Yum! India splits ops as sales growth declines

The food retailer sees same-store sales growth decline 13% for the three months ending December 2015

Fast-food major Yum! Brands has split its India operations as same-store sales growth slides for the ninth consecutive quarter.

The food retailer, which operates brands such as Pizza Hut, KFC and Taco Bell, saw same-store sales growth decline 13 per cent for the three months ending December 2015, pointing to challenges faced by the company in the domestic market.

The split is on the lines of the three existing brands, with KFC headed by Rahul Shinde, Pizza Hut headed by Unnat Varma and Taco Bell under Ankush Tuli.

The new division heads will now report directly to executives in the US, implying that the country head position has been eliminated.

The India restructuring incidentally comes as Yum splits its operations globally into two independent publicly-traded companies. One company will operate its three brands KFC, Pizza Hut and Taco Bell, while the other will manage the China business, which has been consistently losing share to rivals.

The separation is expected to be completed by the end of 2016. However, the India operation has been merged with the global divisions of KFC, Pizza Hut and Taco Bell from January 2016, the company said.

Yum's former India head Niren Chaudhary has moved to Dallas, where he is now in charge of the KFC business across Asia, Canada, Latin America and the Caribbean based out of Dallas. Shinde, who heads the KFC business in India, will report to him.

Abneesh Roy, associate director, research, institutional equities, Edelweiss, said the India restructuring would help Yum regain growth momentum, since the focus would now be narrowed down to the three individual brands.

"Yum has stated that the split will help it achieve compelling growth strategies, distinct investment characteristics and optimise capital structures," Roy said in a just-released report.

For the last five quarters, Yum's decline in same-store sales growth in India has been in double-digits, which the company is hoping to stem in the coming months. In comparison, rival Jubilant FoodWorks, the master franchisee of Domino's and Dunkin Donuts, has seen same-store sales growth turn positive from negative in the same period.