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Yum! Brands, Inc. (NYSE: YUM) has successfully completed its acquisition of Dragontail Systems Limited for approximately A$93.5 million at A$0.235 per share. This all-cash deal enhances Yum!'s global order management and delivery capabilities through Dragontail's AI-based technology that optimizes food preparation, delivery routing, and consumer tracking. The acquisition, expected to have an immaterial impact on 2021 results, marks Yum!'s third tech acquisition this year, underscoring its commitment to digital strategy and franchisee support.
Positive
Enhances global order management and delivery capabilities.
Utilizes AI technology to improve food preparation and delivery processes.
Strengthens restaurant unit economics and customer experience.
Third technology acquisition in 2021, indicating robust growth strategy.
Negative
None.
Acquisition Strengthens Yum! Brands’ Global Order Management and Delivery Capability and Integrates New Technology Talent into Company
LOUISVILLE, Ky.--(BUSINESS WIRE)--
Yum! Brands, Inc. (NYSE: YUM) (Yum! Brands) announced today the completion of its acquisition of Dragontail Systems Limited (Dragontail), an innovative provider of technology solutions for the food industry, following the successful implementation of the previously announced share scheme of arrangement in accordance with Australian corporations law.
Yum! Brands acquired all of the issued and outstanding common shares of Dragontail for A$0.235 per share in cash or a total of approximately A$93.5 million. With today’s announcement, following the approval by the Australian Federal Court and by Dragontail shareholders and certain other regulatory waivers and rulings, Dragontail is now a wholly owned subsidiary of Yum! Brands, Inc.Yum! Brands estimates that this all-cash acquisition will have an immaterial impact on its 2021 financial results.
Dragontail’s platform is focused on optimizing and managing the entire food preparation process from order through delivery. Its connected, intelligent, end-to-end AI-based solution automates the kitchen flow combined with the process of dispatching drivers. It helps restaurants sequence and time each order, while planning optimal delivery routes and combining delivery orders by location. The technology also offers consumer-facing capabilities that enable customers to track their order en route. In addition, it can operate with outside food delivery partners.
“A key growth driver for our business and our teams is the continued acceleration of our digital and technology strategy, including how we leverage our global scale with investments in technology initiatives that enhance the customer and employee experience, strengthen restaurant unit economics and provide a competitive advantage for our franchisees,” said David Gibbs, Chief Executive Officer, Yum! Brands. “We’re excited to welcome Dragontail and its world-class talent to the Yum! family and look forward to deploying its AI kitchen order management, delivery and other technologies globally to our brands and franchisees over time.”
Yum! Brands is focused on the continued acceleration of its digital and technology initiatives across the globe, geared toward providing customers with new and seamless ways to access its brands, simplifying the lives of restaurant teams and improving unit economics for franchisees. Delivery, which Yum! Brands offers in over 39,000 restaurants, is a key part of the Company’s strategy, driven by a combination of expanded aggregator partnerships and continued investment in its own branded channels.
“Dragontail’s cutting-edge restaurant technology allows us to tap into the power of AI to optimize the end-to-end food preparation process and accelerate and further enhance our delivery technology capabilities,” said Chris Turner, Chief Financial Officer, Yum! Brands. “We believe Dragontail will make it easier for team members to operate and run a restaurant, help our franchisees strengthen their store operations and provide a superior experience for customers.”
Dragontail’s kitchen order management and delivery technology is deployed across nearly 1,500 Pizza Hut restaurants in over 10 countries. Many Pizza Hut restaurants leveraging Dragontail’s platform have already seen a positive impact on sales, order fulfillment and customer satisfaction scores, including product freshness and delivery time.
Yum! Brands’ purchase of Dragontail also brings in house other Dragontail emerging technologies, including its QT AI camera quality control system.
Dragontail's Managing Director Ido Levanon commented, “It is exciting to see the completion of the acquisition of Dragontail by Yum! Brands, who we have been collaborating with for years. This transaction is a positive one for Dragontail shareholders and it provides Yum! Brands with even more innovative technology. We look forward to working together to deploy this technology to more Yum! Brands restaurants around the world.”
