Businessmodel of Yum! Brands

Customer Segments

Yum! has a mass market business model, with no significant differentiation between customer groups. The company targets its offerings at consumers who desire fast food.

Value Proposition

Yum! offers three primary value propositions: accessibility, risk reduction, and brand/status.

The company creates accessibility by providing a wide variety of options. It operates both traditional quickservice restaurants (which feature dine-in, carryout and in some cases, drive-thru or delivery services) and non-traditional units  – which feature express units and kiosks and have a more limited menu, and operate in non-traditional locations such as malls, airports, gasoline service stations, train stations, subways, convenience stores, stadiums, amusement parks and colleges.

The company reduces risk through high quality and safety standards in the following areas:

• Nutrition – Yum! aims to proactively enhance the nutrition profile of its food content so that its products are high-quality and part of a sensibly-balanced diet.
• Food Safety – Yum! maintains food safety systems in its restaurants with stringent standards and training on product handling, employee health, product temperature and ingredient management, and prevention of cross-contamination. Everything is covered in day-to-day activity, from raw material procurement to food preparation and serving.
• Ethical Sourcing – Yum! maintains a set of minimum standards for its suppliers and works to ensure that its livestock and produce are obtained in environmentally-responsible ways. The company has established a powerful brand due to its success. It operates almost 43,000 restaurants in 135 countries and territories. Its KFC division is the world’s most popular chicken restaurant chain, with almost 15,000 restaurants. Pizza Hut is the world’s largest pizza company, with over 14,100 restaurants. Taco Bell is the United States‘ leading Mexican-inspired quick service restaurant brand, with almost 6,500 restaurants across the country. Lastly, Yum! opens more than six new restaurants per day on average, and has been named one of the Aon Hewitt Top Companies for Leaders in North America.

Channels

Yum!’s main channels are its traditional restaurant outlets and its non-traditional outlets, namely kiosks and express units in locations such as airports and train stations. The company promotes its offerings through its website, social media pages, and print/online/TV advertising.

Customer Relationships

Yum!’s customer relationship is primarily of a personal assistance nature. Company employees prepare and serve food and beverage products to customers.

Key Activities

Yum!’s business model entails developing, operating, franchising, and licensing its global system of traditional and non-traditional quickservice restaurants.

Key Partners

Yum!’s key partners are the suppliers that provide the equipment and materials the company needs to manage its operations. These items include food products, paper and packaging supplies, and cooking equipment.

In the U.S., McLane Company is the exclusive distributor for the majority of items used in company-owned restaurants and for a large number of franchisee and licensee stores. Outside the U.S., Yum! utilizes many different local, regional, and global suppliers and distributors. The company has 5,700 food and paper suppliers in total.

Key Resources

Yum!’s main resources are its human resources, namely the restaurant staffers that prepare, cook, and serve its food and beverage products to customers. The company places a high priority on its intellectual property, with its Kentucky Fried Chicken, Pizza Hut, and Taco Bell trademarks having significant value and being materially important to its business.

Cost Structure

Yum! has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is restaurant expenses, which include food/paper, payroll, occupancy, and other operating expenses. Other major drivers are in the areas of sales/marketing and administration expenses, both fixed costs.

Revenue Streams

Yum! has one revenue stream: revenues it generates from sales of its products to customers. These include company-owned restaurant sales, as well as franchise and license fees and income.