Market Overview

Yum Brands Has 'Unlimited' Growth Potential In China


Greg Creed, Yum! Brands, Inc. (NYSE: YUM) CEO, was a guest on CNBC Tuesday to discuss the company's business split, as Yum China Holdings Inc (NYSE: YUMC) began trading for the first time ever.

Creed started off by explaining that China is merely at the beginning stages of a major infrastructure push which will see the creation of new airports, roads, train-stations and malls. All of these locations represent a desirable location for Yum Brands to place one or more of its restaurant chains.

"All of those are opportunities to build new restaurants and grow our footprint in China," Creed said. "So we think there is unlimited growth potential in China."

Creed said Yum China is "so far from being saturated" and as China's infrastructure improves so will its business.

What About The Rest Of The World?

With all of the attention focused on China, are investors missing out on the company's prospects elsewhere in the world?

Creed believes this may be the case as the company's global (ex-China) business can grow its system-wide sales by 7 percent across all three brands. This growth will come from other emerging markets globally.

Creed singled out Taco Bell's momentum, especially in the domestic market where it is winning some business from Chipotle Mexican Grill, Inc. (NYSE: CMG), especially at its remodeled locations. Meanwhile, the brand's international expansion is still in its early stages and consists of just 22 countries and 300 stores. By comparison, KFC is found in 225 countries with 16,000 locations.


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