Yum to enter Argentina

"Even though there is commodity price inflation, general wage inflation around the world is very low.

So, people cannot afford to pay a lot more," Micky Pant, president of Yum Restaurants International, told Reuters in an interview on Tuesday during a visit to India

Yum has about 300 stores in India, compared with 800 in Indonesia, and more than 3,900 in China. Yum plans to have 1,000 stores and $1 billion in revenue from India by 2015, from about $200 million currently.

It will add 75 KFC restaurants in India this year to its existing 115, and expects to ramp up growth to 100 KFCs a year in the country from next year, Pant said. Yum will also add to the existing 175 Pizza Hut restaurants, although growth will be slower than that for KFC, he said.

"We were wondering whether this will be more a Pizza Hut market because there are lot vegetarians in India, but it looks like KFC is doing actually surprisingly strong for us, especially in smaller towns," he said at the company's India office in the outskirts of the capital city, New Delhi.

Global chains must adapt their menus in India to accommodate dietary traditions, including a high proportion of vegetarians. Rival McDonald's Corp, for example, does not sell beef in India even though hamburgers are its signature dish.

"It's a good chicken market and we are happy with that," Pant said.

U.S. restaurant chains are increasingly looking overseas to grow. China has for years been Yum's top market for sales growth and accounts for about one-third of the Louisville, Kentucky-based firm's earnings.

In Africa, the company has 675 stores, and Pant expects Yum to reach 1,000 stores "fairly quickly".

He expects Brazil to be a "very important growth market" and said Yum should enter Argentina in the next 12 months or so.

"We have a very strong presence in central America and Caribbean. We have a good business in Peru, Ecuador.

We're expecting to grow Brazil and we expect to enter Argentina," he said.

Restaurant operators are being squeezed by rising food costs but must figure out how to raise prices without scaring away diners.

"We are seeing commodity inflation around the world. So there will be some impact," Pant said.

"But our goal is that if we can keep our price increase to half of inflation of commodities, we'll be in a good situation comparatively." "In the last 18 months, our prices have been pretty flat," he added.

Copyright Reuters, 2011