Retailing, Franchising, and Consumerism Business Intelligence in China

Yum Profit Down 3.9% In China As Company Plans Menu Price Increase

The international food and beverage group Yum! Brands Inc. has published its performance results for the third fiscal quarter of 2011, stating that its profit increased by 7.3% during the reporting period.

However, the food and beverage giant reported a 3.9% profit rate decline to 21.3% in China and it predicted the profit rate will further decrease to 20% by the end of the fiscal year. According to the report, the group still achieved strong sales in China, but the increase of food and labor costs limited its profit growth in the marketplace; meanwhile, its business in America also faced a difficult situation.

The group said the prices of raw materials are expected to peak in the fourth fiscal quarter. To offset the impact brought by the costs increase, they plan to raise the prices of their menus in China.

As of its third fiscal quarter ended September 3, 2011, Yum realized profit of USD383 million and its earnings per share was USD 0.8. The statistics for the same period of last year were USD357 million and USD 0.74, respectively.

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