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Yum, McDonald’s expand their global reach

Yum Brands! and McDonald's, the largest global fast-food chains, now get half of their sales from emerging markets.

Yum Brands! Inc. is the second largest global fast-food chain behind McDonalds.  It is the holding company that owns such brands as Taco Bell, Kentucky Fried Chicken and Pizza Hut.

Like McDonald’s, Yum has gone global and sees emerging markets as the fuel for future growth.  Yum has 48,000 restaurants in 145 countries and has about 48% of its stores in emerging and high growth markets. It opens an average of 8 new stores a day.

McDonald’s has 37,000 outlets in 120 countries with 44% of the outlets in Asia, or other emerging and high growth markets. The U.S. accounts for almost half of Yum’s sales and earnings. The U.S. is also McDonalds biggest market for sales and profits.

Both companies are an example of global brand power.

McDonald’s (NYSE: MCD) is on track to nearly double the number of restaurants in China by 2022 when it will surpass Japan as the second-biggest market outside the U.S.  For Yum, China is already its second biggest market with 22% of its stores.

Yum, like McDonalds is expanding its footprint with franchises. In a global marketplace franchises can respond more quickly to changing local tastes.

In May,  Yum (NYSE: YUM) signed a master franchising agreement in India with New Delhi-based Burman Hospitality for its Taco Bell outlets. Burman plans to open 600 Indian Taco Bells over the next 10 years to make India the largest market for its Mexican food outside the US.

Yum China has plans to invest up to US$525 million in the current year,  opening between 800 and 850 new stores. Most of the new stores will be KFC outlets and a new cafe chain called Coffii & Joy.

Mcdonald's_maharaja_family
In India, the Big Mac comes in two non-beef varieties – vegetarian and chicken. Credit: McDonald’s

Global brands like McDonald’s and Yum have a few things in common. One is a simple, consistent  marketing message. This creates lasting economic value by ensuring consumers can find the brand, recognize it and be assured that if they buy it, it has the same quality and features as their home market. Both  adapt the message to local culture and tastes.

These energizers help increase revenues and profits and support growing dividends. Brands inspire loyalty and encourage repeat business by offering a consistent product that is recognizable in any language and market where it is sold.

You might also like:
McDonald’s emerging market growth strategy
5 things that create global brandpower
3 safe ways to invest in emerging markets

Adam Mayers writes about investing and personal finance. He is a contributor to the Globe & Mail’s Globe Advisor and a contributing editor to Gordon Pape's Internet Wealth Builder newsletter. Adam was Business Editor and investment columnist at The Toronto Star and is the author of six books.

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