Yum! Brands, Inc. (YUM), The Procter & Gamble Company (PG): This Company Is About to Get Shanghaied in China

Part of KFC’s success was predicated on the idea of “go big or go home.” It has more than 4,400 stores in China and is planning on opening another 700 this year. Yet it can’t be denied that its troubles are taking a toll, and same-store sales are evaporating, with declines of as much as 30% reported. For its biggest profit center — the fried-chicken palace accounts for half of Yum! Brands, Inc. (NYSE:YUM)’s earnings — it’s quickly killing off the goose that laid the golden egg.

Where U.S. consumers are weary of high costs and turn to cheap Chinese goods as a salve, rising wages and higher standards of living in China are causing its consumers to seek out quality over price. It’s perhaps something American consumers ought to consider as well.

While some brands like Yum! Brands, Inc. (NYSE:YUM)’s KFC may take for granted the goodwill bestowed on them, it highlights that for the company willing to invest in China, there’s still an Orient Express to profits.

The article This Company Is About to Get Shanghaied in China originally appeared on Fool.com is written by Rich Duprey.

Fool contributor Rich Duprey owns shares of Nike. The Motley Fool recommends Coca-Cola, McDonald’s, Nike, and Procter & Gamble and owns shares of McDonald’s and Nike.

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