Yum China Reports 4% Revenue Rise, Citing Network Expansion And Digital Sales Boost

Yum China, a stalwart in the food and beverage industry, has reported a rise in revenue by 4 per cent year on year for the second quarter ending June 30, 2021, accumulating a total of US$2.8 billion.

The company’s growth is attributed to the expansion of its network and an uptick in same-store sales, which saw a 2 per cent increase in transactions. The burgeoning network of nearly 17,000 locations across Yum China’s food and beverage brands played a pivotal role in achieving this positive outcome, according to the company’s CEO, Joey Wat.

During this quarter, Yum China added 336 stores to its portfolio, raising the total to 16,978 locations. This figure includes 12,238 KFC outlets and 3,864 Pizza Hut outlets. It’s noteworthy to mention that franchisees opened 26 per cent, or 89, of these new stores.

Financial Performance

Joey Wat also expressed satisfaction with the company’s financial performance, highlighting the achievement of double-digit growth in operating profit and substantial margin expansion. The operating profit rose by 14 per cent year on year to $304 million, the highest ever reported by Yum China for a second quarter. The core operating profit also saw a 14 per cent increase compared to the previous year.

In a display of fiscal health, the company returned $274 million to its shareholders through share repurchases and dividends.

Digital Sales and Membership

A significant contributor to the company’s sales, the digital segment accounted for 94 per cent of total company sales, reaching $2.4 billion for the quarter. The delivery sales, growing at a 22 per cent rate year on year, contributed approximately 45 per cent of the total sales.

A key aspect of consumer engagement, membership across KFC and Pizza Hut, saw an increase of 13 per cent from the previous year, reaching approximately 560 million. These members accounted for 64 per cent of total system sales for both brands.

Wat stressed on the importance of digitalization, adding, “We are also fortifying our end-to-end digitalisation to streamline operations and elevate our customer experience.” He expressed confidence in the company’s brands and strategies, stating their potential to deliver sustainable, long-term value for shareholders.

Questions & Answers

What contributed to Yum China’s growth in the second quarter?
Yum China’s growth was driven by network expansion and a rise in same-store sales, which saw a 2 per cent increase in transactions.

What was the percentage of new stores opened by franchisees?
Franchisees opened 26 per cent of the new stores during the quarter.

What was the impact of digital sales on the total company sales?
Digital sales accounted for 94 per cent of total company sales, reaching $2.4 billion for the quarter.