Pizza Hut seeks bigger piece of pie

Updated: 2012-02-09 10:51

By Li Woke (China Daily)

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Pizza Hut seeks bigger piece of pie

Pedestrians pass a Pizza Hut restaurant on Nanjing Road in Shanghai. Yum! Brands Inc said it plans to open at least 150 restaurants in second- and third-tier cities in China this year. [Photo / Agencies]

Pizza Hut plans to open 150 of its restaurants in China this year

SANYA - Pizza Hut, a restaurant chain owned by Yum! Brands Inc, announced it will open at least 150 restaurants in China this year as its parent company moves forward with plans to expand overseas.

"Pizza Hut will accelerate its development speed in China," said Perter Kao, brand general manager of Pizza Hut and Pizza Hut Delivery of Yum! China. "We plan to invest more than 700 million yuan ($111.2 million) and open at least 150 restaurants in third- or fourth-tier cities this year."

Yum! Brands Inc, based in Louisville, Kentucky, has more than 36,000 restaurants in more than 117 countries and regions, according to its official website.

In 1987, Yum! entered China by opening its first KFC store. The catering giant now has more than 4,400 restaurants in the country - KFCs, Pizza Huts, Taco Bells, East Dawnings and Little Sheep.

On Tuesday, Yum! Brands Inc reported that its fourth-quarter profit had increased by 30 percent from the same period a year ago, a result it attributed to its global expansion and the sales increase it has seen at its China stores.

The company's net income increased to $356 million, or 75 cents a share, from $274 million, or 56 cents, a year earlier, Yum! said in the statement.

Yum!, which has about 18,800 restaurants outside the United States, said its fourth-quarter sales at stores that have been open at least 12 months increased by 21 percent in China. The company said it opened 656 stores in the country last year, a record number.

It gets more than 40 percent of its revenue from China.

By contrast, same-store sales during the quarter increased by 1 percent in the US, driven by growth at the Pizza Hut chain, Yum! said.

In addition to the store opening, Yum! announced that its plan for privatizing Little Sheep Group Ltd took effect on Feb 1, making the hotpot chain a subsidiary of Yum!. That change has given the company a much bigger presence in the Chinese market. The acquisition is expected to cost Yum! about HK$4.557 billion ($586.5 million).

"China's catering industry is on a fast development track and has achieved year-on-year growth of about 20 percent during the past 30 years," said Jing Linbo, vice-president of the Chinese Academy of Social Sciences' national academy of economic strategy.

"In 2011, the sales revenue from the Chinese catering industry was estimated to reach 2.05 trillion yuan, up 16.9 percent compared with the year before.

"By the end of 2015, the industry's sales revenue is expected to reach 3.7 trillion yuan. That will provide a huge market for foreign restaurant companies, including Yum!."