Yum China sales suffer as Omicron cases surge

Yum China Holdings Inc said on Monday a COVID-19 resurgence in the country in recent weeks had dented sales in the first quarter, setting back the revival its KFC, Pizza Hut and Taco Bell joints had last year.

Same-store sales decreased around 20% from a year earlier for the first two weeks of March and was still trending down in recent days, after falling nearly 4% for the two months combined in January and February, Yum China said.

“Entering March, the situation has rapidly deteriorated with the highly transmissible Omicron variant causing outbreaks across China, including economically important regions of Guangdong, Shanghai, Shandong and Jilin,” the company said.

The restaurant chain recorded a 1% fall in same-store sales last year, an improvement from the 9% decline in 2020. However, tight curbs on travel and dining out due to the rapid spread of the Omicron coronavirus variant have hurt sales this year.

The company projected an operating profit for the first quarter to be in a range of $165 million to $200 million, compared with $342 million a year earlier.

China has reported more local symptomatic COVID-19 cases so far this year than it recorded in all of 2021, as the highly transmissible Omicron variant triggers outbreaks from Shanghai to Shenzhen.

Over 1,100 Yum China restaurants were temporarily closed or offering only takeaway and delivery services, as of Sunday. It had more than 12,000 restaurants, as of February end.

Yum China’s shares, which have taken a beating in recent days due to an auditing dispute between Beijing and Washington, fell as much as 10.5% to $33.55, a three-year low.