Yum! Brands (YUM) will finally be split into two companies on Tuesday, but there will be little time to celebrate as executives at the new fast-food companies must deliver on several huge goals.
In a move initially announced last year, Yum! China will become an independent company when a spinoff is completed on Nov. 1 via a listing on the New York Stock Exchange. The new spinoff's shares will trade under the ticker YUMC.
Yum! China will hold exclusive rights to use the KFC, Pizza Hut and Taco Bell brands in China, with the opportunity to add or launch new brands in China on its own. Yum! China will pay Yum! Brands a license fee of 3% of its sales at KFC, Pizza Hut and Taco Bell in China.
Over time, Yum! China expects to have more than 20,000 restaurants in operation, up from about 7,000 today. For 2016, Yum! China is expected to haul in $8 billion in sales, up from $4.7 billion generated so far this year. Operating profit is pegged at $1.1 billion for the year, an increase from $751 million for the year up to Sept. 3, 2016. The business's total restaurant count is expected to be 7,500 at the end of the year. And, importantly, the China outfit will have zero debt on the books at the time it becomes a public company, freeing it up to aggressively roll out new stores or even acquire other chains, pay out dividends or buy back stock.