The restaurant industry is increasingly becoming the land of the megabrands.
There is JAB Holding, which owns chains including Krispy Kreme, Caribou Coffee, and Panera Bread. Restaurant Brands International has Burger King, Tim Hortons, and Popeyes. Inspire Brands is less than a year old and already owns Arby’s, Sonic, and Buffalo Wild Wings.
Then you have Yum Brands. The company has owned its three major chains — KFC, Pizza Hut, and Taco Bell — since the company was spun off from PepsiCo in 1997. Between the three chains, Yum has more than 45,000 locations around the world.
“We don’t need to do an acquisition to build scale. We already have scale,” David Gibbs, Yum Brands’ president and chief financial officer, told Business Insider following the company’s investor conference on Wednesday.
Gibbs says he believes scale is becoming increasingly important in 2018. For example, the company’s scale helped make possible its deal with GrubHub, in which Yum Brands purchased a $200 million stake in the delivery company.
“That’s why you’re seeing so many other companies go out and try to acquire new concepts just to try and build their own scale,” Gibbs said.
According to Gibbs, brands seeking acquisitions are “always” presenting themselves to Yum Brands. But it takes a lot to make what he called the “distraction” of a new brand worth its while.
“It would have to be a brand … that fits in with our growth drivers, that could be a big developer, that has a distinctive, relevant brand, that could grow same-store sales growth in the long term,” Gibbs said.
“If a brand fits all of our criteria — a lot of which I can’t share for strategic reasons — then yes, we would go do an acquisition and be excited about it,” Gibbs continued. “And we’re always looking at them.”
Gibbs said that people should not expect a new chain to join Yum Brands’ portfolio anytime soon. Instead, the company is more likely to acquire more tech-centric companies, as with its recent acquisition of delivery company QuikOrder.
“We have a very high bar because we know the brands that we have today are incredible growth brands that we have just scratched the surface around the world in realizing their full potential,” Gibbs said.