Yum Brands CFO: When consumers control ordering process, they spend more

April 29, 2014 | by Alicia Kelso

Yum Brands' CFO Pat Grismer spoke today at Barclay's Retail and Consumer Discretionary Conference, hitting on topics such as KFC's continued recovery in China, the importance of providing a "healthy and indulgent" menu balance and the company's ramped up focus on digital channels in every global markets.

"Digital is an enormous priority everywhere, not just in China," he said.

However, it is the company's China market that has paved the standard for digital objectives. In the country, Yum has online ordering capabilities for both its Pizza Hut Delivery business and its growing KFC Delivery business.

Grismer said sales coming through digital channels in the market are between 70 and 80 percent. Of that number, 25 to 30 percent come from mobile, which is up from about 10 percent this time last year.

"We've put significant resources behind it. We believe [digital ordering channels] both grow top line sales and improve profitability for a number of reasons — including savings on labor and increase in average spend," he said. "When consumers are in complete control of their ordering process, they tend to spend more."

Grismer said the company is in the process of rolling out mobile ordering for KFC and is testing the service in a few markets before taking it national.

"It's hard to say when that will happen. We have a high priority on getting things right. I've read about some flawed launches for QSR concepts and we have to ensure we have the right app so we get the results we need from that investment," he said.

Domestically, the company also continues to test mobile ordering for Taco Bell. The platform is expected to roll out later this year.

"We're excited about the design, how differentiated it will be, how fantastic it will be from a customer experience standpoint and how we're going to weave it into a customer loyalty program," Grismer said.

Healthier offerings 'don't mix high'

Grismer was also asked how the company is responding to increased demands for healthier options. He said while Yum's brands have introduced more healthful alternatives, they haven't mixed high.

"We've found that consumers come to our brand because they appreciate the taste and indulgence," he said. "But we need to continue to maintain high standards and provide more balanced offerings and give customers a choice. We're taking steps to evolve the menu in ways that are responsive to that."

Taco Bell breakfast update

Finally, Grismer provided some color on how Taco Bell's fledgling breakfast business is going. The morning menu, which launched in late March, http://www.qsrweb.com/article/230133/Taco-Bell-recruits-Ronald-McDonald-to-promote-new-breakfast has been in line with sales expectations and sales are predicted to continue growing over time.

"We believe it's going to be significantly accretive to the business and to the unit-level economics and ultimately for margin, and we believe it will be a tailwind for new unit development," Grismer said. "We're very excited about it and very pleased with the early results."

Topics: Food & Beverage , Health & Nutrition , International , Online / Mobile / Social

Alicia Kelso / Alicia has been a professional journalist for 15 years. Her work with FastCasual.com, QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.
View Alicia Kelso's profile on LinkedIn

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