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Monday, April 26, 2010

Taco Bell a Big Hit in India

The Detroit Free Press

Taco Bell is off to a flying start in India, with its first unit, in Bangalore, averaging more than 2,000 customers a day. That's great news for owner Yum Brands (NYSE: YUM), which also operates Pizza Hut and KFC.

Yum intends to open 1,000 outlets in India by 2015. International expansion is a key focus for chain restaurants, as saturation and a stagnant economy have caused a fast-food slowdown in the U.S.

Emerging markets offer the potential for decades of growth, which is why McDonald's plans to double its presence in China by 2013. (Yum has 2,800 locations in China.)

It's not easy to bring American restaurant chains to new countries, but Yum's quick start in India and fantastic success in China is promising.

Yum's management likens India to China of 10 years ago. Considering that China now generates about 34% of Yum's revenue, the company clearly sees a great opportunity.

Investors should recognize their opportunity as well. Yum continues to position itself to take advantage of emerging middle classes and should enjoy steady growth through the coming decades.