The addition of Dragontail to the Yum! portfolio marks the Company’s third technology acquisition in 2021. In March, Yum! Brands acquired the business of Kvantum, Inc., an AI-based consumer insights and marketing performance analytics company with a proven track record of adding significant value in enabling data-driven decisions to drive return on advertising dollars and increase sales. That same month, Yum! Brands also acquired Tictuk Technologies, a leading omnichannel ordering and marketing platform company offering more ways for consumers globally to access and order its brands through text, social media and other conversational channels.
Transaction Details
With today’s announcement, Dragontail Systems Limited is now a subsidiary of Yum! Brands, Inc., and will continue to be operated as an independent brand.
The Dragontail business unit, as part of Yum! Brands, will continue to offer technology solutions to its existing clients.
Dragontail employees will primarily be located in Israel, the U.S. and Australia, and will continued to be managed by Dragontail’s Managing Director Ido Levanon.
Baker McKenzie acted as lead legal advisor to Yum! Brands and Thomson Geer acted as legal advisor to Dragontail Systems Limited.
About Yum! Brands
Yum! Brands, Inc., based in Louisville, Kentucky, has over 51,000 restaurants in more than 150 countries and territories, operating the Company’s brands – KFC, Pizza Hut and Taco Bell – global leaders of the chicken, pizza and Mexican-style food categories. The Company’s family of brands also includes The Habit Burger Grill, a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. Yum! Brands was included on the 2021 Bloomberg Gender-Equality Index. In 2020, Yum! Brands was named to the Dow Jones Sustainability Index North America and was ranked among the top 100 Best Corporate Citizens by 3BL Media.
About Dragontail
Dragontail is focused on revolutionizing the Quick Service Restaurant (QSR) and foodservice industry with its two core technology offerings, sold under a cloud-based, monthly subscription, software-as-a-service model. Dragontail’s Algo Platform is the first system in the world to fully automate and streamline the kitchen flow to deliver an immediate and significant return on investment to fast food and quick service restaurants, integrating directly into a restaurant’s point of sale system. In addition, its QT AI camera system’s sensor and camera system automatically monitors the preparation and cooking process in the kitchen, improving its efficiency and diagnostics using proprietary patented, advanced AI machine-learning technology. Dragontail is active in locations throughout Australia, New Zealand, the United States, Latin America, Canada, Europe – UK, Belgium, Singapore, South Africa and Israel. The Company is rolling out its technology globally and has formed partnerships with global delivery services across a growing number of countries.
Certain statements in this communication contain “forward-looking statements.” Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are based on current expectations, estimates, assumptions or projections concerning future results or events, including, without limitation, the projected closing of the transaction, the anticipated benefits of the transaction, and the anticipated impact of the transaction on Yum! Brands’ 2021 results. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause actual results to differ materially from those indicated by those statements. We cannot assure you that any of the expectations, estimates or projections expressed herein will be achieved. Numerous factors related to the transaction could cause actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: the effect of the announcement of the transaction on Yum!’s and Dragontail’s business relationships, operating results and business generally; the risk that the proposed transaction may disrupt current plans and operations and the potential difficulties in employee retention as a result of the transaction; the ability to achieve the synergies and value creation contemplated; Yum!’s ability to promptly and effectively integrate Dragontail’s businesses; the risk that operating costs and business disruption (including, without limitation, difficulties in maintaining relationships with employees) may be greater than expected; the assumption of unexpected risks and liabilities; the diversion of and attention of management of both Yum! and Dragontail on transaction-related issues; and the other factors discussed in “Risk Factors” in Yum!’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and subsequent filings with the SEC made by Yum!, which are available at http://www.sec.gov. Yum! assumes no obligation to update the information in the communication, except as otherwise required by law. Accordingly, you should not place undue reliance on these forward-looking statements.
