A delivery staff of the KFC rides an electric bicycle along a road on January 8, 2020, in Shenyang, Liaoning Province of China.

Yum China Holdings thinks it can get half of China’s 1.4 billion people to eat KFC and Pizza Hut.The firm posted strong financial results in a Tuesday report, as the rest of China struggles.Yum runs KFC and Pizza Hut in China, and says it already has 470 million members for both chains.

Yum China Holdings, the company that operates KFC and Pizza Hut in China, said on Tuesday that it hopes to soon expand its customer base to half of the country’s entire population despite an ailing national economy.

“Currently serving just one-third of China’s population, our ambitious goal is to extend our reach to half of the population by 2026,” Yum China CEO Joey Wat said in the company’s latest quarterly results report.

Yum plans to fuel its growth through restaurants in China’s “lower-tier cities,” which host over half of the firm’s stores, Wat said.

Cities in China are unofficially organized by tier based on their population size and the affluence of residents, with the highest tier including global hubs like Shanghai and Beijing.

Second-tier cities, such as Xiamen and Harbin, and third-tier cities, like Luzhou, are the most numerous and contain most of China’s urban population.

The company said it opened more than 1,500 new KFC and Pizza Hut restaurants in 2023, with a total of 10,296 KFCs and 3,312 Pizza Huts in operation by the end of the financial year.

That’s more than twice the number of KFC restaurants in the US, which has 4,293 stores, though only half of the around 6,750 Pizza Huts in the US.

Both restaurant brands also have 470 million members in China, Yum said, though it didn’t say if this number accounted for any overlap.

Yum enjoyed a significant rebound after China’s COVID lockdowns, with net profit for 2023 rising to $827 million in an 87% year-on-year increase, per its report. In 2022, as consumer spending nose-dived amid a series of stringent lockdowns and waves of coronavirus infections, Yum’s net profit slumped 55% in 2022 to $442 million.

Its revenues for 2023 also rose 15% to $10.98 billion compared to the year before, it said.

The jump is a rare bright spot in China’s gloomy economy, which has struggled to return to form and saw its stock market lose $6 trillion in value since the onset of the pandemic.

“2023 was a pivotal year for Yum China,” Wat said. “Not only did we demonstrate strong resilience during the pandemic, but we also seized opportunities that arose from China’s reopening.”

Meanwhile, Yum said it’s increasing dividends for investors by 23% to 16 cents per share in March.

Read the original article on Business Insider

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