Yum Brands is not necessarily done buying restaurant chains.
The owner of KFC, Pizza Hut and Taco Bell, which acquired the fast-casual burger chain Habit Burger in 2020, is “always” keeping its eyes open for new acquisitions, CFO Chris Turner told analysts this week at the Bernstein Strategic Decisions Conference.
“We’ve always kept our eyes open for potential acquisitions,” Turner said, according to a transcript of the conversation on the financial services site AlphaSense.
His reasoning: Scale matters more than ever, and Yum is among the biggest restaurant companies in the world, with more than 60,000 global locations. That size gives Yum a significant competitive advantage, particularly since its creation of the technology platform Byte by Yum.
That system could be a major benefit to acquired restaurant chains, Turner said.
“We think technology matters more than ever,” Turner said. “And we think talent matters more than ever. And we have an abundance of all of those. And so we think brands entering the portfolio could benefit from those things.”
Habit Burger & Grill has seen some of those benefits. But that has not translated into organic sales growth, at least yet.
The fast-casual burger chain’s system sales have increased 41% since 2019, the year before Yum acquired the company. But all that came through new-unit growth. Average-unit volumes have declined 4.2% over that period, including a 2.8% decline last year.
Still, Turner said, “I think the long-term future for Habit is very bright.”
Turner said anything the company could buy would have to be “compelling” enough for the company to pull the trigger.
“Clearly, the bar is high for making any sort of acquisition,” he said. “It would have to be a growth unlock. It would have to be a brand that really could leverage those elements of our scale. And there would have to be a very compelling story for our shareholders for us to do that. So we would be very selective.
“But we always keep our eyes open.”
And, he added, the company has plenty of growth in its existing portfolio. KFC International and Taco Bell are Yum’s “twin growth engines,” and both have plenty of white space. KFC with continued global unit growth, and Taco Bell with its unique level of dominance in its competitive set.
“There is amazing whitespace and growth ahead in our current portfolio of four iconic brands,” Turner said.
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