Profit up for Yum China despite Covid-19

Yum China has reported a flat third quarter to September, with sales up 1 percent year on year to US$2.35 billion.

The company said operations improved during the period, but sales were still impacted by reduced traffic at transportation and tourist locations, a delayed and shortened school-holiday season, and other lingering effects of the Covid-19 outbreak.

“Dine-in volume has been recovering, while delivery and takeaway remained popular options,” the company said in a statement. “Our primary focus continues to be safety, efficiency, and driving traffic.”

The fast-food company, which completed a secondary listing on the Hong Kong stock exchange during the quarter, said it has launched digital and membership campaigns offering strong value propositions to consumers to drive a recovery in sales post-pandemic.

Yum China achieved productivity improvements and improved operating profits through trimming costs and improving productivity, however, the company now plans to increase staffing levels in the coming months to balance service and efficiency.

Same-store sales declined 6 percent year on year, excluding foreign exchange, but the results included the consolidation of the Huang Ji Huang chain since April and a further 25 percent ownership of the Suzhou KFC operator since August.

The company opened 312 new stores during the quarter taking its count to 10,150 at the end of September.

Operating profit rose 86 percent from $300 million to $556 million (excluding foreign exchange impact), largely due to the gain from remeasuring the contribution of the Suzhou KFC business, of which Yum China now owns 72 percent. Net income increased 96 percent to $439 million.