An unusual motif was strung throughout Wednesday’s Investor Day presentations at Yum Brands, the parent company of Pizza Hut, KFC and Taco Bell and the world’s biggest restaurant operator: “Proud, but dissatisfied.”
A 45,000-restaurant operation spread across 140 countries, Yum Brands has seen its properties gain momentum globally in recent years, culminating in the 2016 spin-off of Yum China. Its brands have gained popularity for their distinct messaging as well as high-profile partnerships with organizations like the National Football League.
But CEO Greg Creed, who sat down with CNBC’s Jim Cramer for an exclusive interview on “Mad Money,” still thinks the Louisville, Kentucky-based operation can do more.
“We have three global, iconic brands. We have incredible scale. We have this global diversity,” he said. “We’re proud of the brands, but we’re dissatisfied because we can get more growth.”
To do that, Yum’s management is using a three-word motto, not dissimilar to some of its brands’ catchier slogans, to promote its ideals: RED, short for “relevant, easy and distinct.”
Creed said that KFC, with its well-known mascot, red-and-white-striped buckets and “finger-lickin’ good” catchphrase, embodies distinction; Pizza Hut, with its newly lowered prices and focus on delivery, is growing in relevance; and Taco Bell sits at the cornerstone of “relevance and distinctiveness.”
But, he told Cramer, “we’re dissatisfied because not every brand is purely great at RED, and I think we can make some improvements.”
Those include getting rid of ingredients like artificial colors and flavors and trans fats; rolling out kiosks at every Taco Bell in the United States by the end of 2019; and Pizza Hut’s newly announced acquisition of QuikOrder, an online ordering platform that will help the chain close the gap with tech-savvy competitors like Domino’s.
While KFC and Taco Bell have seen notable growth in recent quarters — with KFC posting 14 straight quarters of same-store sales growth — Pizza Hut has remained a challenge for the company as the brand has struggled to attract new customers and take market share from its rivals.
“Look, I think that it’s fair to say that Pizza Hut is as easy to access as our competitors. We’ve just got to make it more distinctive,” Creed said. “We now own that e-commerce engine that’s going to drive between two and a half and three billion dollars’ worth of work. We’ve bought it in-house. We’ve got 75 incredibly talented people now joining Yum. We think we can unleash that power.”
But the QuikOrder purchase — made for a yet-undisclosed amount — is more of a foray into e-commerce technology than it is a snub to delivery giant GrubHub, in which Yum has a roughly $200 million stake.
“We love our GrubHub relationship. We think it’s a great for GrubHub and it’s great for Yum and our brands,” Creed said. “GrubHub was all about delivery. QuikOrder was all about an e-commerce platform.”
Shares of Yum Brands managed to withstand the stock market’s Thursday sell-off, rising 0.9 percent to $91.50 a share.
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