Will Yum! Brands, Inc. (YUM) & McDonald’s Corporation (MCD) Regain Consumers? Valuentum Says ‘Yes’

The question of grabbing a meal from Yum! Brands, Inc. (NYSE:YUM) owned KFC or McDonald’s Corporation (NYSE:MCD) has become a distant thought for the food lovers in China post the fresh uncovering of a food safety scandal there. However, Brian Nelson, the President of Equity Research at Valuentum, told CNBC that the impact will settle in a short term rather than stretching out for a longer period.

Yum! Brands, Inc. (NYSE:YUM)

“When we look at McDonald’s Corporation (NYSE:MCD) and Yum! Brands, Inc. (NYSE:YUM)’s brand awareness in China, they are among the most recognized foreign brands. And we would expect consumers to come back to those brands,” said Brain Nelson.

He went on to state that over the long term, the firm is positive about the sales of the two companies while they see the scandal impact for a short term. He based his views on Yum! Brands, Inc. (NYSE:YUM) second-quarter reports, in which, the revenues have recovered significantly in its China division that accounts for nearly 40% of its total operating profit, following the outbreak of Avian influenza and other poultry related sourcing issues.

Also, the operating profit of Yum! Brands, Inc. (NYSE:YUM) in China has tripled during the second quarter. Further, Nelson explained that Yum! Brands, Inc. (NYSE:YUM)’s same-store performance was in a poor state through April to June in 2013, but the company swinged back with better results in the second-quarter. On the other hand, Nelson believes that McDonald’s Corporation (NYSE: MCD) will have little impact of the food scandal as the brand is fairly diversified in the region, compared to Yum Brands.

On a personal note, Nelson is fairly confident about both Yum! Brands, Inc. (NYSE:YUM) and McDonald’s Corporation (NYSE:MCD) as the two globally recognized brand’s management chains are concerned and act with utmost responsibility, when it comes to keeping the consumer safety at par.

Disclosure: none

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