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Yum China Holdings, Inc. (NYSE: YUMC, HKEX: 9987) is the largest restaurant chain in China, operating over 15,000 restaurants across more than 2,000 cities. With flagship brands like KFC and Pizza Hut, and additional brands including Little Sheep, East Dawning, Taco Bell, Huang Ji Huang, COFFii & Joy, and Lavazza, Yum China caters to a wide array of culinary tastes and dining styles.
Founded in 2016 after separating from Yum! Brands, Yum China has grown to become a Fortune 500 company with a mission to make every life taste beautiful. The company employs over 400,000 people and generates revenue through its own restaurants and franchise fees. In 2022, Yum China achieved nearly USD 10 billion in systemwide sales with approximately 13,000 units, including 9,094 KFCs and 2,903 Pizza Huts.
Yum China continues to innovate with its digital ecosystem and supply chain capabilities. Their industry-leading digital platform and loyalty program enable fast and efficient customer service. Recent strategic initiatives include expanding their price range to appeal to broader customer bases and launching engaging campaigns with popular e-games to attract younger audiences.
Recent Achievements:
- Reported record total revenue and adjusted operating profit for Q3 2023.
- Added 1,155 new stores in the first nine months of 2023, targeting 1,400-1,600 new stores for the full year.
- Increased share repurchase authorization by $1 billion, with plans to return $3 billion to shareholders from 2024 to 2026.
- Collaborated with Lavazza to expand the coffee brand in China.
- Launched innovative pet-friendly Pizza Hut restaurants in collaboration with Beijing Aita Animal Protection Foundation.
Current Projects:
- Enriching core menu offerings at KFC and Pizza Hut to drive incremental traffic.
- Expanding brand presence in lower-tier cities to capture demand from long-term consumption upgrades.
- Innovative store formats such as one-person hotpot modules for Little Sheep.
- Building awareness and fostering a culture of care with pet-friendly dining experiences and animal welfare initiatives.
CEO Joey Wat and CFO Andy Yeung emphasize the company's robust supply chain, digital innovation, and strategic growth plan to achieve its ambitious goals, including operating 20,000 stores by 2026 and returning significant value to shareholders.
Yum China Holdings will report its unaudited financial results for Q4 and fiscal year 2021 on February 8, 2022, at 4:30 PM ET. Following the release, an earnings conference call will be held at 7:00 PM ET on the same day. Investors can access a live webcast of the call through the company’s website. Yum China, a franchisee of KFC and Pizza Hut in mainland China, had approximately 11,415 restaurants across over 1,600 cities by September 2021. The company ranked #363 on the Fortune 500 and has received various accolades for gender equality and sustainability.
Yum China Holdings announced enhanced medical insurance coverage for its approximately 10,000 Restaurant General Managers (RGMs), with up to RMB 1 million coverage effective January 2022. Additionally, the critical illness insurance for their family members will be increased to RMB 200,000. The company is also upgrading its Family Care Fund, increasing coverage to RMB 150,000 for restaurant management team members. These improvements aim to support over 60,000 employees and their families, reflecting Yum China's commitment to employee welfare amidst ongoing challenges.
Yum China Holdings reported a 9% increase in total revenues for Q3 2021, reaching $2.55 billion, despite challenges from the Delta variant. Operating profit fell 68% to $178 million, primarily due to sales deleveraging. The company opened a record 524 new stores, increasing total store count to 11,415. However, same-store sales decreased by 7%, with KFC and Pizza Hut down 8% and 5%, respectively. The restaurant margin also dropped to 12.2% from 18.6% the prior year. Looking ahead, challenges related to COVID-19 and rising costs are expected to impact recovery.
Yum China, on October 20, 2021, unveiled its Digital R&D Center across Shanghai, Nanjing, and Xi'an, marking a strategic move to enhance its digital ecosystem. The center will focus on utilizing big data, AI, and digital tools to improve customer service, store operations, smart delivery, and supply chain management. With an investment of $1-1.5 billion over five years, $100-200 million will be allocated to the center, aiming to boost in-house digital capabilities and support expansion towards 20,000 stores.
Yum China Holdings, Inc. (YUMC) announced that its board will discuss a potential quarterly dividend on or around October 28, 2021. This decision follows the compliance with HKEX regulations, which require notice before dividend declarations. No assurance is given that the dividend will be declared as no resolution has been adopted yet. Yum China operates numerous restaurant brands, including KFC and Pizza Hut, and maintains over 11,000 outlets across China. For further updates, investors can refer to the company's Investor Relations page.
Yum China and Lavazza announced an expansion plan to rapidly increase Lavazza cafés in China, targeting 1,000 new stores by 2025. The companies will inject $200 million into their joint venture, which was formed in early 2020 and currently has over 20 stores. The partnership aims to leverage Yum China's supply chain and digital capabilities to enhance Lavazza's presence and product distribution in the Chinese market. As of August 31, 2021, Lavazza has 22 stores, with plans to double this by year-end.
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