Shares in Yum! Brands (YUM) were looking less tasty today after it delivered news of a $2 billion investment to expand KFC in the U.K. and Ireland.
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Booming Demand
YUM stock was down 0.2% in early trading as it unveiled the five-year plan to fight off growing competition and meet booming demand for fried chicken.
It will upgrade more than 200 restaurants, a fifth of its existing sites in the region, and spend £466 million on opening 500 new locations with a focus on northwest cities and towns in the U.K. and Ireland.
The company said the expansion and upgrade plan would create over 7,000 new jobs in its U.K. and Ireland business, and across its supply chain. The roles include restaurant managers, kitchen workers, customer-facing staff and a new “guest experience” position.
Investment is also being earmarked for KFC’s suppliers, including spending on fresh chicken, gravy, and salads.
Busy Pecking Order
Rob Swain, the general manager of KFC in the U.K. and Ireland, said: “We’ve never seen such strong demand for freshly prepared, fried chicken as we are seeing today.”
KFC estimates that the U.K. fried chicken market is worth £3.1 billion annually and it’s not only it trying to get to the top of the pecking order. It is facing increased competition from new entrants such as Popeyes, Wingstop, Dave’s Hot Chicken and Slim Chickens.
In its recent Q1 update, Yum! Brands reported that KFC same-store sales grew 3% in its international division compared with a 1% slide in the U.S. The U.K. saw a 4% rise in system sales.
Other international markets include China, Australia, and Canada.
Is YUM a Good Stock to Buy Now?
On TipRanks, YUM has a hold consensus based on 5 Buy and 15 Hold ratings. Its highest price target is $185. YUM stock’s consensus price target is $160.21 implying an 10.76% upside.
