Yum Brands CEO takes global view on fast food
Novak thinks big in terms of expansion
This is the second in a series of occasional interviews with top executives on global competition. This month, David Novak, 59, chief executive of fast-food giant Yum Brands — with 36,000 restaurants in 117 countries under brands such as KFC, Taco Bell and Pizza Hut — talks about growing up with fast food and what he sees as the biggest retail opportunity of the 21st century. His answers were edited for clarity and space.
Q: Have you always been a fan of fast food? A: Like many of our customers, I grew up with the brands. My family loved a bucket of Kentucky Fried Chicken. I took dates to Pizza Hut. When I was in college, every Sunday, I used to go and chow down on six or seven tacos, maybe eight (at Taco Bell). Q: How do you successfully sell fried chicken, pizza and tacos in 117 countries? A: You have to have food that people love. A lot of people can’t travel to the United States, but they want to experience U.S. brands. Q: Are taste buds in emerging markets different from those in the U.S.? A: In Asia, people like spicier foods. We have a Zinger sandwich, a spicy chicken fillet sandwich that is enormously popular. In India, sauces and flavors are really important, so we have a Masala line of pizzas. Q: What’s the key to being a successful global company? A: You need to be strategic. We knew that the growth in the U.S. business was going to be slow to moderate over the long term, and that to be a growth company, we needed to strategically make an investment in our international business. We focused our capital in big opportunity markets, like China, India, Russia. France and Germany (also) represent big opportunities. Q: China is your fastest-growing overseas market by sales. What’s the biggest challenge to doing business in China? A: China is the biggest retail opportunity in the 21st century. It’s the biggest restaurant opportunity in the 21st century. The biggest challenge for us is (to) have leading brands in (key restaurant categories) in China . . . and to build the people capability that will accelerate and drive growth.
Q: Fake KFCS have sprouted up all over China. Do you consider these restaurants competition? A: We don’t consider this a significant issue. Q: More than 70% of your profits last year came outside of the U.S. Do you still consider yourself a U.S. company? A: We view ourselves as a global company. We want to be the defining global company that feeds the world. We think that if anyone can define what a truly great multinational company can act like, it should be us. Q: What are Yum Brands’ growth prospects in the U.S.? A: We expect to have a strong year. We are laying the groundwork for sustainable growth. Once we get the business moving on a steady basis, we hope (the growth rate will) be around 5%. Q: How did your upbringing prepare you to lead Yum Brands? A: My dad was a government surveyor. We moved around every three months. I lived in 23 states by the time I was in seventh grade. I learned how to go into new situations, survey the landscape and deal with people. I think that’s been particularly helpful in a global business. I have a higher empathy factor. That makes me very respectful of other cultures.
Q: In your new book about leadership, called Taking People With You, you advise people to “think big” in setting goals. How are you “thinking big” overseas? A: We don’t want to just be a global company, we want everyone to come to us and say, “What’s the key to your success?” In China, we’re thinking big in that we want to have the leading brands in (key restaurant categories). We’ve got a significant base of restaurants in India that we can grow. We lead in (the number of fast-food restaurants in) markets like Indonesia, Malaysia, Vietnam, Africa. We already have 660 restaurants in South Africa. By the end of the year, we’re going to be in 20 countries in Africa. We’re thinking really big in terms of our expansion and how we take our business to the next level. Q: Your book also talks about finding good ideas in unexpected places. What’s the last good idea the company found in an unexpected place? A: In Australia, we had a big-box pizza meal, where we offered pizza and chicken wings and bread sticks. We took that idea and launched it here in the U.S., and now it’s being launched in other parts of the world. Who would think that one of the biggest ideas you can execute in the United States would come from Australia? Q: What’s the secret to sustaining growth in emerging markets, whether India, Russia or South Africa? A: Our formula for success is very simple: Build people capability. Make that your No. 1 priority. Then you can satisfy more customers and make more money. That’s the common sense truism of our business.