Yum Brands is targeting Africa and other emerging global markets for expansion for its venerable KFC chain that has become a dominant fast-food player in China but has struggled in the US.
Louisville-based Yum said Wednesday that it expects to double the number of KFC restaurants in Africa to about 1200 by 2014. Yum projects that KFC will grow into a nearly $2 billion brand in Africa within four years and will contribute more than $100 million in profit to Yum's international division, which excludes China - which has its own division.
"Africa has tremendous opportunity," Yum Chairman and CEO David C. Novak said during the company's investor-analyst conference in New York. "It's a great emerging continent, and we have a chance to really lead in that business."
KFC is already a leading brand in South Africa with more than 600 restaurants. The chain has a small presence in a few other African countries.
"We're using our South African base as an opportunity for us to ... enter other countries," Novak said.
The chain will expand with restaurant openings planned in such places as Nigeria, Ghana, Angola and Zambia. The company said it expects franchisees to invest about $500 million in Africa by 2014.
By 2014, Yum projects about 850 KFC units in South Africa and about 350 restaurants in other African countries.
Yum expects its Africa business to yield about $48 million in operating profit this year, and forecasts that amount will swell to about $120 million by 2014.
Yum has taken aim at other emerging markets including India, Vietnam, Russia and Pakistan.
"We are on the ground floor of tremendous global growth," Novak said.
KFC has about 100 KFC restaurants in India and expects that count to mushroom to 1,250 by 2020.
Yum predicts strong growth in Vietnam, Russia and Pakistan, where the KFC chain is expected to count about 500 units in each country by 2020. KFC now has 87 restaurants in Vietnam, 150 in Russia and 65 in Pakistan.
By 2015, Yum expects its China and international businesses to account for about three-quarters of its profits, Novak said. In 1998, some 22 percent of profits came from outside the US.
Novak said the company expects to open about 1400 new restaurants in its China and international divisions this year, marking the 10th straight year of least 1,000 openings outside the U.S.
KFC has prospered in China, where the chain expects to open about 475 new units this year, continuing an aggressive expansion that has driven robust operating profit growth for Yum.
Sustained sales growth has been more elusive for KFC in the US The chain posted an 8 percent quarterly sales drop at U.S. restaurants open at least a year in the three months ending September 4.
KFC had sought a sustained US turnaround with the national rollout of Kentucky Grilled Chicken in the spring of 2009 in hopes of luring health-conscious customers turned off by fried food.
Yum's chains also include Pizza Hut, Taco Bell, Long John Silver's and A&W All-American Food.