Taco Bell’s reputation has been poor in the past, but, as anybody following Yum! Brands, Inc. (NYSE:YUM) knows, the company has really turned itself around in recent years. The recent launch of the company’s breakfast menu across the country, and its relatively good performance, is an apex that the company’s board seems unable to ignore. The firm’s CEO Greg Creed is going to be the company’s next CEO according to reports on Thursday.
Current Yum! Brands, Inc. (NYSE:YUM) CEO David Novak will become the company’s new executive chairman according to the announcement. Shares in the fast food giant were declining on Thursday’s market after the announcement. According to the company the executives will take their new positions next year.
Yum! continues striving for growth
Yum! Brands, Inc. (NYSE:YUM) has two paths to growth, epitomized by the behaviours of its biggest brands, KFC and Taco Bell. While KFC has continued to attempt expansion outside of the United States, Taco Bell has continued to attempt to foster growth in its traditional markets. Both approaches have brought growth to the company, and both come with problems.
KFC ran into its biggest roadblock just over a year ago when a food safety panic killed sales of its products in China. The drop in sales showed off the kinds of problems that companies trying to make it big in China can face. Much of the company’s time since that crisis has been spent trying to clean the company’s reputation in East Asia. Growth based on a single region is incredibly vulnerable to setbacks. yum! Brands Inc. (NYSE:YUM) learned its lesson.
Taco Bell, on the other hand, is following a more traditional approach. The company is not spreading itself with international aggression, it’s doing its best to increase the value of the business it has at home. Taco Bell is leveraging creative strategy to try to get ahead. The next CEO of Yum! Brands, Inc. (NYSE:YUM) Greg Creed knows all about that process.
Concepts lead at Yum! Brands
There is still, quite obviously, huge avenues for growth for Yum! Brands, Inc. (NYSE:YUM) in Greater China. KFC’s reputation is being pulled back to where it was in 2012, and the company’s revenue is once again expanding. The future of the company will rely on that growth, but the centerpiece of strategy may follow the Taco Bell model more closely.
That model will likely center around a couple of key attributes. Discover when and where people spend money eating out, and offer them the same service. Do that in a way that’s different and a company can attract a subsection of the market. Do it in a way that’s better and a company can take a large chunk of the sales.
Yum! Brands, Inc. (NYSE:YUM) is currently doing this with Taco Bell. The company’s next CEO, who was chief concept officer and president at Taco Bell until 2011, brought the company’s products to a breakfast menu. It’s now competing in a market that McDonald’s created and has continued to dominate. Yum is set to be lead by ideas rather than external growth. It’s up to shareholders to decide the value of that shift.