Last fall, Yum announced plans to turn the huge China Division into a standalone company, a mammoth undertaking the Louisville fast-food giant plans to complete by Oct. 31 — despite recent reports of stalled talks with two big investors.
Expenses for investment banking, legal, and other spin-related services are enormous, according to Securities and Exchange Commission documents. Yum disclosed initial expenses of $9 million in the annual report last February. They’ve mushroomed ever since, according to the most recent quarterly report:
spent in the second quarter alone
since the spinoff was announced in October
projected total cost by Oct. 31
What’s at stake?
Much of Yum’s future. Based in Shanghai, the China Division has 7,200 restaurants, mostly company-owned KFCs and Pizza Huts. Last year, they accounted for 61% of Yum’s $11.1 billion in revenue and 39% of $1.9 billion in profits. Overall, Yum has 43,000 restaurants. (About Yum.)
More than two weeks before Taco Bell even starts testing a new Cheetos-stuffed burrito in Cincinnati, social media is having a field day — and handing the Yum division a public relations bonanza. Attorney Marcy Wagman Rauer told Huffington Post the $1 sandwich looks like “Donald Trump exploded.” And everyone was retweeting San Diego musician Danny Ellis’ marijuana-inspired conclusion that it looks “like a stoner’s dream date with death.” The chain had tested the “Cheetos Crunchwrap Slider” earlier this year in Canada, but this is the first time the snack’s being used on its menu in the U.S. (Huffington Post).
In the Ohio test market, the Cincinnati Enquirer’s Ben Goldschmidt says to forget the November elections. “Sure,” he wrote yesterday, “we’re in a swing county in a swing state in a bonkers election year, but . . . we will decide for the nation if the cheesy powder of Cheetos successfully meshed with molten queso, or if it’s just an uninspiring, soggy lump in a burrito.” Much more news coverage.
To be sure, it wasn’t all good news yesterday for the Yum division. In California, Taco Bell is investigating reports employees taunted a Bakersfield police officer Thursday night by making “oink, oink” sounds and laughing at the cop in the drive-thru. “Taco Bell does not tolerate discrimination in any way,” the company told 23 ABC. “We are deeply appreciative of the men and women who have taken the oath to serve and protect our communities” (23 ABC).
The chain is still smarting from an incident two weeks ago in Alabama, where a cashier refused to serve two sheriff’s deputies; the chain apologized and fired the employee, but not before it was slammed across the Internet.