Macquarie Group’s Consumer Analyst Elaine Lai’s favorite name in the Chinese restaurant sector is Yum! Brands, Inc. (YUM), due to the company’s successful growth over the last 10 years and its future potential in China.
“We have seen rapid expansion carried out by foreign corporations…because these are companies with very strong management capabilities and the knowledge to replicate the industrialized food production process. These companies were able to replicate their business model on Mainland China,” Lai said.
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Specifically, Lai points to Yum! Brands, as the company operates over 5,000 restaurants in China, almost all of them self-operated, which translates to profits. Additionally, the company has the back-end support to continue its growth.
“This is by far the first company in the whole Greater China restaurant sector in terms of execution ability and also for the potential for growth…because of urbanization, because new cities are created and then more and more people are adopting an eat-out kind of lifestyle,” Lai said.
“A lot of the Chinese local brands are not able to expand, because they don’t have the back-end support and they don’t have a real ability to continue to grow,” Lai added. “Yum! Brands, however, has over 1,000 people just looking at real estate, just understanding, analyzing the traffic journey every single city in China.”
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