Yum! Debuts Pizza Hut in Iraq - Analyst Blog

Yum! Brands, Inc. YUM recently ventured into newer territory in the Middle East. The iconic Louisville-based restaurateur teamed up with Kuwait-based franchise partner Al Kout Food Company to unveil a Pizza Hut in Iraq. This marks the brand's debut in this Middle East country and is consistent with Yum!'s expansion in emerging markets.

Located in the popular Majidi Mall in Erbil in the Kurdistan Region, Northern Iraq, the restaurant can accommodate 120 people. The casual dining restaurant will serve a range of appetizers, pizzas and flatbreads, pasta, salads, desserts and drinks.

Yum! Brands, which operates more than 14,000 restaurants in emerging markets, is looking to strategically expand in Iraq. In fact, the company, along with its franchisees, plans to invest $10 billion and operate more than 20,000 stores in emerging markets by 2020.

Yum! plans to open four Pizza Hut units (in collaboration with Kout Food Company in Iraq later this year — three in Erbil and one in Sulaymaniyah. Erbil, the capital city of the Kurdistan Region, is the third largest city in Iraq, while Sulaymaniyah is the second largest city in the region.

In the recent years, Erbil has become a major trading center of Iraq with foreign investors increasingly focusing on this region. This resulted from a 2006 investment law exempting foreign investors from paying taxes on profits for the first 10 years.

Additionally, total ownership of companies and repatriation of profits, reduced-price land allocation for investment projects have made foreign investors keen on Erbil. This has resulted in the region experiencing an unprecedented economic boom. In fact, the city now has a per-capita income that is significantly higher than the rest of the country.

In our view, Yum! Brands is foraying into this region to tap in on the investment opportunities and steady economic expansion.

Yum! currently has a Zacks Rank #3 (Hold). Some better players in the restaurant industry, which look attractive at current levels, include Ignite Restaurant Group, Inc. IRG, Famous Dave's of America Inc. DAVE and The Wendy's Co. WEN. All these stocks sport a Zacks Rank #1 (Strong Buy).