Yum! Outlines Plan for India - Analyst Blog

Sluggish sales in the U.S. and China have prompted Yum! Brands Inc. (YUM), the operator of KFC, Pizza Hut and Taco Bell fast-food chains, to focus more on emerging markets such as India, which is still completely untapped.

With the saturation of the U.S. market and the recession taking its toll on eateries, the restaurant industry is concentrating more on the overseas market. The NPD Group, a market research firm, has forecasted weak U.S. restaurant industry sales during the first half of 2010.

Louisville, Kentucky-based Yum! plans to accelerate its expansion in India with an investment blueprint of about $120 million over the next five years, apart from a $100 million already invested.

The company, which currently operates about 158 Pizza Hut and 72 KFC outlets in India, aims to increase its restaurant count to 1,000 by 2015, with planned openings across 60 cities, requiring about 50,000 staff, five times more than the current level. The company plans to open its first Taco Bell restaurant in Bangalore by March 2010.

The Indian market has been virtually recession-proof, providing ample growth opportunities. Yum! targets India’s organized food and beverage market, which is growing rapidly. The company plans to generate $1 billion in revenue by 2015. The company’s long-term plan is to put India on a similar platform as China, where it operates 3,500 outlets.

Yum!’s restaurants in India, managed by Niren Chaudhary, faces stiff competition from other fast-food chains such as McDonald’s Corporation (MCD) and Domino’s Pizza Inc. (DPZ).

McDonald’s currently operates about 173 restaurants of which 91 are in North and East India and 82 in West and South India, with plans to open 180−190 restaurants by 2015. Domino’s currently operates nearly 274 quick service restaurants across 54 cities in India.