QSRs feeling the heat: Yum! to sell its KFC business in Western India

Just two weeks after US-based Burger King opened the doors to its first store in New Delhi's Select Citywalk Mall, arch rival Yum! Brands, which owns chains such as Pizza Hut, KFC and Taco Bell, is reportedly selling its Kentucky Fry Chicken ( KFC) business in Western India to avoid real estate costs such as rentals and other overhead expenses, the Economic Times said today.

Yum! reported its fourth straight drop in quarterly samestore sales in India in the June-September period, indicating that high food inflation and slowing discretionary spends is still impacting quick-service restaurants business in the country. Competitors like McDonald's, which has over 350 outlets across India, Domino's Pizza (772 outlets) and Subway (472), have all seen consumer spending-hit by high inflation in the last year. Still, Crisil Research estimates the market to grow to Rs 7,000 crore by 2018 from the current Rs 3,400 crore.

 QSRs feeling the heat: Yum! to sell its KFC business in Western India

Reuters

Yum Brands has been in India for more than a decade. It has over 700 units in the country. It's departure from KFC is surprising given earlier this year an Edelweiss Securities (post an interaction with Yum! Restaurants) said the company is on an expansion spree and has entered new cities through a mix of owned and franchise-operated stores.

"Store additions have tripled in the past three years and the company aspires to triple again to over 2,000 stores till 2020," the report had said in April, 2014.

The report had further said that KFC has significantly bridged the gap with its nearest competitor McDonald's and is likely to top it in the QSR segment.

"From 155 stores in 2011 compared with 240 for McDonald's, KFC has reduced the gap in two years and now operates 305 KFC stores as compared with 350 for McDonald's. Also, Yum!'s initiatives could potentially lead to loss of market share for McDonald's India,"the report said.

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Updated Date: Nov 26, 2014 10:21:35 IST