➡ KFC, a part of Yum Brands which also includes Taco Bell and Pizza Hut, is successfully expanding its market in China, with its 10,000th Chinese store recently opening. This success is linked to Yum Brands’ ownership and operation of the majority of its stores, the Chinese population’s preference for KFC’s varied menu and digital ordering, and China’s growing economy, suggesting potential investment opportunities in Yum Brands.
➡ McDonald’s strategy involves purchasing the real estate used by its franchisees as part of the lease agreement, ensuring adherence to their brand standards and franchise agreement. The company’s earnings come from franchise agreements, not real estate, even though owning the land provides them with leverage. Other franchises like Yum Yum brands and Chick fil A have differing approaches. They generate significant revenue and have experienced growth by breaking into hard-to-reach markets, but a thorough analysis of their numbers and profits is necessary before investing.

Did y’all know that KFC, KFC, their fastest growing market, was over in China? No, they are not cooking up dogs. Everybody keeps saying that. No, that’s not true. No, not that I’m aware of. I’ve never been to China. I don’t plan to go to China. But as far as I know, no, they are not cooking up dogs. But KFC. Even though you may not be checking for them here, you might be checking for chickfila, you might be checking for Popeyes, but KFC is over there killing it in China.

We need to pay attention to that because this may be an investment opportunity for young brands. Young brands. If you don’t know what young brands is, Y-U-M exclamation mark, then exclamation point. You need to pay attention to it. Let’s get into it, y’all. With more than 29,000 restaurants, 800,000 employees, and a new location opening every three and a half hours, KFC is one of the world’s largest fast food chains.

But while much of the brand’s early success came from the US, today the majority of that growth is in China. In the city of Hongzhou, about an hour outside of Shanghai, KFC China recently celebrated the opening of its 10,000 store. By comparison, the US has a little over 4300 kfcs. KFC is celebrating the opening of its 10,000th store in America. When y’all think of stuff from an investment opportunity, or when you start to think of what you want to invest in, do you all only look at how it is that they doing it in your hood or are you also looking at what their worldwide impact is whenever you starting to evaluate your portfolio? I want y’all to look at things on a global scale.

A global scale. I don’t want you to just look at what’s happening here in the United States of America. Don’t just look at whether or not they raising a minimum wage over there in California. We are in a global market. The growth, the stock price is all going to be reflected based off of where the growth opportunities are and the profitability and the margins that you’re able to gain based off of being able to run these businesses.

And when they’re opening up 10,000 stores in China versus 4300 here in the United States of America, that’s a big deal. The last four years is the highest speed of KFC development. A lot of y’all probably don’t even know what young brands is. Y’all know what young brands is. Let me pull up their stock price. Do you all know what young brands is? Young brand stock price is at $129 a share, up about 7% or 0.

7% today. Almost a whole percentage point. Young brands, for a lot of y’all that’s not familiar consists of KFC, Pizza Hut, and Taco Bell. KFC, Pizza Hut, and Taco Bell all makes up Yum brands. Okay. Yum Brands is one company. Now, I know a lot of people may not be familiar with it. A lot of people are not aware of it. The only thing you know of McDonald’s, Wendy’s, Burger King, all of these different places, but Yum Brands is controlled by one company.

Taco Bell, Pizza Hut, and KFC are the main brands within young brands. All right, remember that history because the sheer scale of the economy provides us opportunities to build more stores. Over 40% of our stores have been built in the last four years alone. China is a very important. That’s almost what, 4000 stores important market for Yum. It is the largest KFC market and Yum’s second largest pizza market.

Remarkably successful in a market full of restaurants. It’s not like there aren’t a lot of restaurants in China. They’re everywhere. Known for more than just chicken. A typical menu in China can include items like rice, kanji, steamed dumplings, and egg tarts. Digital ordering and delivery are also a major component. And here I can choose the nearest restaurant, and this one is a restaurant. I’m right now thought that y’all was the only ones that can order online and then have it delivered or picked up.

300 million members. It identifies members as someone using a member coupon QR code for ordering through its app. A million as someone using C. China claims restaurant. And this one is a restaurant. I’m right now, KFC China claims it has over 4000 300 million members. It identifies members as someone using a member coupon QR code for ordering. Did he say 430,000,000 members? Did he say 430,000,000 members? And it’s over a billion people in China compared to 340,000,000 people over here in the United States of America.

Remember that? Listen. Sheer scale. And they’re a growing economy, and they’re incentivized by the federal government in order for them to continue to be successful. We only have 340 something million, like 343,000,000 people on the payrolls. Well, maybe that’s why we get more migrants. We only have 340,000,000 people inside the United States of America. And we not really having no children. We not really having no children. And they need you guys.

They need you guys to continue to have kids. They need you to grow. They need you to continue to be successful. You know why? Because you then feed into the economy and they have a growing economy and they are incredibly successful. And so they’re incentivized to beat you guys. And one of the ways that they’re going to do it is they’re going to do it by sheer numbers.

Through its app. A million of those customers visited at least 100 times in 2023. But the business has faced headwinds, including food safety scandals, lockdowns due to Covid. Not the food safety scandals. No, I’m just playing concerns about the health of the chinese consumer as well as questions about plans for future growth. Definitely. As more us brands enter, KFC might see itself facing more direct competition from the faces it’s used to seeing only in the US.

Yum. China, the operator of KFC China generated revenue of $7. 2 billion from its KFC segment in 2022. Over the coming three years, the company plans to return $3 billion to shareholders. Is that not an investment opportunity? Is that not an investment opportunity? I’m just saying they’re looking to return over $3 billion over to shareholders based off of an annual profit of $7. 2 billion. Just from the KFC brand or annual revenue from the not profit.

