Yum Inks Deal With Gas Stations In China

Yum! Brands Inc. has struck a deal with China Petroleum & Chemical Corp. that will allow additional restaurant openings for KFC, Pizza Hut, and Yum's proprietary East Dawning brand in Sinopec gas stations.

Yum currently has seven restaurants located in Sinopec stations in Shanghai, Shandong, Fujian, Guangdong, and Shenzhen. The deal would allow the Louisville, Ky.-based company to open 50 more restaurants in Chinese gas stations over the next five years. There are more than 30,000 Sinopec stations in China, and Yum has more than 4,000 restaurants in that country, mostly KFC units as well as Pizza Hut Delivery and Pizza Hut Casual Dining.

"The cooperation between Yum! and Sinopec will propel the development of a new commercial service model in gas stations and expressway service stations," Mark Chu, president of Yum's China division, said in a statement. "Different from previous cooperative models, the collaboration between Yum and Sinopec is a flexible and diversified framework agreement open to our various brands. Yum will select appropriate brands for different gas stations according to their unique features, so that the newly built restaurants can meet the needs of Sinopec locations."

In addition to locations of its American brands and the East Dawning quick-service concept, Yum's China division also owns a stake in the 480-unit Little Sheep casual-dining brand, which specializes in "hot pot" cuisine. Yum submitted a formal bid to acquire Little Sheep from its founders for $682 million on May 13, and Chinese regulators approved the bid Nov. 8.

China has been the strongest performing division of Yum Brands' portfolio for the past several years. For the Sept. 3-ended third quarter, same-store sales in the country rose 19 percent, compared with a 2-percent decline for Yum's restaurants in the United States.

Yum operates or franchises more than 38,000 locations of KFC, Pizza Hut, and Taco Bell in the United States and more than 100 countries.

— Mark Brandau, NRN.com