Dubai: For the world’s largest restaurant operator, taking large bites of commercial space globally has not hurt its appetite for more.
In fact, the growth strategy for the $12 billion (Dh44.04 billion) Yum! Brands — which owns Pizza Hut, KFC and Taco Bell in the US and franchises them in most of the other markets — is built around adding thousands of new locations and certainly not in the tens or hundreds. And that includes the Middle East as well.
“The Middle East and North Africa is an extremely strong and growing market for us and we plan to double the number of restaurants in the region to 2,800 locations within the next five years,” said David Novak, the chairman and CEO, who was in Dubai on a short stop last week.
He was on a promotional tour for his book Taking People with You: The Only Way to Make Big Things Happen, the sales proceeds of which will go to the UN’s World Food Programme.
Pizza Hut and KFC enjoy predominant rankings within their categories in the Gulf, even as growth in the UAE’s casual dining market is estimated to be in the high double digits. “Even with all the new concepts that have been introduced in the market in the last four years, the share of the generic brands have not been impacted in any way,” said a retail industry analyst who tracks the F&B (Food and Beverage) space. “In fact, during the downturn they actually won back a lot of traffic.”
As for Novak, he does not see any need to change the growth recipe. “Our vision is to be the defining global company that feeds the world and we see a long runway for growth. We’re the largest — and fastest growing — restaurant company in emerging markets with a 2 to 1 advantage over our nearest competitor.”
It is scale that Novak intends to use to pummel the opposition into submission. As many as 600 new locations are to open in China this year and the stretch target for that market is to reach 20,000 outlets “someday”.
As for India, which is expected to have a “significant impact” on the company’s future profit growth, the plan is to open 2,000 locations by 2020. In Africa, Yum! Brands intends to build on the 656 outlets in South Africa to get into other markets. It has eyes on serving around 20 markets in the continent before the year-end.
“Ninety per cent of our new restaurants outside of China and the US are being opened by our growth-ready franchisees,” Novak — who became chairman in 2001 — said. Lest anyone think that all of the growth is centred around Pizza Hut and KFC, he added for full measure: “We have tremendous opportunity with our two global brands, and believe that Taco Bell over the long-term has the potential for global expansion.”
That thought holds true in this region. While it is inconceivable to think of a consumer-facing location where Pizza Hut and KFC is unrepresented, the expansion of the Taco Bell network is proving to be a long drawn out process.
Could it be that the menu works less well outside of the Americas? “We’ve opened Taco Bells in 12 new countries over the past four years and proving the concept internationally as we go,” said Novak.
Is there any takeaway that the Recession has taught him and the company? “We always ask the question: “What consumer perception, habit or belief do you have to either change, build or reinforce in order to grow the business?” because the answer leads to great insights,” said Novak.
“During challenging economic times, it is especially important to be conveniently located and offer great tasting, affordable menu items that provide value for the consumer.”
The dynamics of the restaurant industry are as straight forward as they get.