Revenue and profit is two different things. Let me be very careful. Annual revenue from the KFC brand over in China. We need to put this on our list. BYD young brands. All of these are things that we’re going to talk about in stock Club over the weekend. We’re not just going to talk about blue chip stocks. We’re going to talk about the healthcare industry. We’re gonna talk about technology companies.

We’re gonna talk about everything, right? And I can’t wait to do this live stream so that we can go over it and we can make informed decisions because we want to know where the growth is. Okay. A lot of people don’t understand the businesses, but we gonna get into it. Let’s continue. So how did KFC overtake other fast food chains in China like McDonald’s, Starbucks and Taco Bell? And can the business continue to grow? CNBC travel and Taco Bell is huge there too.

But they all of the same, literally of the same company. Hongzhou, China to find out. The first KFC franchise opened in Salt Lake City in 1950. I don’t care about the history, but the chain didn’t get its start in China until 1987. A leg up on the. Unlike its us counterpart, Yum Brands, with 98% of its stores franchised, Yum China owns and operates the vast majority of its restaurants in Yum China.

Over 90% of our stores are still owned by our company. They are not franchisee. I mean, the investment payback of our store is incredible. In China, that now ownership model has helped to boost the company’s store count. Yum China had revenue of $9. 5 billion in 2022, compared with Yum Brands that had revenue of $6. 8 billion that year. Okay, so let’s break this down. How does franchises make money? They make money off the franchise fees.

They make money off of the fact that you got to continue to operate within a franchise agreement, which means that you got to continue to buy their food and be supplied by them. Right. And so they make money a lot of different ways. And a lot of people like to reference McDonald’s because they think that they understand how McDonald’s makes money. And if you say, well, what business is McDonald’s in? They’re going to say the old adage that they’ve heard online, but they have no context to understand it.

Then they’re going to say, well, McDonald’s is in the real estate business. McDonald’s isn’t in the restaurant business. McDonald’s is in the real estate business. No, McDonald’s is in the restaurant business. They don’t understand that McDonald’s owns some of the most valuable real estate in order to force their franchisees to operate based off of their franchise agreement. Let me break it down for you, okay? I’m gonna break it down for you.

If you read and understand the history of McDonald’s and you read the book and you understand, first of all, the person that made McDonald’s popular is not the person that founded the McDonald’s franchise. Right. And they own some of the most valuable real estate because that’s how they force their franchise. So when you franchise for McDonald’s, they then buy the land that you lease from them as a part of the lease agreement in order to force you to continue to abide by their franchise agreement.

So you got to do things a certain way. You got to carry your restaurant a certain way, you got to reinvest in it a certain way. You got to make sure you’re supplying the right stuff, the right everything right. You have to do things by the book because why? Because then they can remove, you remove your franchise agreement and they can take your property back because they own the land by which you built the restaurant.

On. So when you say they’re in a real estate business, that’s just the leverage that they have in order to continue to force you to do things that maintains the prestige image of what McDonald’s is supposed to be. And they own the real estate, but that’s not how they make money. They make money off of you franchising from them, because then they can guarantee a product and they can guarantee you a piece of real estate within a certain demographic and that it’s not another store that’s so close to you so that you can continue to make money from that particular industry and so on and so forth.

Right? And so they end the real estate business in order to control you as a franchisee. But then controlling you as a franchisee also guarantees you to basically be a millionaire. And that’s the pitch. Whereas if you go and open up a subway, they’d be selling hot dogs on some of these subways and everything. I said, what the, what’s going on in here? Anybody can go on up on a subway, you could probably get that franchise for less than 510 thousand dollars right now.

Real talk. Anybody can go on and up, open up a subway, you can probably go and get that for less than 510 thousand dollars. But the continued fees and the continued supply chain and everything like that. But if you look at what they saying over here for Yum Yum brands in Yum China, they saying that we’re tightly controlling the growth of what happens within the company, but we’re also keeping a majority of the profits.

If you look at Chick fil A, Chick fil A is a privately owned company. Chick fil A is growing rapidly. Absolutely is growing rapidly. But Chick fil A doesn’t do franchising. Chick fil A is tightly controlling the image of what Chick fil A is. And they’re even when they get somebody that they say is going to be a franchisee, they’re not. You’re a highly paid store manager, that is an owner operator, technically, but realistically, they own a brand and you’re just paying in order to get trained.

And you can guarantee yourself to make a couple of hundred thousand dollars a year. But you are very much a hands on manager. So different brands require different things in order for you to be able to participate in ownership of the stores. But that’s also a reflection of young brands stock price, because a lot of investors are more concerned with growth. And then when you get the profits to go along with it, which we need to go through and we need to look at these numbers.

I’m not telling you to just jump into it and invest in young brands. What I am telling you is they generate a lot of revenue. They have a lot of growth. They have infiltrated industries and cities and countries that have been hard to nail down for other brands and other franchises along the way. But we need to deep dive into the numbers because now I want to understand what the profit is, not just what it is that they’re generating as far as revenue.

Okay? Profit, gross revenue, all of these things are important as far as what the stock price is. But we also want to look into the headwinds, which we’ll get into that in stock club this weekend. And we want to look at the business model that they’re using to grow over in these other countries. That’s then propelling their stock price to be what it is. All right, so listen, I love you guys.

I appreciate you. We went a little bit longer because I had a couple of over had to switch over to my Internet because we was having problems. I’m definitely looking to get rid of this grace soon. Make sure y’all tune into the Anton Daniels channel. Tap into the Patreon link is in the description as well as pin to the top of the chat. .