Research Means Business.
There is a right way to conduct research to grow your market share and a wrong way. Unless you are asking the right questions, your research will fail.
Go Beyond Theory to Steal Share.
You must go beyond theory and identify the emotional drivers of your target audience and use tough-minded strategies and positioning to steal market share from the competition.
The Process Does Count.
Stealing Share has developed a unique process unlike any other brand company in the world that is designed with a single purpose, to steal market share.
Yum! Brands to sell Long John Silvers, A&W
By Jere Downs
jdowns@courier-journal.com
Long John Silver's and A&W All-American Restaurants are up for sale, parent company Yum! Brands announced Tuesday.
The fast food giant plans to reap 75 percent of its profits overseas in markets like China on mainstay businesses like KFC by 2015. Putting its two lesser brands on the block reflects that business strategy, a company release said.
“The company is sharpening its long-term growth focus on building leading brands in every significant category in China, driving aggressive international expansion …” the release said.
Overall, Yum!'s U.S.-based stores — including Taco Bell, Pizza Hut, KFC, Long John Silver's and A&W — delivered anemic profit growth in 2010 for the world's largest restaurant company. The proposed sale also will help Yum! streamline its domestic business, the release said, “improving its U.S. brand positions.”
“We do not believe Long John Silver's and A&W-All American Food restaurants fit into our long-term growth strategy,” said David C. Novak, Yum! Brands Inc. chairman and chief executive officer. “Accordingly, we have decided to put these two great brands up for sale and we will complete the sale only once the right buyer or buyers have been identified and we can ensure a seamless transition.”
Yum! stock rose $1.41 on the news to close Tuesday at $49.25 per share.
Steve West, restaurant analyst at Stifel Financial Corp., estimates Yum is getting less than $80 million in annual operating revenue and about $10 million in operating profit, which is less than 1 percent of its total operating profit, from Long John Silver's and A&W. The two brands also contribute just $1 billion in sales, West said.
“But overall, the sale isn't really a big deal. Not because the brands aren't worthwhile, but because it's Yum. They are so big they don't really need Long John's and A&W distracting them,” West added.
Both chains need refreshing, analysts said.
“From a restaurant standpoint, neither has really reached its full potential,” said Mark Kalinowski, restaurant analyst at Janney Capital Markets. “Maybe another owner could revamp it, but that's not necessarily easy.”
Long John Silver's is the only major seafood quick service chain. “If new ownership could figure out a way to grow that category in general, Long John's in particular would hugely benefit,” Kalinowski said.
Yum! spokespersons Virginia Ferguson and Ben Golden did not respond to e-mails seeking further details on the announcement.
With root beer floats and burgers a specialty, A&W is the oldest fast food chain in the U.S., dating back to 1919.
In greater Louisville, A&W shares quarters in 20 “multi-brand” stores with fried fish purveyor Long John Silver's.
Standard fare at Long John's Silver's, which began in 1969, includes fried fish fillets with french fries, hush puppies and specialties like “Buttered Lobster Bites.”
In the U.S., Taco Bell earns 60 percent of Yum!'s profits, followed by Pizza Hut and KFC. In all, there are 1,630 Long John Silver's and A&W stores, all operated by franchisees, the release said.
Acquired by Yum! for $320 million in 2002, both brands are dwarfed in number and popularity by other company franchises. In QSR Magazine's top 50 Quick Service Restaurants, McDonald's was first followed by Taco Bell at 6th, Pizza Hut at 8th and KFC in 9th. Long John Silver's ranked No. 29 and A&W doesn't even make the list.
The other fast food giant headquartered in Louisville, Papa John's, ranked 17th.
Yum! now derives 65 percent of its profit from overseas KFC and Pizza Hut outlets in China and elsewhere, compared with 22 percent a decade ago. At an analysts' conference last week in New York City, Yum! forecast that profit picture would expand to 75 percent from abroad by 2015.
In reporting third quarter earnings last October, Yum outperformed analysts' expectations to announce net income of $357 million, or 74 cents per share, compared with $334 million, or 69 cents per share, in the same time period a year prior. In that October release and its 2009 annual report, the latest financial data available, Yum! consolidated earnings from all brands.
In 2011, Yum! recently announced it expects 10 percent growth in earnings per share, and 1,400 new stores overseas.
Yum! may have problems finding a buyer for Long John Silver's and A&W, suggested Tom Dougherty, president of Stealing Share Inc., a Greensboro, N.C., brand consulting firm.
Over the years, A&W shed its distinct image by losing carhop service and frosty glass mugs, Dougherty said. Housing the brand in the same quarters with fried fish offerings at Long John Silver's damaged the appeal of both, he added.
“When I think now about A&W, it's just like everybody else, but it serves root beer. It could be Hardee's. It could be Burger King. There's no difference except they've got root beer,” Dougherty said. “
The announcement is the latest in a series of struggles for both chain restaurants. In 1999, Long John Silver's was in bankruptcy when the Lexington seafood chain was bought by Yorkshire Global Restaurants.
When Yum! acquired both brands from Yorkshire in 2002, it sought to offer burgers as a choice to customers who might also want chicken products, Yum! vice president for investor relations Tim Jerzyk told investors.
The acquisition also brought the concept of multi-branding to Yum! as a way of enticing customers to cross-shop between brands in one store. Housing both brands under one roof came under fire last fall when a 26-store Long John Silver's franchisee filed a lawsuit in federal court alleging restaurants in standalone locations are more profitable. Treasure Isles, the franchisee, sought bankruptcy protection Feb. 1. A Yum! spokesperson said at the time the lawsuit does not have merit.
But some customers like the multi-branding approach.
“It is a good combination. If I want fish and people that are with me want burgers, you get a variety,” Steve Flener, 32, a Louisville Metro corrections supervisor, said, adding that his favorite store is located near his home on Preston Highway.
Reporter Jere Downs can be reached at (502) 582-4669. Dow Jones contributed to this report.
Additional Facts
LONG JOHN SILVER'S AND A&W ALL-AMERICAN RESTAURANTS
Yum! acquired both brands in 2002 from Yorkshire Global Brands.
A&W dates back to 1919, with 359 restaurants in the U.S., 267 abroad and 623 outlets in shared quarters with other fast food fare, like Long John Silver's.
Begun in 1969, Long John Silver's has 1,000 restaurants here and abroad and 700 outlets inside other fast food outlets, like KFC.
— Source: Yum! Brands Web site
