Yum! Brands struggling to revive Little Sheep hot pot chain
Wu Jui-ta and Staff Reporter
2013-06-10

Little Sheep, once the largest hot pot chain in China, saw its sales and revenue fall last year after it was acquired by US fast good giant Yum! Brands, reports our Chinese-language sister paper Commercial Times. The chain is now now feeling the pinch of a shrinking clientele and declining sales, and is dragging down the overall performance of the fast good giant. Last year, the group’s overall sales in China rose annually by 24% to 6.9 billion yuan (US$1.1 billion), while its food-sector profit in China rose by 18.1% year-on-year, according to Yum! Brands figures. It overall profits last year also saw an increase of 18.5%, excluding the poor performance of the Little Sheep chain. Yum! Brands has attempted to change the image of Little Sheep since its acquisition in 2011, hiking up its prices across China late last year in an attempt to reestablish it as a high-end restaurant chain. The average cost of eating at the restaurant rising from 70 yuan (US$11) to over 90 yuan (US$15). Industry insiders said that the move to increase prices is the direct cause of the restaurant’s poor performance, as it has driven many of its old clients away, adding that Yum! Brands may have to reevaluate their business model for the chain.
Yum’s Little Sheep: tasty meal or indigestion?
Thursday, 06 June, 2013, 5:16pm
An interesting new Chinese media report is questioning whether US fast food giant Yum (NYSE: YUM) is spoiling the Little Sheep chain of hot pot restaurants it acquired just a year ago. The numbers released by Yum certainly don’t look very so-so, and comments by an unnamed restaurant official don’t paint a very rosy picture either for Little Sheep under Yum’s management. But it’s probably still too early to say whether this acquisition will be a success, and I would still be willing to bet we’ll see Little Sheep start making some new and exciting moves later this year. Read more of this post
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