Yum! Brands Broke a Franchising Record Last Year — Here’s What it Could Mean for the Industry

Amid the ongoing challenges of the COVID-19 pandemic, including supply chain issues, safety restrictions and labor shortages, many experts have predicted that entrepreneurs would no longer be interested in opening restaurants. But one of the world’s largest restaurant franchisor parent companies, Yum! Brands, begs to differ. The company opened a whopping 4,200 new restaurants last year, according to its fourth-quarter results, which it says is an industry record for unit development.

“We opened a new restaurant every two hours,” Yum! Brands CEO David Gibbs told investors on Wednesday.

Each one of the Yum! Brands concepts added locations, primarily overseas in China. KFC added 2,471 new restaurants in 105 countries (up 8% from 2020) and now operates nearly 27,000 global restaurants. That makes it the fourth-largest restaurant brand by unit count in the world.

Taco Bell opened 433 new restaurants in 27 countries last year, up 5% from 2020, and now operates nearly 7,800 locations. Pizza Hut opened 1,250 new locations and now operates 18,381 global restaurants, which is a 4% increase from last year. Habit Burger opened 26 new restaurants last year as well.

Franchise growth impact

With nearly 98% of Yum’s more than 53,000 global restaurants owned by franchisees, the company has a profound impact on the franchise industry at large. Now, this record-breaking growth in 2021 suggests interest in franchising may be booming, a sentiment that has been echoed by many experts in the industry over the past year. More and more entrepreneurs are looking to take control of their destiny following the uncertainty of the COVID-19 pandemic, and shifting social, economic and cultural norms have created an environment extremely favorable to franchise growth.

And, in the case of Yum! Brands, it makes sense why entrepreneurs are choosing to invest in the concepts right now. While many other businesses continue to struggle in 2021, Yum reported same-store sales growth for all of its concepts, both globally and in the U.S. The company said its sales specifically accelerated toward the end of the year.

Same store sales growth

Pizza Hut’s fourth-quarter same-store sales, for example, rose 1% in the U.S. and 4% internationally in the fourth quarter, which ended Dec. 31. Same-store sales rose 10% on a two-year basis domestically.

Habit’s same-store sales rose 11% for the fourth quarter and on a two-year basis rose 5%.

Taco Bell same-store sales rose 8% in the fourth quarter, and 9% on a two-year basis. KFC’s same-store sales rose 4% in the U.S. over the last quarter and 12% over a two-year basis.

Challenges undoubtedly remain for both franchisees and franchisors in the restaurant industry, but Yum! Brands’ sales growth suggests post-pandemic recovery is potentially on the horizon. According to a newly released State of the Restaurant Industry report from the National Restaurant Association, industry sales are expected to increase 12.4% in 2022, reaching $898 billion. The size of the workforce in the foodservice industry is also expected to grow in 2022, with an estimated addition of approximately 400,000 jobs.