Yum! forecasts price increases in 2012

by Meat&Poultry Staff
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Louisville, Ky. – The CFO of the parent company for the Pizza Hut, KFC and Taco Bell brands said during a Feb. 7 conference call with analysts that rising food and labor costs at its restaurants in China would likely result in menu prices being increased in China in 2012. A Dow Newswire report stated that despite recent menu price hikes by Yum! Brands, margins among China eateries dropped by about 2.4 percent in its fourth quarter, ended Dec. 31, 2011. The company otherwise posted positive fourth-quarter results and expressed a positive forecast for 2012.

"We expect to make progress closing the gap between inflation and our menu pricing and to see positive year-over-year restaurant margins in the second half of 2012," Chief Financial Officer Rick Carucci said during the call. He also indicated that food cost in China to rise 6 percent and by 5 percent throughout the rest of the international division, while in the US those costs are expected to increase by 2 percent.

With regard to the company’s restaurants in China, Carucci said, "we expect to take, obviously, some pricing in 2012; our best guess is sometime in the second quarter, but that's dependent upon how things play out a little bit."

As for locations in the rest of the world, Carucci said, "I think similar to China, in the way that we'll probably take some modest pricing early in the year, and then sort of reassess depending on what commodities do later in the year."

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