Breakfast? Check. Here's What's Next for Yum! Brands, Inc.

Yum! Brands just finished rolling out breakfast nationwide, but it's not done yet.

Apr 1, 2014 at 6:15PM

Yum! Brands, (NYSE:YUM) may have just completed its nationwide rollout of Taco Bell breakfast last week, but don't for a second think the fast-food giant is resting on its laurels.

Don't get me wrong. I've held a special place in my arteries for Taco Bell's new "waffle taco" since it was introduced on a test basis last summer. So, believe me, I understand why investors are still buzzing with excitement for how breakfast at Taco Bell could change Yum! Brands' fortunes for the better.

And Yum! is pulling no punches, either, as it unabashedly attacks the fast food daypart historically ruled by McDonald's (NYSE:MCD). Heck, Yum! even went so far as to hire dozens of people named Ronald McDonald to promote its new breakfast lineup. Gimmicky? Sure. But it's no mystery McDonald's stands to lose more than any other chain if Yum! Brands succeeds.

At the same time, however, we need to remember there's much more to Yum! Brands' business than just breakfast at Taco Bell. Here are two big steps Yum! is planning to drive its growth over the long term:

1. Reboot KFC in China


Source: Yum! Brands.

Last Wednesday, Yum! Brands announced what it's calling an "aggressive and comprehensive plan to restage KFC in China."

This is an almost certain response to KFC's persistent struggles in the region over the past year, and already began with an "unprecedented" menu revamp involving the simultaneous introduction of 15 new products. The new menu was rolled out to all of Yum!'s 4,600 KFC China locations in more than 900 cities, and Yum! says it plans to implement a similar menu update "at least once a year." 

While it might seem risky, Yum! Brands insists it developed the new menu by "carefully listening" to customer feedback on social media and through "rigorous consumer research and market testing." 

In addition, Yum!'s restage includes redesigned product packaging, contemporary uniforms, a gradual rollout of a new store design, and digital initiatives including a new mobile app, electronic menu, and prepay takeout options.

Finally, Yum! outlined plans for a new national marketing campaign, which will include several Chinese celebrities across all communication mediums. The end goal, Yum! says, is to "further elevate the brand and enhance consumer engagement."

So what's to gain from the revamp? Remember, despite adding 740 new locations in China in 2013 -- 428 of which were KFC units -- Yum!'s operating profit there fell from $1.015 billion in 2012 to just $777 million last year. If Yum! can pull this off and return to business as usual in China, suffice to say there's plenty of room for both top- and bottom-line growth.

2. Permeate small towns in the U.S.


Source: Wikipedia.

Remember last year Yum! Brands management outlined its plan for doubling annual U.S. Taco Bell sales to $14 billion by 2021.

That plan includes initiatives like the now-complete nationwide breakfast rollout, improving restaurant ergonomics, offering higher-quality menu items like the Cantina Bell lineup, and, perhaps most notably, adding around 2,300 new stateside Taco Bell locations. And though many will reside in more traditional suburban locales, roughly half are targeted for smaller U.S. towns.

All told, this also means Yum! will have around 8,000 stateside Taco Bell locations just seven years from now. If this sounds too lofty a goal, remember McDonald's currently has more than 35,000 global locations, of which over 14,000 are located in the U.S. alone.

In the end, I'm convinced that leaves ample opportunity for Yum! Brands' franchises to grow and thrive for years to come.

Three stocks poised to be multibaggers
I think Yum! stock will only continue to reward investors for years to come, but that certainly doesn't mean it's the only great stock out there.

The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multibagger stocks time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.


Steve Symington has no position in any stocks mentioned. The Motley Fool recommends and owns shares of McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information

Compare Brokers