc.
) recently announced a complete restructuring of its business
divisions. According to the reshuffling, the company will be
merging its Yum! Restaurants International (YRI) and the U.S.
divisions for each of its three brands - KFC, Pizza Hut and Taco
However, the company will continue to operate its other two
divisions - Yum! Restaurants China and Yum! Restaurants India -
separately on expectations of potential growth. This
reorganization is an attempt by the Yum! Brands to improve its
brand recognition and concentrate on individual geographical
markets, thus boosting its business.
These structural changes are expected to take effect from Jan
1, 2014. From the beginning of fiscal 2014, Yum! Brands will be
posting its financial results for the following divisions - KFC,
Pizza Hut, Taco Bell, Yum! Restaurants China and Yum! Restaurants
India. The company will no longer be providing separate results
for the U.S. and YRI divisions.
As part of the realignment, Yum! Brands also announced few
executive changes. Rick Carucci, the President of Yum!
Brands, will step down in Mar 2014.
Niren Chaudhary - President of Yum! Restaurants India - and
Sam Su - vice chairman of Yum! Brands and chairman as well as
Chief Executive Officer (CEO) of Yum! Restaurants China - will be
reporting to David C. Novak - CEO of Yum! Brands. Additionally,
the CEOs of all the three brands will now be directly working
under Novak. These leadership changes are in line with YUM!
Brands' focus on streamlining its organizational structure.
YUM! Brands' initiative to restructure its business comes in
the wake of witnessing disappointing financial results for the
past few quarters due to weak performance in its China division.
China, which once played a pivotal role in the company's growth
story, began to falter after fourth-quarter 2012 due to bad
publicity resulting from the quality issue. Moreover, poor sales
performance at KFC China in September compelled YUM! Brands to
state that the China comps will continue to be down in the fourth
Other Stocks to Consider
YUM! Brands has a Zacks Rank #4 (Sell). Investors interested
in the restaurant industry may consider stocks like
Cracker Barrel Old Country Store, Inc.
Bob Evans Farms, Inc.
). All these companies hold a Zacks Rank #2 (Buy).
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YUM! BRANDS INC (YUM): Free Stock Analysis
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