Although the big news of the Yum! Brands Inc. investors conference last week was the China split, the CEO of each of the Louisville-based restaurant company’s subsidiaries also took the stage to update people on how they plan to grow their individual restaurant chains.
The following are some highlights from the three speeches.
KFC CEO Roger Eaton was first to the stage. He said his company is focused on increasing the frequency with which customers visit the fried chicken restaurant. On average in Australia, customers visit KFC every 24 days. In the United States, that average is 59 days.
“It is really important for us to drive that frequency,” Eaton said. “If we can do that, it will have a huge impact on our business.”
KFC can do this, he said, by adding “craveable” and fresh dishes to its menu and offering a good value.
One new menu item headed to KFC stores is Nashville Hot Chicken, which is currently only available at Pittsburgh stores but will be available in stores everywhere soon, according to KFC’s website.
While the specialty can be sold at a premium price, the company’s sweet spot for pricing is the $5 individual meals and $20 family meals, Eaton said. KFC currently offers a $5 Fill Up with an entree, mashed potatoes, a biscuit, a cookie and a drink, and the $20 Fill Up that includes enough items for a family of four.
KFC is Yum’s largest subsidiary with about 20,000 stores globally, but Mexican concept Taco Bell, which has about 6,400 restaurants, is Yum’s pride and joy.
The company is on track to do $15 billion in system sales by 2022, according to Taco Bell CEO Brian Niccol. In 2015, the company’s system sales will reach $9 billion.
Taco Bell during the last few years has made a concerted effort to attract Millennials and members of Generation Z — people born from 1996 to 2010. The brand is considered creative and cool by its customers, who frequent Taco Bell every 11 days on average.
“This brand has unbelievable frequency,” Niccol said.
To keep bringing customers back, Niccol said Taco Bell continues to focus on food innovation and will debut a new Fritos Taco, similar to the popular Doritos Locos Taco, next year. The company also is testing an item called a Naked Crispy Chicken Chalupa.
Details weren’t provided but one can only imagine that it will be similar to its Naked Crispy Chicken Taco — but a chalupa.
The big focus for Taco Bell going forward, however, is its international presence. The chain has about 250 stores internationally. This year, the company opened about 35 international stores, and it plans to open 75 in 2016, Niccol said.
“The growth is really ramping up,” he said.
The critical piece to making Taco Bell successful overseas, though, is the ability to scale up its supply chains to accommodate a larger number of stores, Niccol said. He did not go into detail on how it plans to accomplish that.
While KFC and Taco Bell’s CEOs talked about growing already successful brands, Pizza Hut CEO David Gibbs discussed how he plans to make the pizza company as successful as its siblings.
The brand has struggled quite a bit with flat and negative same-store sales growth. But that has started to change: In the last two quarters of 2015, Pizza Hut has seen positive same-store sales growth both nationally and internationally.
To help turn around sales, Pizza Hut has introduced more new menu items to entice customers, including pizza with cheesy garlic crust and pizza with a cheese bites crust.
“We bring flavor and excitement to your pizza experience,” Gibbs said. “You can always count on us for something new and different.”
The next step, he said, is making Pizza Hut easy to buy by offering deals such as its Triple Treat Box, cutting the time it takes to make the pizza, and making it easier for customers to order online or via mobile devices.
The company is “making it easier to get a better pizza,” he said.
Gibbs ended his speech by announcing that Pizza Hut also reached an agreement with franchisees to make “significant investment in all our assets.” That includes renovating stores, updating kitchen equipment, and switching the entire chain to one point-of-sale system.
After the investors’ conference last week, Yum’s stock dropped 2.6 percent from $73.18 to $71.25 on Dec. 11. It has stayed in the $71 range since.
The big dip is attributable to the Standard & Poor’s downgrading Yum’s credit rating to BB, or junk status, from BBB. During the conference, Yum executives talked about their plans to split its China division off into a separately traded company as well as give $6.2 billion back to shareholders.
In a CNBC appearance, Yum CEO Greg Creed said they knew the downgrade was coming.
“We did a lot of analysis, obviously,” Creed said. “We think we have got an incredibly strong story for our shareholders returning the $6.2 billion in capital. We can cover interest rates over four times, and we feel really good about the financial position of the company today, and we feel even better about it going forward.”