The recent success of Yum! Brands

It’s supposed to be a tough environment for the fast food companies and – with their poor reputation for investing in their employees - it’s surprising to hear that one is implementing a training programme that is described as the “biggest culture-change initiative in the world today”, affecting all of the firm’s 1.4m workers spread across 112 countries.  The business is Yum! Brands, once part of Pepsi, before it was sold in 1997.

Since then, its share price has risen fourfold and its earnings per share have grown by more than 10% a year for seven years in a row. It has also fulfilled its ambition to become truly global, with more than 65% of revenue earned outside America.

Yet according to a report in The Economist, the business isn’t standing still.  It has come up with three big areas for improvement: selling more healthy items, offering a greater variety of drinks and changing menus according to the time of day.

But a big problem is handling the corporate culture problem – a typical diseconomy of scale.  How can a firm with different brands and operations in different countries implement change?  In China alone it operates in 600 cities.

The plan is to try to create a single global corporate culture that emphasises constant innovation, which is supposed to spread down the chain of command from Yum!’s 200 most senior executives to all restaurant managers and franchisees around the world.  The plan is to get Yum! to make far quicker progress on its three initiatives than would have been possible in the past. Innovations tested in one country are quickly being adopted in others. British KFC outlets, for example, pioneered a breakfast menu which is now being offered in 12 countries. Taco Bell is also trying to sell breakfast, and Pizza Hut in China is pushing a teatime menu.  There are numerous other examples too.

I am sometimes overcome with doubts when I read stories like this, half expecting to hear in a few years about a once praised business vanishing into oblivion.  Let’s wait and see.  You may remember a recent blunder by the firm: it tried to rebrand Pizza Hut as Pasta Hut.  The move bombed and they had to quickly backtrack.  A quick survey of my students reveals that a third hadn’t even noticed…..

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