Riding on solid same-store sales growth and new unit expansion in India, Yum! Brands Inc. (YUM) expects its profits in the country’s market to reach $100 million by 2015.
 
Around 70% of India’s population of one billion belong to the young generation who are more inclined to fast-food joints. The company sees this as a strong rationale for its expansion in the market.  
 
Yum! Brands has around 74 KFCs in 13 Indian cities as well as 159 Pizza Huts spread across 33 cities. In March 2010, Yum! Brands also announced the opening of the first Taco Bell in India by its international division. This store has been well received since its inception with transactions exceeding 1000 per day. According to management, the overall numbers for KFC, Pizza Hut and Taco bell will likely hit 1000 units by 2015. 
 
Yum!’s head of  Indian operations commented in November that the company would invest about $150 million to quadruple the number of restaurants, expanding its footprint to about 60 cities and increasing staff levels by five times to about 50,000.
 
Presently, the company’s growth strategy thrives on its presence in emerging markets such as India, China, Indonesia, Malaysia, Russia, Vietnam and Brazil, as these economies are growing at a fast pace. Yum! Brands appears all set to binge on growth opportunities in these countries where the middle-class population is on the rise. The company currently boasts of owning near or over 100 Yum! restaurants in each of these economies. 
 
In the five-year period ending 2009, Yum! Brands added about 4000 net new units in the emerging markets, registering a compound annual growth rate of 12%. This is in stark contrast to a 1% compound annual growth rate in the balance of Yum!’s international operations.
 
The company’s growth rate in emerging markets was higher than its major quick service restaurants competitors. Yum! Brands has almost two times the number of emerging-market units as McDonald’s Corp. (MCD). Moreover, none of its peers are even planning to open restaurants in many of the emerging markets. We believe Yum! Brands will enjoy significant competitive advantage with its ability to identify potential markets.
 
YUM! Brands is the worldwide leader in multi branding, which offers consumers more choice at one restaurant location from a combination of KFC, Taco Bell, Pizza Hut, A&W or Long John Silver’s brands.  The firms believe major long-term growth drivers will be new unit openings and international expansions. 
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