Yum! Brands spins off China operations

Fast food operator Yum Brands announced it would separate its Chinese operations after a failed multi-year attempt to return them to profitability.

The new unit, dubbed Yum! China, will become a franchise of Yum! Brands in mainland China with access to KFC, Pizza Hut and Taco Bell, the group's three leading brands.

It would have “no significant” debt and “substantial financial capacity to invest in its business,” the Kentucky-based company said in a statement.

The rump of the company, Yum! Brands, would concentrate on expanding the presence and performance of those three brands across the world.

The new China-focused company had approximately 6,900 establishments – mostly of the KFC brand - with the potential to reach a total of 20,000 or more, Yum! Brands added.

Last week, Yum! added Keith Meister – an advocate of moving all China stores to a franchise model - to its board.

“Our commitment to a future capital structure that provides strong financial support for our business strategies and meaningful cash returns to shareholders underscores our on-going focus on value creation and our confidence in our long-term growth prospects,” Yum! Brands executive chairman David Novak said.

In May 2015 Meister disclosed he held a 5% position in Yum! Brands.