This Growth Stock Is Just Getting Started: Is It a Buy?
China's quick-serve restaurants (QSR) chains like Yum China's (NYSE: YUMC) fast but casual dining restaurant brands, KFC and Pizza Hut are a small percentage of the entire restaurant industry, and represent an enormous opportunity for chains to penetrate the market. But there are immense barriers to building a full-scale QSR chain in the country. Yum China has overcome those challenges, and is just now beginning to reap the rewards of its long-term growth trajectory. Here's how it's doing it.
Historically, the Chinese restaurant industry has been highly fragmented compared to other countries like the U.S. The fragmented nature of the industry means there is a significantly higher percentage of local mom-and-pop restaurants throughout the sprawling country. Likewise, the industry's supply chain feeding the local restaurants is also fragmented.
Image source: Getty Images.
Source Fool.com
