Yum China kicks off trad­ing in New York

China Daily (USA) - - 1 - By WU YIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

Yum China Hold­ings Inc, a sep­a­rate com­pany carved out from Yum Brands Inc that started trad­ing in New York on Tues­day, said it will con­tinue fo­cus­ing on direct op­er­at­ing busi­ness model in China, rather than fran­chis­ing.

Yum Brands an­nounced it was sep­a­rat­ing its China op­er­a­tions last Oc­to­ber, and the spinoff from Yum Brands com­pleted on Oct 31, with Yum China listed on the New York Stock Ex­change.

In China, most of its restau­rants are di­rectly op­er­ated by Yum China while most are fran­chised in other coun­tries.

Micky Pant, chief ex­ec­u­tive of­fi­cer of Yum China said ex­pand­ing taco restau­rant Taco Bell and lamb hot pot restau­rant Lit­tle Sheep will drive the growth of Yum China in the next few years.

Yum China is go­ing to triple its cur­rent num­ber of restau­rants from more than 7000 to around 20,000 across China in the next few years.

Yum China has re­ceived $460 mil­lion strate­gic in­vest­ment in­clud­ing $410 mil­lion from Pri­mav­era Cap­i­tal and $50 mil­lion from Ant Fi­nan­cial. Fred Hu, a vet­eran in in­vest­ment bank­ing be­comes non-ex­ec­u­tive Chair­man of Yum China.

As an in­de­pen­dent com­pany, Yum China will con­tinue to fo­cus on direct op­er­a­tions other than fran­chis­ing, to bet­ter lever­age its ex­per­tise and re­sources gath­ered over the past decades, in­clud­ing knowledge, tal­ent and sup­ply chain, to bet­ter en­sure food safety and suc­cess­ful op­er­a­tion. More than 90 per­cent of Yum China restau­rants will be op­er­ated and owned di­rectly by the com­pany, said Pant.

An­a­lysts said that the food and bev­er­age sec­tor will see great op­por­tu­ni­ties for growth amid fast ur­ban­iza­tion with surg­ing num­ber of shop­ping malls, but com­pe­ti­tion will also be­come fiercer.

Xue Yuhu, an an­a­lyst with Founder Se­cu­ri­ties, said: “In­creas­ingly savvy con­sumers will de­mand in­no­va­tive and cre­ative prod­ucts that meet fastchang­ing in­ter­ests.”

“Strong ca­pac­i­ties in re­search and de­vel­op­ment, man­age­ment of the sup­ply chain and cost man­age­ment are keys for fast food chains to sur­vive and thrive,” said a re­search note from Galax­ies Se­cu­ri­ties.

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