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Yum! Brands Inc (NYSE: YUM) has signed a deal with Suning Appliance Co (SHE: 002024), China's largest chain store by revenue, to open 150 restaurants in the latter's electronics and home appliance complexes over the next five years.
Yum Brands was already operating 17 KFC and Pizza Hut restaurants at Suning stores in Shanghai, Nanjing and Beijing as of the end of April.
Although this is a not an exclusive deal, Suning will prioritize Yum Brands' establishments in their malls, a senior Suning official told Yicai.com.
"The two parties share the same growth strategy and closely supplement each other, and this forms the bedrock of the alliance," Zhu Zongyi, Yum Brands China chief executive officer said. "The partnership will attract more customers than if each operates separately."
On top of KFC and Pizza Hut, Yum Brands also owns Dong Fang Ji Bai, a popular Chinese fast food brand, and Little Sheep Group Ltd (HKG: 0968), China's largest hotpot restaurant chain, which Yum Brands acquired for $863 million last year.
Yum Brands had opened more than 5,000 restaurants across 700 Chinese cities as of the end of April, including 3,800 locations for KFC, 780 for Pizza Hut, 500 for Little Sheep and 20 for Dong Fang Ji Bai.
Yum Brands' Zhu said the fast food giant plans at least 600 openings per year in China, a pace similar to Suning's. Suning posted an estimated ¥110 billion in revenues and was operating over 1,700 stores as of the end of 2011, according to the China Chain Store & Franchise Association.
Yum Brands will also increase the number of its restaurants at Sinopec Corp's (NYSE: SNP, SHA: 600028, HKG: 0386) gas stations to 50 in the coming five years and build tie-ups with major retailers such as Sun Art Retail Group Ltd (HKG: 6808), Carrefour and Tesco, Zhu added.
$1 = ¥6.3
@2011 China Economy @ The China Perspective.
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