Major fast food operators are concentrating on restructuring their business strategy and divisions, in order facilitate global expansion, while at the same time supporting sustainability initiatives pertaining to ingredient sourcing.
Starting next year, YUM!Brands Inc, whose portfolio includes KFC and Pizza Hut restaurants worldwide, will reorganize its business to drive greater brand and geographic focus. The move involves combining the international business of Yum! Brands with the North American divisions of KFC, Pizza Hut and Taco Bell, while Yum! Restaurants China and Yum! Restaurants India will remain separate divisions given their strategic importance and enormous growth potential. “We believe that having 100% focused brand teams will enable us to more aggressively accelerate growth. We also believe know-how sharing will be more powerful by bringing the U.S. and international businesses together,” said David C. Novak, Chairman and Chief Executive Officer, Yum! Brands, Inc. “This is a natural evolution from where we are today. Over the last few years, we have been separating our YRI field business units by Brand. The next logical step was to organize our division leadership and resources by Brand, as we are now doing,” he added.
USD 10bn investment
Recently, the company announced the opening of its 40,000th restaurant, a flagship KFC store in Goa, India, to spotlight the Company’s emerging market leadership and growth. By 2015, India is expected to have USD1 bn in system sales, which includes company and franchise restaurants. By then, the restaurant company will have over 1,000 KFC, Pizza Hut and Taco Bell outlets in more than 100 cities. Yum! Brands is the worldwide leader in emerging markets with a two-to-one advantage over the nearest competition. The Company is also a leader in international development opening more than five new restaurants per day outside the U.S. with plans to open a record 1,450 new restaurants in emerging markets this year. Emerging markets represent tremendous growth potential for the Company. “Together with our growth-ready franchise partners, Yum! Brands plans to invest USD10 bn and have more than 20,000 restaurants in emerging markets by 2020”, said David Novak, Chairman and CEO, Yum! Brands. “With only 2 restaurants per million people in the top 10 emerging markets, vs. 58 restaurants per million in the U.S., we are only on the ground floor of global growth. India is one of the biggest emerging market opportunities in the world and we are thrilled to celebrate our 40,000th restaurant here.”
Sustainable efforts
The Sustainable Agriculture Initiative (SAI) is an organization which involves major companies active in the food chain, whose aim is to support sustainable actions relating to agriculture. Recently, SAI launched an initiative covering the beef industry, from farm to fork, promoting sustainability throughout the food chain, by adhering to a set of principles which, according to parties involved, are the most complete guidelines developed for beef production to date, covering sustainable farming systems, economic sustainability, social sustainability and requiring achievements in each area of beef cattle production. The initiative is supported by some of the major fast food chains, including McDonald’s. “Beef is the most iconic item on our menu, so sourcing beef sustainably has long been a priority for our business. More than a decade ago we introduced our McDonald’s Agricultural Assurance Programme (MAAP) which has been helping drive higher standards in our Supply Chain.
However to date there has been no widely agreed definition of what sustainable beef looks like. SAI Platform has successfully brought together producers and processors from across the supply chain, along with key retailers as knowledge exchange partners, to establish a set of Principles for Sustainable Beef Farming that we can all support. This is a significant achievement – the Principles will be instrumental in aligning actions and accelerating progress towards a more sustainable beef supply chain. The next step is to develop a set of Sustainable Beef Farming Practices to help farmers meet those Principles in a practical way and then widely promote and support their adoption. At the same time we are also aligning our work with the Global Roundtable for Sustainable Beef,” said Keith Kenny, Senior Director, Supply Chain at McDonald’s Europe.
Guidelines for the beef industry
Those responsible for the sustainable project concerning this industry believe that the introduction of the principles relating to the initiative will help move towards the production of safe, high quality beef, in a way that protects and improves the natural environment, the social and economic condition of farmers, their employees and local communities and safeguards the health and welfare of beef cattle. “The Principles for Sustainable Beef Farming will help us to identify and share sustainable practices with farmers. Cattle production has a large variety of farming methods and the Principles are especially valuable as they allow us to adapt to the variety of methods used,” said Estelle Rabourdin, director quality and environment, McKey Food Service.
Some of the largest meat producers active in Europe have adhered to the initiative, as is the case of Dawn Meats, whose representative, Charlie Coakley, group environmental manager said: “Dawn Meats is committed to the sustainability of the beef supply chain from farm to fork. The SAI Platform Principles for Sustainable Beef Farming provides a solid framework to strengthen Dawn Meats commitments. The global adoption of the Principles ensures sustainability is enshrined in beef production, providing clear environmental, social and economic benefits to farmers, their employees and local community. It will allow Dawn Meats to further assist our beef suppliers in sustainable practices.” In his turn, Dr. Gereon Schulze Althoff, director quality assurance at Vion Food Germany, added: “Vion has contributed to the development on the Principles for Sustainable Beef Farming from its first idea to finalization.
Most important for us was the collaborative approach of the initiative. Together, we succeeded in defining a baseline for the industry on which specific actions towards sustainable farming can be developed. Vion intends to use this framework in our future sustainability initiatives together with our supplying beef farmers.” This is the latest set of Principles from SAI Platform, aimed at defining sustainable agriculture practices. SAI Platform’s Beef Working Group created Principles, which are dynamic in nature, based on proven dairy principles, in collaboration with representatives from the food industry, retailers and The Global Roundtable with Sustainable Beef. The Beef Working Group comprises of representatives from McDonald’s Europe, Unilever, Inalca, OSI Food Solutions UK, Bord Bia, McKey Food Service, Vion Food Group, Quality Meat Scotland, Livestock and Meat Commission for Northern Ireland, ABP, Beef and Lamb New Zealand, FAI Farms, Nestec, Dawn Meats, Novus International and EBLEX.