Yum to cut hundreds of jobs in restructuring

Fast-food company Yum Brands Inc. said Wednesday that it would eliminate several hundred nonrestaurant jobs and shift as many as a couple hundred more as part of a restructuring of its U.S. business.

The restructuring is part of Yum’s strategy to sell more company-owned stores to franchisees, said Jonathan Blum, a spokesman for the Louisville-based operator of KFC, Taco Bell and Pizza Hut.

“We’re restructuring the U.S. business to create additional opportunities for growth and enable us to operate more effectively and improve our cost structure,” Blum said.

Blum said Wednesday that several hundred jobs would be eliminated through a combination of cutbacks at Yum’s Louisville operations, at Taco Bell’s headquarters in Irvine, at Pizza Hut’s headquarters in Dallas and in field operations nationwide. An unspecified number of cuts will be achieved through early retirements and by not filling open positions, he said.

Also, up to a couple hundred more positions will be shifted from Yum’s corporate headquarters in Louisville to the company’s brand operations, Blum said. Some of those employees will be asked to relocate; others will stay put in Louisville, Dallas and Irvine but with new assignments.

Asked whether the economic downturn played a role, Blum said Yum had worked on the refranchising strategy throughout the year.

The moves won’t affect Yum’s high-growth international operations, led by its robust China division.

Strong overseas sales have more than offset sluggish U.S. results. Yum said last month that its third-quarter profit grew 5% despite a 16% drop in U.S. operating profit resulting from surging commodity prices and lagging KFC sales.

Employees were notified of the changes Tuesday and Wednesday, Blum said.

Most of the restructuring will be completed by year’s end, he said.

About 20% of Taco Bell, KFC and Pizza Hut stores in the U.S. are company-owned, Blum said. Yum’s goal is to cut by about half the number of company-owned KFC and Pizza Hut stores while maintaining about 20% company ownership of Taco Bell restaurants, he said.

Larry Miller, a restaurant analyst with RBC Capital Markets, said the sell-off of additional company-owned stores to franchisees “makes a tremendous amount of sense.”

Yum shares closed down 75 cents at $25.12.