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With a nod to McD, Yum airs a turnaround plan

NEW YORK Yum! Brands Inc. officials reportedly told analysts and investors Wednesday that it would follow the lead of archrival McDonald’s in attempting to turn around lagging domestic sales at its five major quick-service chains. The operator or franchisor of some 18,000 U.S. restaurants will focus on breakfast, late-evening sales, beverages and new menu items, including more healthful selections and desserts, Yum chief executive David Novak said at the company’s annual investment conference here.

Among the specific initiatives mentioned during the meeting were the introduction of a Tuscani pasta line and “healthier pizza” by Pizza Hut; the rollout of pressed sandwiches, slow-grilled chicken and shakes by KFC; and a marketing push behind Taco Bell’s Fresco Style health-focused option, which allows patrons to substitute pico de gallo for cheese or other condiments that are higher in fat. Officials also repeated earlier indications that Taco Bell would add frozen drinks, a focus of McDonald’s research and development efforts as well.

In addition, Yum officials said they plan to outfit all 7,500 domestic Pizza Hut outlets with a WingStreet chicken-wing sales counter. Currently, only 1,000 of the pizzerias sport the WingStreet brand.

Yum also operates or franchises Long John Silver’s and A&W All American Food, and is tinkering in Asia with a Chinese fast-food concept called East Dawning.

At Wednesday’s conference, Yum chief financial officer Rich Carucci said the company would roll out its Taco Bell brand internationally, as it has with KFC and Pizza Hut. Worldwide, Yum operates or franchises about 35,000 restaurants, but only about six Taco Bells are located outside of the United States.

Yum is projecting a same-store sales decline of 3 percent for 2007, a year that paled in comparison to 2005, when same-store sales increased 4 percent. U.S. results have been hurt this year in part by a late 2006 E. coli outbreak in the Northeast and negative publicity arising from the rat infestation of a Taco Bell-KFC unit in New York City.

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