Why is Yum Brands Selling its KFC Locations in India—and Should You Follow Suit?
For a few years now, India has been marked as a key emerging market with a growing middle class hungry for Western cuisine—in other words, the perfect market to grow your fast food chain. Even now, brands are able to make headlines by finding innovative ways to break into the India fast food market. Burger King managed to do just that last month with the beef-free Whoppers marking its successful launch in New Delhi.
But are the halcyon days of fast food growth in India reaching their end? According to a new report, after a decade of growth as an earlier foreign entrant into this market, fast food empire Yum! Brands surprised experts by announcing that it is considering selling off its KFC business in western India. So what’s going on? Is this a move that every fast food business should consider as well?
Declining Sales and the Remedy in Franchising
Fast food growth isn’t necessarily at an end in the long run, but it is in a tricky position at the moment. According to Guru Focus, KFC is at the top of the fast food game, but that doesn’t mean that it’s at its best: sales at KFC’s India business have reportedly been in decline for the fourth quarter in a row due to multiple factors, particularly a decrease in discretionary spending among consumers paired with an increase in food prices.
Those issues together create a perfect storm: when consumers have to cut back on luxuries and impulsive purchases, the only way to keep something discretionary like fast food more marketable is to keep it affordable. When rising commodity and ingredient costs make that kind of affordability impossible, all bets are off.
As the report indicates, despite projections for market growth in the long term, KFC is far from the only fast food business that is under pressure from these factors:
In KFC’s case, rising overhead costs at its 18 company-owned locations in India have been eating into the chain’s bottom line. By selling off these locations, parent company Yum! Brands can shift real estate costs, staffing costs, and other overhead charges onto the franchisee and bring that bottom line back in step with expectations. This could turn out to be a wise choice as well for any fast food chain with a franchising system already in place elsewhere that wants to reduce their costs and stay profitable.
Who Can Weather These Conditions?
Times may be tough for fast food in India right now, but these tough times are not expected to last forever. Fast food chains will just need to be able to weather this storm of poor circumstances.
Some brands will be able to do this easily – it helps to have novelty, which could attract enough consumer interest to override natural inclinations toward more cautionary spending. Burger King could have this advantage on its side, being the new kid on the block in this market and offering a fresh region-tailored take on its global menu. Somewhat ironically, it is the more established brands who will likely have to look into ways of scaling back in order to maintain a presence and come out ultimately stronger once the market becomes more favorable later on.
[SOURCE: Guru Focus]
Tyson Foods 2050 net-zero target with no bargain on taste
Tyson Foods, a leading global protein company, aims to achieve net-zero greenhouse gas emissions across its global operations and supply chain by 2050.
The company supplies 20% of the USA’s beef, pork and chicken and is best known for products such as Jimmy Dean, Hillshire Farm and BallPark.
As the first U.S.-based protein company to have an emissions reduction target approved by the Science Based Targets initiative (SBTi), this ambition, in conjunction with the release of the company’s fiscal year 2020 Sustainability Progress Report, underscores the company’s commitment to help combat the urgency of the growing climate change crisis.
Food giant Tyson will meet net-zero targets
The high level of meat and diary that humans consume is fuelling climate change for many reasons:
- Gassy cows, sheep and goats are responsible for up to 14% of all greenhouse emissions.
- 75% of agricultural land across the world is used for animal agriculture. This includes land for the animals to graze upon, as well as the land used for the crops which animals eat to grow in. The amount of land required leads to deforestation.
The move to net-zero is an expansion of Tyson Foods current science-based target of achieving a 30% GHG emissions reduction by 2030, which is aligned with limiting global temperature rise to 2.0c.
As a global organisation with 239 facilities and 139,000 employees worldwide, achieving net-zero emissions is a large task, which will require a collective effort from every team member, in addition to external stakeholders.
Tyson Foods’ goals include:
- For emissions to align with limiting global temperature rise to 1.5℃, consistent with the Paris Agreement, by the end of 2023.
- Expanding the company’s current 5m acre grazing lands target for sustainable beef production practices by 2025.
- Continuing work to eliminate deforestation risk throughout its global supply chain by 2030.
Tyson foods supports accountability and transparency
“We believe what good food can do for people and the planet is powerful. Our net-zero ambition is another important step in our work toward realising our aspiration to become the most transparent and sustainable food company in the world,” said Donnie King, Tyson Foods President and CEO.
“At Tyson Foods, we believe progress requires accountability and transparency and we are proud to exemplify that as we work to achieve net-zero greenhouse gas emissions by 2050,” said John R. Tyson, Chief Sustainability Officer, Tyson Foods. “As the first U.S.-based protein company in the food and beverage sector to have an emissions reduction target approved by the Science Based Targets initiative, we hope to continue to push the industry as a leader and remain committed to making a positive impact on our planet, with our team members, consumers and customers, and in the communities we serve.”
Tyson Foods’ new ambition, along with the company’s existing sustainability goals, is aligned with the UN Sustainable Development Goals, which include:
Goal 2: ‘End hunger, achieve food security and improved nutrition and promote sustainable agriculture’.
Goal 15: ‘Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss.’