No, KFC is Not Closing Or Going Bankrupt: But It’s Profit Fell in Q2 2013

Everyone wants to know whether or not KFC (Brand of Yum! Brands, Inc) is closing it’s business or not? But right now there is only a little information to go on. In 2010 CEO David C. Novak of the company briefly commented on the fact that some of the stores of the chain may be closed down to make the company more profitable, especially since the chain’s proceeds for the second quarter seemed to drop a little over 7%.

David comments that when it comes to China, the chain has become very dominant over other types of fast food. During the second quarter in China, they were able to see an increase of over 30% in revenue, and there were at least 55 or more new stores opened in the country.

This proves that the fast food chain is highly profitable in China, but they will have to cut back on the labor if they want to keep seeing results like this. However, the U.S. stores have been trying to gain back some of their most loyal customers by promoting the grilled chicken sandwich, and with a promotion appearing on Oprah Winfrey’s website, it worked.

KFC was able to win back some of their healthy conscious customers, but when a promotion for the double down bun chicken sandwich interfered, they found themselves not being able to sustain the momentum. In 2009, the company closed down about 15,000 of their locations to turn into relief kitchens. During this time, people struggling to feed their families could obtain a meal for free because of this Fight the Hunger campaign.

Other fast food brands owned by Yums makes one think that cost could be a problem, because all of their other restaurants tend to be less expensive than KFC. However, the company says that they are dedicated to growing the company but additional costs will be a challenge in the future. One of things that they will need to focus on the most is how they will be able to provide the same value that all of their other restaurants provide.

With over 37,000 stores in operation, the company was able to see a full year’s earnings jump from $2.39 to $2.43, when analysts expected $2.42. Pizza Hut and Taco Bell seemed to be doing well during the first two quarters, and KFC was able to acquire a gain during the second quarter. Chief Financial officer Rick Carucci commented that it will not be an easy fix and if additional costs become too much of a problem for them in the future, it could lead to closures in the U.S.

No one really knows if KFC is going out of business, but with loved restaurants like McDonalds stepping more into KFC’s territory with chicken Mcbites, the company is really fighting back. Considering that the new CEO for McDonalds Don Thompson states that while the economy is down, he will be focusing on more chicken ideas, KFC has no choice but to get ready if they want to be the last standing.

Update July-2013

We have news saying that Yum! Brands second quarter profit has fallen down by ~15%, but its EPS (Earning Per Share) is better than expected. Thus in-short, investor should not be worrying about such hiccups and overall company is doing good. But its good idea to keep a watch on news flowing in the market.

NO, KFC is Not Closing Or Going Bankrupt: But It’s Profit Fell in Q2 2013

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