What's the most popular foreign brand in China? You may have guessed Coca-Cola
Also popular with the Chinese is Pizza Hut, which has grown to represent more than 35% of Yum!’s total store count. And while the Taco Bell concept remains largely a U.S. phenomenon, the fast-food restaurateur has experienced serious success in rolling out its two other brands on a global scale while keeping a tight focus on appealing to local flavors.
Even as Yum! Brands' chains have become a sensation halfway around the world, the company’s share price dipped this week after releasing second-quarter results. That’s because the domestic market still represents 46% of Yum!’s total sales, and with our recessionary-like environment, U.S. margins slipped from surging commodity costs, sending operating profits down 12%. While this is a concern for investors, the unwelcoming response from Wall Street seems to largely overlook the long-term appeal Yum! possesses overseas.
The international division posted a respectable 4% increase in total sales, and while profits surged 18%. Demonstrating just how much of a focus China is to Yum!, it counts the mainland as its own division. There, sales jumped 20%, while profits surged 38%. Wrapping it all up, the consolidated results posted a 12% increase in the top line while earnings per share rose 15%, helped out from management repurchasing shares.
Because of the strong trends overseas, management was confident enough to boost its full-year earnings growth forecast to 12%. Given the challenging trends most rivals are posting these days, especially those such as Wendy's
Snack on related Foolishness: