Yum! Brands Inc. has announced plans to place its Long John Silver’s and A&W All-American Food Restaurants for sale and has begun a process to identify a buyer.
The decision to sell the two restaurant chains is tied to Yum’s plans to focus on aggressive international expansion and improving its U.S. brand position at Taco Bell, Pizza Hut and KFC.
“Over the past decade, Yum! has delivered annual EPS (earnings per share) growth of 13 percent, exceeding our 10 percent annual growth target,” said Yum! Chairman and CEO David C. Novak. “This has been driven by aggressively building restaurants in China and Yum! Restaurants International at a pace of nearly four new restaurants every day of the year. We do not believe Long John Silver’s and A&W All-American Food restaurants fit into our long-term growth strategy. Accordingly, we have decided to put these two great brands up for sale, and we will complete the sale only once the right buyer or buyers have been identified and we can ensure a seamless transition.”
The company does not expect the eventual sale to have a material impact to its ongoing earnings or cash flow.
In 1998, when Yum! was spun-off from PepsiCo, 22 percent of its profits were tied to its international locations. Today, about 65 percent of the company’s profits are from the China and Yum! Restaurants International divisions, and the company expects that percentage to grow to 75 percent by 2015.
In the United States, Taco Bell accounts for approximately 60 percent of the company’s profits, followed by Pizza Hut and KFC. The Long John Silver’s and A&W All-American Foods brands account for a total of 1,630 restaurants, all of which are owned and operated by franchisees.
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