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
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Fool contributor Ryan Fuhrmann is long shares of Jack in the Box but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.
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