KFC, Taco Bell and Pizza Hut are building a lot of new restaurants.
The chains’ owner, the Louisville, Ky.-based Yum Brands has been on something of a crusade of late to prove that it can open restaurants at a breakneck pace.
That continued in 2022, when Yum’s concepts—mostly the franchisees of said concepts—opened more than 4,560 “gross” new restaurants, or about 3,100 after factoring in closures from the various brands, notably Yum’s debranding more than 1,000 restaurants in Russia.
The company has opened 8,600 new restaurants since the end of 2020, before accounting for closures. “Over the past two years,” CFO Chris Turner said in an interview, “we’ve opened a new restaurant every other hour.”
Yum is pushing aggressive unit growth, believing that it would combine with same-store sales growth to generate stronger revenues and then profits for the company. Yum’s board of directors gave top executives special bonuses for meeting certain unit growth targets last year.
Yet the store growth came last year despite various challenges in the company’s two biggest markets, the U.S. and China.
In China, COVID restrictions were lifted last year, only to be followed by an intense surge in the coronavirus that led to more restrictions and same-store sales declines. System sales at KFC China declined 4% for the full year. And yet Yum China opened nearly 1,200 net new locations last year, including more than 500 in the fourth quarter, most of them KFC and Pizza Hut locations.
“The amazing thing is that, despite all the challenges, they have been building restaurants at a record pace,” Turner said.
The restaurant growth market is tougher in the U.S., where all but Yum’s fast-casual Habit Burger brand are well established but development for fast-food brands, particularly those with drive-thrus, is more challenging.
Still, for the company, the unit development has taken place across brands and throughout the world. “It’s broad-based,” Turner said. “If you go around the world, we had 91 of our 156 countries with positive development in Q4.”
Taco Bell, the Mexican fast-food chain, finished 2022 with 8,218 restaurants, up 5% from a year ago. The brand now has more than 1,000 international restaurants. China is about to become its fourth market with more than 100 locations, a number the company considers a milestone that leads to more aggressive expansion. “Taco Bell International has built 40% of its current estate within the last two years,” Yum Brands CEO David Gibbs told investors on Wednesday.
In the U.S., the brand opened 250 gross new units in 2022. That was the second most in the brand’s history.
KFC, meanwhile, operates 27,760 restaurants globally, an increase of more than 800 over the past year, which is notable given the closure of the Russian locations. The chicken chain remains one of the biggest brands in the world, but particularly outside the U.S.
Pizza Hut, meanwhile, operates more than1 9,000 locations worldwide, an increase of more than 600 from a year ago, or 4% unit growth.
Turner told investors that the company has more aggressive plans this year. The company has registered more sites for new Taco Bell locations than it ever has, for instance.
“It’s driven by fundamentals,” Turner said of the unit growth. “We have strong unit economics and strong franchisees. And there is still a lot of white space around the world.”
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