Taco Bell stays down, but China pushes Yum Brands profit up 30%

By Tiffany Hsu

Feb. 6, 2012 12 AM PT

Taco Bell may still be having a rough time at home, but Yum Brands Inc. is riding high -- and it has China to thank.

The company, which also owns Pizza Hut and KFC, reported a 30% surge in fourth-quarter income due largely to explosive growth abroad. Yum of Louisville, Ky., said it earned $356 million over the period, compared with $274 million from a year earlier.

Revenue was up 15% to $4.1 billion for the quarter.

Income was up 14% for the year that ended Dec. 31 to $1.3 billion. Revenue for 2011 jumped 11% to $12.6 billion.

In China, where Yum has made a concerted effort to expand this year, same-store sales for 2011 grew 19%. In the U.S., the same measure was down 1%. The company’s various chains opened a record 656 new restaurants in the Asian country over the year.

Earlier this month, Yum picked up a majority stake in Little Sheep Group, a 450-unit hot-pot concept based in China.

“The Yum growth story is clearly about China and a whole lot more,” Yum said in a statement.
But it was yet another slow quarter in the U.S.

Both Mexican-style fast food chain Taco Bell and chicken chain KFC saw same-store sales slump 2% over the year, while Pizza Hut remained flat.

Taco Bell has struggled to recover from a lawsuit early last year over the quality of its seasoned beef filling. The suit was quickly dropped, but not before it had wreaked heavy damage on Taco Bell’s customer relations.

In December, Yum tried to shed weight, selling off its Long John Silver’s and A&W All-American Restaurants brands. The company is aiming to eventually own only about 5% of its Pizza Hut and KFC restaurants while giving franchisees control of all except 16% of Taco Bell locations.

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