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General Investing

Amid Wavering Domestic Demand, Quick-Service Restaurants Look Abroad

March 24, 2011

Quick-service restaurants have their sights set abroad, as international expansion provides growth opportunities beyond a domestic environment marked by reduced traffic, Argus Research Analyst John Staszak says.

Fuel prices are high and people are feeling pinched because of rising prices, but I’m still kind of bullish on quick-service restaurants. I think they should do okay, but it’s kind of weak demand here because of joblessness and the weak housing,” Staszak said. “So I’m really looking at quick-service restaurants that are growing internationally.”

Yum! Brands (YUM) is a quick-service restaurant with contrasting domestic and international realities. While the company has struggled to increase domestic same-store sales for its KFC brand, Yum! is quickly increasing its presence in China.

Yum! Brands is growing rapidly in China, and they have a lot of room to grow in China,” Staszak said. “They just have 1.5 restaurants per million customers, and they usually handle more than that, 60 restaurants per million people here in the United States. So they’re far from saturation in China.”

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