Yum! Brand Company Overview Yum! Term Paper

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Many companies in this industry are no longer trying to expand the number of restaurant, but rather focus on other growth strategies, such as international expansion or product innovation. The last strategy is very suitable for the home market. The eating habit trends point to a change in the average American towards a healthier lifestyle. Yum! has a weakness point in this area as its products are not perceived as healthy. McDonalds has developed a number of products for the customers interested in a healthier died, such as salads. Other competitors, such as Wendy managed to prepare the same products with less 10 grams of fat in it. The healthy lifestyle trend opened the way to more competitors which sell quick-service healthy products, such as: Panera Bread, Subway and Quizno's.

The consumer habits change from one generation to another. The trend in the last generations is not only towards healthier products, but also for gourmet products at the expense of fast food. This is one of the reason why quick restaurants such as Panera Bread, Subway and Buffalo Wild Wings gained popularity lately. Consequently, as their popularity increased, these restaurant chains managed to produce food products of higher quality at marginally higher prices. This type of restaurants represents a threat for Yum! Brands given the current consumer habits and their success in the market.

The industry prospects are in favour of restaurant industry. Thus, according to the National Restaurant Association, consumers will spend over 53% of the budget allocated to food on food prepared away from home by 2010, an increase of over 4% from 1999.

The industry is populated by a small number of large chains that manage to achieve high economies of scale and deliver cheap products to customers.

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Yum! Brands is part of this restricted club and the membership is a major competitive advantage. Additionally, the large size of the group enables it to develop cost-effective operating systems (e.g. superior supply chain management solutions) that create a true price advantage over competition.

The competition in the food industry is getting stronger because companies are competing globally and the strongest markets are stagnating, which forces companies to be creative to gain competitive advantages. Some develop better operating systems that drive cost efficiency, some develop new and improved products, while others explore new markets that bring home more revenue.

Reference List

Clarke, P., Hedden, S. & Olson, C. 2006. Yum! Brands - Consumer Discretionary. Krause Research Fund, vol. Fall (November).

NY Times by Tracie Rozhon. 2007. Just to Add to the Pressure, the Name Is Yum. Published October 6th, http://www.nytimes.com/2007/10/06/

The company's sales have registered a 5% to 10% YoY growth.

The growth is mainly generated by the success in emerging markets, such as China.

Source: Corporate Annual Reports

The main market remains U.S. despite its lack of growth. China offers a large potential as the Chinese consumer's purchase power increases exponentially and this is an important growth factor for Yum!

The indicators on the left hand side summarize the following: Yum! started the day with $37.09/share; did not….....

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