YUM! Brands Inc, operator of KFC and Pizza Hut outlets, opened its largest distribution center in China in Shanghai yesterday to have tighter control over its supply chain.

China is the only country where the US restaurant chain giant has built its own distribution centers to handle its logistics services. It outsources the business in all of its other overseas markets.

"We desires to grow in so many places in China but the capability doesn't really exist in China to provide the services we need," said Todd Nelson, Yum! Logistics China general manager.

He said with the logistic center, the company could grow with the pace of its restaurant expansion. Yum!, China's biggest restaurant chain operator with more than 1,700 KFC and Pizza Hut outlets at present, has maintained a pace of opening about 300 new stores per year over the last few years.

The new center in the western Taopu area of Shanghai has an annual distribution capacity of over 5 million boxes. It will serve Shanghai and the neighboring cities for the next 10 years, according to Nelson.

The company plans to build or upgrade distribution centers in f ive more locations in Guangzhou, Nanjing and Wuhan, among others, in the coming 18 months.

It estimates its 16 distribution centers across the country at present will handle more than 30 million boxes of supplies in total next year and grow by 20 percent annually in future.

The company has stopped buying poultry from suppliers in bird-flu hit areas, according to Yum! spokeswoman Wang Qun.

She said it was too early to estimate the birdflu's impact on its business.

Yum!, which doesn't raise poultry itself, relies on 30 suppliers nationwide to provide processed chicken products.

The company has not changed its menu to date.

(Shanghai Daily November 25, 2005)