Yum China kicks off trading in New York

A pedestrian walks past a KFC fastfood restaurant of Yum Brands in Yichang city, Central China's Hubei province, October 16, 2015. [Photo/IC]

Yum China Holdings Inc, a separate company carved out from Yum Brands Inc that started trading in New York on Tuesday, said it will continue focusing on direct operating business model in China, rather than franchising.

Yum Brands announced it was separating its China operations last October, and the spinoff from Yum Brands completed on Oct 31, with Yum China listed on the New York Stock Exchange.

In China, most of its restaurants are directly operated by Yum China while most are franchised in other countries.

Micky Pant, chief executive officer of Yum China said expanding taco restaurant Taco Bell and lamb hot pot restaurant Little Sheep will drive the growth of Yum China in the next few years.

Yum China is going to triple its current number of restaurants from more than 7000 to around 20,000 across China in the next few years.

Yum China has received $460 million strategic investment including $410 million from Primavera Capital and $50 million from Ant Financial. Fred Hu, a veteran in investment banking becomes non-executive Chairman of Yum China.

As an independent company, Yum China will continue to focus on direct operations other than franchising, to better leverage its expertise and resources gathered over the past decades, including knowledge, talent and supply chain, to better ensure food safety and successful operation. More than 90 percent of Yum China restaurants will be operated and owned directly by the company, said Pant.

Analysts said that the food and beverage sector will see great opportunities for growth amid fast urbanization with surging number of shopping malls, but competition will also become fiercer.

Xue Yuhu, an analyst with Founder Securities, said: "Increasingly-savvy consumers will demand innovative and creative products that meet fast-changing interests."

"Strong capacities in research and development, management of the supply chain and cost management are keys for fast food chains to survive and thrive," said a research note from Galaxies Securities.