Thousands of new KFC and Pizza Hut outlets in China means lots of new jobs.
And for the soon to be spun-off China arm of fast food giant Yum! Brands (YUM - Get Report) , that job creation may keep it in the good graces of government officials seeking to boost the slowing Chinese economy. Yum! Brands has over 7,500 restaurants in China, employing some 450,000 workers. With an ambitious goal to operate over 20,000 locations in China in the future, Yum! Brands sees the potential to employ about 1 million people in the country.
"Job creation is important to the Chinese government, and we think our growth aligns with what the Chinese government wants to achieve," said Yum! Brands CEO Greg Creed at an investor conference on Tuesday.
Creed, who just returned from a trip to China, said the company opened its first restaurant in Tibet last week to "record numbers." Later this year, Creed said, the first Taco Bell may open in China. The biggest opportunity for Yum! China is in the country's inland cities, as it attempts to serve people moving away from the coast to find employment.
This year, Yum! anticipates opening 600 new restaurants in China, while remodeling some 550 locations. The openings and refreshes should support China's aggressive growth plans for 2016.
Chinese officials recently unveiled a GDP growth projection of 6.5% to 7% for 2016. The country is seeking to create a whopping 10 million jobs this year, and hold the urban registered unemployment rate steady at 4.5%.
Yum! is scheduled to complete the spin-off of its China business by the end of 2016. Yum! China will be an independent company with exclusive rights to use the KFC, Pizza Hut and Taco Bell brands in China, and the opportunity to add new brands over time.
Yum! China will pay Yum! Brands a license fee of 3% of its sales for those three brands in China. The remaining Yum! Brands, led by current CEO Greg Creed, will continue to expand and develop Taco Bell, KFC and Pizza Hut in the U.S. and internationally, outside of China.