Yum! Brands, the company that owns KFC, Pizza Hut and Taco Bell, announced today that it is spinning off its Chinese business, which has struggled in recent years.
The company said it will become two publicly traded companies. Yum! China will continue operating 6,900 locations in mainland China. Pizza Hut and KFC both exists in China, but Taco Bell has not hit there yet.
The other company will be Yum! Brands, consisting of the rest of the company. Yum! operates over 41,000 restaurants outside of China and hopes to open another 2,000 each year.
According to Forbes, Yum was hit hard last year in China when a mean supplier was caught handling food improperly. Even though the company quickly changed suppliers, Yum hasn’t been able to get consumers back. China’s economic growth has also slowed, which has also hurt operations there.
Yum has been in China since 1987, when the first KFC opened there. The company is still going to earn a percentage of profits from Yum! China through licensing its brand names.
“Over the past year, our management and Board have thoroughly evaluated a range of value-creating opportunities that capitalize on our considerable strengths,” Yum CEO Greg Creed said in a statement. “Following the separation, each standalone company will be able to intensify focus on its distinct commercial priorities, allocate its own resources to meet the needs of its business, and pursue distinct capital structures and capital allocation strategies. This will provide a clear investment thesis and visibility to attract a long-term investor base suited to each business.”
The deal will be complete by the end of 2016.