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Thursday, March 6, 2014

Yum Eyes Ethiopian Entry as KFC Restaurants Expand Across Africa

Yum! Brands Inc. (YUM:US), the owner of the KFC fast-food chain, said it’s looking at entering Ethiopia, Africa’s second-most populous nation, as it expands across the continent.

“Ethiopia is the one that stands out because it has 85 to 90 million people, so that’s attractive,” Bruce Layzell, Yum’s general manager of new African markets, said in a phone interview today from Johannesburg. “We’re certainly nowhere near pushing the go button, it’s still at that explore stage, to find the right partner, to see if the business model will work.”

Ethiopia’s economy grew an average of 10.3 percent from 2008 to 2012, according to the International Monetary Fund. Expansion is projected to reach 7.5 percent this year from 7 percent in 2013, the Washington-based lender said in October.
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Yum last month posted fourth-quarter profit that exceeded analysts’ estimates on sales gains at its international division. The Louisville, Kentucky-based company has been expanding in emerging markets as well as boosting sales in nations including Russia and France. Yum gets about a quarter of its revenue from its international division, where sales at restaurants open at least a year rose 2 percent in the quarter. Yum has more than 40,000 restaurants worldwide.

“We don’t want to go to a country where we can only build four or five restaurants, that’s going to deliver no one success,” Layzell said. “We want to go in and build 50, 100, our business is the scale game.”

Yum operates in 13 sub-Saharan African countries, including South Africa and Nigeria, which are its largest markets in the region, he said. The company is also exploring the possibility of opening Pizza Hut stores in the region, Layzell said.

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