Yum! Brands, Inc., The World’s Largest Fast Food Company: A History
Yum! Brands, Inc. is one of the world’s largest fast food-restaurant companies. In 2018, Yum! Brands operated over 48,000 restaurants in 140 countries and territories worldwide. Over 18,000 of these locations were operating within the U.S with China having the second most operating locations with almost 9,000 as of 2019.
Roughly 98% of Yum! Brands restaurants are franchised with the other 2% being company-owned. In 2019, Yum! Brands was named to the Dow Jones Sustainability North America Index and ranked among the top 100 Best Corporate Citizens by Corporate Responsibility Magazine amongst other highly successful corporations such as Apple. As of 2020, Yum! Brands is the parent company of four operating segments:
- KFC,
- Taco Bell,
- Pizza Hut (including WingStreet), and
- The Habit Burger Grill.
Tricon Global Restaurants
Yum! Brands, Inc. was originally established in 1997 as Tricon Global Restaurants (TCR), Inc. TCR was established as a divestment spin-off from PepsiCo Inc. The underperforming restaurant chains were causing the PepsiCo brand to lose capital spending and management time resulting in lower group earnings. Although restaurants accounted for 36% of the PepsiCo corporation, they only accounted for about 22% of its $3.7 billion profit.
By removing all the restaurants from the PepsiCo corporation, it allowed PepsiCo to focus on the more profitable soft drink market and Frito-Lay snacks business they acquired in 1965. This also allowed TCR to dedicate all of its resources to managing a successful restaurant company. TCR decided to establish their new headquarters in Louisville, Kentucky. David Novak, who was the top executive at KFC’s Louisville headquarters, became Tricon’s vice chairman and president.
Beginning in 2000, TCR agreed to test multiband restaurants with A&W All American Food Restaurants and Long John Silver parent company, Yorkshire Global Restaurants. The two companies opened 83 KFC/A&Ws, six KFC/Long John Silver’s, and three Taco Bell/Long John Silver’s. In 2002, TCR acquired Long John Silver’s and A&W Restaurants and change the company’s name to Yum! Brands, Inc.
A&W Restaurants
A&W Restaurants, Inc. is a restaurant chain known for burgers, root beer, and root beer floats. The A&W origins trace back to 1919 when Roy W. Allen, the founder of A&W Root Beer, set up a root beer roadside stand in Lodi, California. The first restaurant was established in Sacramento, California in 1923 as a drive-in. A&W had over 170 franchised outlets in 1933 and by 1960, A&W had over 2,000.
Long John Silvers
Long John Silver’s is an American fast food restaurant chain that specializes in seafood. The chain traces its history to 1969 when Jerrico Inc., which owned a restaurant chain called Jerry’s Restaurant, opened a seafood restaurant in a building called “Cape Codder” in Lexington, Kentucky. Between 1970 and 1979 the chain expanded with over 1,000 locations. In September 1999, A&W announced intentions to acquire Long John Silver’s out of bankruptcy, as a result a new company called Yorkshire Global Restaurants was formed.
(U) International Focus
Yum! Brands decided in 2011 to sell A&W and Long John Silver’s due to their poor worldwide sales performance. Yum! wanted to focus on international expansion for its remaining brands, specifically on growth in China. In 2016 Yum China Holdings, Inc. was established and separated from Yum! Brands. Yum China became the largest restaurant company in China with over 7,500 restaurants
(U) Current Yum! Brands Restaurants
KFC
KFC was founded in Corbin, Kentucky by Colonel Harland D. Sanders, an early developer of the quick service food business and a pioneer of the restaurant franchise concept. The Colonel perfected his secret blend of 11 herbs and spices for Kentucky Fried Chicken in 1939 and signed up his first franchisee in 1952. The chain had reached 3,000 outlets in 48 different countries by 1970. PepsiCo Inc. bought KFC from R. J. Reynolds Tobacco Company in 1986 for $850 million, over $2 billion in 2019 after adjusting for inflation.
