Nearly two years into the COVID-19 pandemic, many restaurants have shut their doors. Others continue struggling to make up for lost revenue from closed dining rooms and labor shortages.
Despite these obstacles, Yum! Brands, which owns KFC, Taco Bell, Pizza Hut and The Habit Burger Grill, set a restaurant industry record for unit development with over 3,000 net-new units driven by nearly 4,200 gross unit openings in 2021. Yum! also reached new heights in digital sales, which topped $22 billion in 2021.
As it was expanding its global footprint in the pandemic, Yum! was also fighting the “chicken sandwich wars” (see #chickenwars on any social media platform) with KFC’s release of a new fried chicken sandwich. It won acclaim among a growing field of competitors, even as a temporary chicken shortage at one point threatened to impact its availability, CEO David Gibbs recently told Dean Bill Boulding of Duke University’s Fuqua School of Business.
The value of relationships
Yum!’s strong connections with franchisees was crucial to responding quickly to the global lockdown and keeping restaurants open, said Gibbs, a Fuqua alumnus (MBA ’88).
“The relationship piece of how you get through business challenges can never be understated,” said Gibbs, a guest of the Distinguished Speakers Series. “It honestly was the key to all of this.”
When the pandemic hit, Yum! Brands worked quickly to keep businesses open with digital innovations and contactless and off-premise service options. The company supported franchisees by helping them minimize business interruptions and access sources of economic support. In some cases, Yum! offered franchisees grace periods for certain near-term payments, allowing many small business owners to focus on keeping teams intact and making payroll.
“That was an enormous relief for them,” Gibbs said. “That’s an example of something we did that others in the industry didn’t do as quickly as we did, and that will, I think, forever pay dividends, because they know during the darkest of times we’ll be there for them.”
The company also used other measures, such as a COVID medical relief fund, to take care of employees and their families, he said.
“The defining characteristic of Yum! Brands ... is the culture that we create in the restaurants, the way we take care of people in our communities, and the culture we create in our professional teams,” Gibbs said. “That proved to be incredibly valuable during COVID. Our employees and the communities we serve knew that we would be there for them.”
Building a pipeline of talent
Gibbs may know the company’s culture better than anyone, not only as its CEO, but as someone who has climbed the ranks for more than 30 years. After earning his MBA, Gibbs began his career in the real estate division for Taco Bell. In his early years, he felt like he needed to make sure leaders in his company knew his name. He soon realized a more meaningful way to get noticed was to bring out the best in others and help his team be successful – a core Fuqua value.
“If you’re in an organization that is in the business of advancing talent and developing talent, invariably the people that are doing great work will get recognized and don’t have to shout it out from the mountaintops,” Gibbs said.
Yum!’s commitment to building talent goes hand-in-hand with investments the company is making to build diversity and inclusion among employees and enrich opportunities for diverse communities in Yum!’s hometown of Louisville, Kentucky, Gibbs said. The company’s Unlocking Opportunity Initiative is a $100-million, five-year project to create more equitable access to education, training and entrepreneurship opportunities in underserved communities across Yum!’s global system.
The company had been planning the program before the pandemic, but its launch in 2020 was especially timely as the U.S. grappled with the murder of George Floyd and ongoing discourse about racism and civil rights across America, Gibbs said.
Yum! is also working with OneTen, a collaboration of several large companies with the goal of closing opportunity gaps for Black workers to develop jobs into careers that can produce a family-sustaining income. One example could be creating opportunities for young restaurant employees to grow their skills and start on the path to becoming a Yum! franchise owner, Gibbs said.
“Really, the most gratifying part of my job is to see the progress we are making around the world, being an even better citizen in our communities and the good that we can do,” he said.