KFC, Pizza Hut Owner Yum Foods To Spin China Business Unit

On Tuesday, Yum Foods announced that it would be spinning off its China food business as a separate franchise by the end of next year. Nation’s Restaurant News said the spin-off would entail separating the operations of the Chinese restaurants. Yum China would then be operating as a publicly-traded firm and would have to pay a percentage of its sales from using the company’s brands, namely KFC, Pizza Hut and Taco Bell, Reuters reported. 

Following the separation, each standalone company will be able to intensify focus on its distinct commercial priorities, allocate its own resources to meet the needs of its business, and pursue distinct capital structures and capital allocation strategies. This will provide a clear investment thesis and visibility to attract long-term investor base suited to each business,” CEO of Yum Brands Greg Creed said in a statement.

USA Today said the announcement followed the pressure Yum has received from its activist investors, which no doubt had been concerned about the backlash it received from its involvement in a couple of food safety scares and its disappointing third-quarter earnings report released earlier this month.