Yum! Brands to split operations between franchisees

Yum! Brands, which entered India in early 90s is planning to split operations between its two franchisees, Devyani International and PE Fund Samara Capital, reported ET.

Yum currently operates more than 800 KFC, Pizza Hut and Taco Bell stores across India through about half a dozen franchise partners.

The exiting franchisees include Dubai-based Dodsal group, KFC Holdings Malaysia, Punjab-based ANPPL and a smaller one in Kerala.

KFC Holdings Malaysia runs stores in the western region, including Maharashtra. Samara is also learnt to be buying out entrepreneur CK Jaipuria's franchisee in Sri Lanka.

"Yum wants to operate its KFC and Pizza Hut franchisees through Devyani in the North and East and Samara in the South and West," said an executive with knowledge of the development.

Devyani, Yum's largest partner, runs more than 60 percent of the stores, mainly in the North and East.

According to two executives, Dodsal has close to 80 Pizza Hut stores in the north that will go to Samara. More than 30 Yum stores owned by KFC Holdings Malaysia in the western region are being sold to Samara for an estimated Rs 50 crore. ANPPL runs about 25 stores in Punjab.

"Consolidation would help the firm grow faster. A lesser number of franchisees are easier to manage and a few larger players with greater investment capabilities would help turn step up growth,’ said said food retail consultant Samir Kukreja.

Yum will also be divesting some of its own stores to Samara. "Yum is banking on only two partners to step up growth and itself operate on a lower cost model focusing mainly on branding and customer relationships," said one of the executives cited earlier.

Taco Bell will also increase operations in the north through Gaurav Burman of the Dabur family.