In a bid to expand in the Chinese mainland, Yum China Holdings, Inc. YUMC recently announced the opening of its first Taco Bell store in Beijing on Aug 21. Currently, there are 11 Taco Bell stores in China, including the recent openings in Shenzhen and Ningbo.
Located in the Liangmaqiao district, the new store offers culture-centric, Mexican-inspired food such as nachos, tacos, quesadillas and burritos. Additionally, new menu items such as rice bowl, seasoned bone chicken and taco pizza have been developed exclusively for China markets. The store also offers digital capabilities, mobile pre-orders and takeaway features.
CEO of Yum China, Joey Wat, stated, “We believe that there is a growing appetite for Taco Bell, and we will continue to review and refine Taco Bell’s service model and offerings for the Chinese market. We also look forward to bringing this fun and dynamic brand to other parts of the country in the future.”
Increased Focus on Unit Expansion
Yum China is focused on relentless unit growth of restaurants in order to drive incremental sales. It recently acquired a controlling stake in Huang Ji Huang that has more than 640 restaurants, almost all of which are franchise-based. In second-quarter 2020, the company opened 169 new restaurants and remodeled 310.
Despite the coronavirus pandemic, the company expects to open 800-850 stores in 2020. Approximately, the company possesses five restaurants per million people in China, which is expected to grow to 15 stores per million. Moreover, with continuous rise in middle-class discretionary spending, growth opportunities in the restaurant base remains viable.
So far this year, shares of the company have gained 13.8%, compared with the industry’s 0.5% growth.
Zacks Rank & Key Picks
Yum China currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the same space include Jack in the Box Inc. JACK, Papa John’s International, Inc. PZZA and El Pollo Loco Holdings, Inc. LOCO. Jack in the Box and Papa John’s sport a Zacks Rank #1, while El Pollo Loco carries a Zacks Rank #2 (Buy).
Jack in the Box 2021 earnings are expected to surge 17.7%.
Papa John’s has a three-five year earnings per share growth rate of 8%.
El Pollo Loco has a trailing four-quarter earnings surprise of 94.1%, on average.
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