KFC is the world’s second-largest restaurant chain in sales after McDonald’s, with over 23,000 KFC outlets and more than 140 countries and territories around the world. KFC’s main product is pressure fried, on-the-bone chicken pieces seasoned with Colonel Sanders’ “Original Recipe” of 11 herbs and spices. Sanders’ recipe is one of the most famous trade secrets in the catering industry. KFC adapts its menu internationally to suit regional tastes with over three hundred KFC menu items worldwide.
Pizza Hut
The first Pizza Hut restaurant was opened in 1958 in Wichita, Kansas by brothers Dan and Frank Carney. The first franchise unit was also opened in 1959 in Topeka, Kansas. By 1971 Pizza Hut had become the number one pizza chain in the world in both sales and number of restaurants. In 1973, the company had opened units in Costa Rica, Japan, and England. By 1976 Pizza Hut had 100 international locations and 2,000 in the United States. PepsiCo Inc. merged with Pizza Hut in 1977.
Pizza Hut is the largest pizza company in the world and has over 18,000 restaurants in over 100 countries. The company is known for its Italian American cuisine menu, including pizza and pasta, as well as side dishes and desserts.
Wing Street is restaurant hybrid at some Pizza Hut locations and specializes in chicken. Wing Street has 5,000 locations within the U.S and Canada. The brand sells breaded and traditional buffalo wings for take-out and delivery, as well as fried cheese sticks, chicken tenders, apple pies, French fries, and potato wedges.
Taco Bell
Taco Bell restaurant was established in 1962 by Glen Bell in Downey, California. The Taco Bell’s first franchise location was in Torrance, California in 1964. Taco Bell had 100 locations by 1967, 325 in 1970, and in 1978 there were 868 restaurants. PepsiCo Inc. acquired Taco Bell in 1978 for about $125 million, almost $497 million when adjusted for inflation in 2019.
The Taco Bell chain has grown to nearly 500 restaurants across almost 30 countries. Taco Bell’s menu consists of a variety of Mexican and Tex-Mex foods that include tacos, burritos, quesadillas, and nachos. In late 2014 the restaurant launched a new value menu called Dollar Cravings, to compete with other chains that have similar discounted menu items such as McDonalds. Taco Bell has since added 21 new items to the discounted menu.
The Habit Burger Company
The most recent restaurant chain added to Yum! Brands is The Habit Burger Grill. Yum! The Habit Burger Company was founded in Santa Barbara, California as a family-owned business in 1969. This American fast casual restaurant chain specializes in charbroiled hamburgers.
In 2014, the chain had 109 locations either open for business or under construction. At that time, the company was one of the fastest-growing fast food chains in the United States, with a 40% sales increase from 2012 to 2013. Also in 2014, The Habit’s “Charburger” was named the best burger in America by Consumer Reports.
Chief Executive Officer, Russell W. Bendel, agreed to be purchased by Yum! Brands in January 2020. The sale was expected to be around $375 million and closed in March 2020. At the time of the purchase, Habit has over 250 locations; however, most were throughout California and almost 10 were international.
Innovation in the Restaurants
The mid-1980s, Pizza Hut introduced the delivery and carryout model throughout the chain allowing people the opportunity to enjoy their pizza at home. In 1989, Pizza Hut pizza was delivered to the White House when First Lady Barbara Bush hosted a party for 200 children during a “Reading is Fundamental” reception. Now Pizza Hut offers a rewards system “Hut Rewards” that allows customers to receive points with each online purchase that can be used to redeem free products.
In 2014, Taco Bell announced a new app that let customers order food from their smart phones. Taco Bell was the first major fast food chain to do a nationwide roll out of this kind of app. With companies like Grubhub, DoorDash, and Uber Eats entering the food delivery arena over the past decade, Yum! Brands decided to invest $200 million into Grubhub and sign an exclusive partnership in 2018 for KFC and Taco Bell.
