Yum Brands taking KFC to China's smaller cities

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The owner of KFC and Pizza Hut is taking its fast-food menus to the lesser-known regions of China. And there are plans to set up shop in smaller cities throughout the key market.

After expanding in China's biggest cities in recent years, Yum Brands is focusing on populating the country's less urbanized areas. CEO David Novak says building in those outposts of the developing nation will give the fast food giant an advantage similar to what McDonald's established decades ago in the U.S.

Yum, which also owns Taco Bell in the U.S., is already the biggest Western fast-food chain in China, with about 5,400 locations, compared with 1,600 for McDonald's. The nation's booming economy has been a boon for Yum, helping its profits increase at least 10 percent over the last several years. But with competition intensifying and economic growth slowing, Yum has hit a snag as well, with investors fearing its brands could be losing their luster.

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