Yum Brands (NYSE:YUM) is putting its Long John Silver's and A&W restaurant chains up for sale so it can focus on its growing international business. The company, based in Louisville, Ky., said Tuesday that it is narrowing it focus to its Taco Bell, Pizza Hut and KFC business in the U.S. and abroad. Long John Silver's and A&W All-American Food restaurants do not fit into its long-term strategy.Yum acquired the two chains in 2002 for $320 million. They account for 1,630 of the company's more than 37,000 restaurants worldwide. However, the chains have a minimal presence outside the U.S. and no sites in China, a critical market for the company. Yum's profitability has improved greatly since putting a heavier emphasis on overseas business. In 1998, when Yum! Brands was spun-off from PepsiCo, 22 percent of its profits were sourced internationally. Today, about 65 percent of the company's profit is from overseas business.
Like many consumer companies, Yum expanded aggressively in overseas markets to win the business of growing middle classes. Yum opened an average of four new restaurants every day overseas during its 2009 fiscal year.
The company reported in its last quarter that net income grew 7 percent on surging international sales despite a slight downturn U.S. sales. The company said earlier this month that it is on track to deliver 14 percent growth in earnings per share for the year based on its success overseas. The company said it doesn't expect the sale of the chains to have a material effect on its earnings or cash flow. Shares of Yum Brands rose $1.09, more than 2 percent, to $48.91 in midday trading.
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