Yum China reopens most stores, reports recovering footfall

Yum China says it is witnessing “early signs of recovery” in Mainland China as business gradually resumes and people return to work.

However, the company, which operates KFC, Pizza Hut and Little Sheep chains, said in an update to shareholders that restaurant traffic remains “heavily impacted” as people continue to implement social-distancing measures.

Store closures peaked in mid-February when about 35 percent of the company’s network was closed, the remainder offering only delivery and takeaway services. However, trade for those still trading significantly declined. Same-store sales for Yum China were down by between 40 percent and 50 percent year on year during the Chinese New Year holiday period.

This week, about 95 percent of Yum China’s stores had reopened either fully or partially and about 15 percent of those continued to offer only takeaway or delivery services.

In its update, Yum China said that while customer volumes were slowly building, they remained well down on pre-outbreak levels.

“The pace of recovery varies by region and is slower during weekends as people avoid going out. In recent days, same-store sales were down approximately 20 percent. Sales performance fluctuates as the recovery is uneven, and the situation continues to evolve,” the company said.

Yum China launched contactless delivery in late January, which proved popular and supported the delivery business during a period of lower dine-in traffic. “Delivery sales grew year over year, and its mix as a percentage of company sales approximately doubled.”

Yum China also launched contactless pick-up and corporate catering services as highly sanitary options for consumers and corporate customers.

Now that the coronavirus crisis appears to have passed its peak in Mainland China, the company is considering resuming its network expansion program. Currently paused – largely due to a shortage of construction workers and traffic restrictions – the company says it will “continue to monitor the situation and work with local authorities, resuming new store openings when conditions allow”.

“Despite a challenging start to the year, Yum China is here for the long run, and will ensure that it remains well-positioned for the long-term growth opportunities in China.”