China Food

The CEO of Yum! China, which has just opened 10000 stores, said that this year’s “playing method” has come!

Despite the impact of the epidemic, yum! China, which has just unlocked the “small target” of 10000 stores, has not stopped its expansion. It not only reiterated that the goal of opening new stores this year remains unchanged, but also aims at new business opportunities brought about by digitization and vegetable meat.

Recently, China’s largest catering company released its second quarter results in 2020. Subsequently, Joe Wat, chief executive officer of Yum! China, and Yang Jiawei, chief financial officer of Yum! China, attended a performance meeting with Wall Street analysts. Xiaoshidai learned that at the meeting, the company’s executives further talked about the recovery of different brands, the strategy and mode innovation in digital, as well as future prospects and plans.

Let’s take a look at the live news.

Sales continue to recover

Compared with the first quarter of 2020, which covered the most difficult period of the epidemic, the sales situation of Yum! Brands in China continued to improve in the second quarter.

“With the concerted efforts of the team, our sales are continuing to recover and, importantly, remain profitable this quarter.” Qu Cuirong said at the meeting.

According to the financial report, in the second quarter of this year, yum’s total revenue in China was $1.9 billion, down 11% year-on-year; KFC’s sales fell by 6%, and Pizza Hut’s sales fell by 12%. The company’s operating profit was 128 million US dollars, a year-on-year decrease of 38%; net profit of 132 million US dollars, a year-on-year decrease of 26%; same store sales decreased by 11%, of which KFC decreased by 10%, and Pizza Hut decreased by 12%.

Qu Cuirong said the company’s sales increased month on month in April and may, but sales in June were affected by measures such as delayed school holidays and shortened summer holidays, as well as stricter social distance due to new infections in local areas.

“Our stores located in transportation hubs and tourist attractions continued to decline significantly year-on-year, which has a greater impact on KFC than on pizza hut.” She said.

In the second quarter, yum’s total revenue returned to 93% of a year earlier, compared with 79% in the first quarter, Mr. Yang said at the meeting. In the second quarter, KFC’s same store sales returned to 90% in the same period of the previous year, while that of pizza hut returned to 88% of the same store sales in the same period of last year.

“Both of our core brands, KFC and pizza hut, have improved their trading volume over the previous quarter. However, the passenger flow is still lower than that before the outbreak. ” He said.

Xiaoshidai noticed that in response to the analyst’s questions, Qu Cuirong revealed that after allowing the resumption of the business in the second quarter, the business of Pizza Hut’s restaurant food quickly rebounded, “it has recovered from 40% to 55% in the second quarter.”.

According to the company’s management, more than 99% of its stores in China have resumed business, while about 60 stores in Wuhan and North China are still closed.

“We still face enormous difficulties, and the recovery process is nonlinear and unbalanced.” Qu Cuirong said. However, she stressed that even if there was short-term uncertainty, yum China was “enthusiastic” about its long-term prospects.

New strategy under epidemic situation

Let’s take a look at the brands.

Qu Cuirong said at the meeting that for KFC, compared with the first quarter, the trading volume in the second quarter was greatly improved. “We will try our best to attract customers by providing price performance and consumption occasions, but the recovery may take a long time.” She said.

“For pizza hut, we see encouraging signs of a recovery. However, the delay and shortening of summer vacation will also affect our business. We will strengthen our services for individuals, takeaway and takeaway while family dining is restored. ” Qu Cuirong said.

As for Taco Bell, she said the brand has now expanded beyond Shanghai, opening its first flagship store in Shenzhen and will soon open in Beijing. “We are happy to bring this new cuisine to more parts of China, and we are working hard to create the right business model for Chinese customers.”

In April this year, yum! China announced the establishment of a new Chinese food business division. Its brands include Xiaofeiyang, Dongfang Jibai and Huang Jihuang.

Finally, she said that Yum! China’s integration of the Chinese food business division is on the right track. The sales of Xiaofeiyang and Huang Jihuang stores are “recovering”, and Huang Jihuang is using the resources of Yum! Brands China to improve its delivery, retail and logistics capabilities.

It is worth noting that the catering giant has not stopped innovating menus under the influence of the epidemic.

For example, Qu said at the meeting that KFC expanded its beverage, dessert and snack delivery lines in the second quarter. “Our breakfast beancurd line is rapidly gaining popularity among consumers, and we have also launched new festival oriented products, such as dried scallops, salted egg yolk and eight treasure dumplings.” She said.

Yum! China is still selling “vegetable meat” dishes. “Our plant meat test was successful. The introduction of plant meat products to KFC, Pizza Hut and Taco Bell soon sold out. If we expand the scale of domestic production, it will have great potential to bring new consumers to our brand. ” Qu Cuirong said.

In the post epidemic period, the catering company has also paid more attention to cost performance in product supply. Qu Cuirong mentioned at the meeting that KFC launched the “buy one get one free” weekend for its members for the first time in June. In addition, in order to stimulate passenger flow, Pizza Hut launched a buffet promotion for the first time, with steak and crayfish as its selling points.

New opportunities for digitalization

“In the past few months, the benefits of our digital strategy have been particularly evident.” At present, yum China has more than 265 million members, and its digital ecosystem consists of its app, cooperation with third-party online platforms, and in store digitization, Qu said at the meeting.

“Whether it’s to let customers know our contactless delivery mode or weekend specific preferential information, we can reach our members faster with greater flexibility and lower cost.” She said. In the second quarter, digital orders accounted for about 80% of total sales.

According to her, in the second quarter, the member sales of Yum! Brands China accounted for more than 60%. “During the outbreak, our overall sales fell, but our member sales increased by double digits year-on-year. We use popular social media apps and websites to get new members in innovative ways and turn online traffic into in store sales. ” She said.

“Once we get members, we can design more targeted promotions to improve the user stickiness of our apps or applets, and eventually turn them into paid members. This year, we have nearly 10 million paid member orders. After becoming paid members, the frequency and amount of consumption of these loyal customers have more than doubled. ” Qu Cuirong said.

Overall, she says, the average revenue contribution per active member has doubled over the past few years.

In order to retain “members”, yum! China has planned a lot of interactive activities. “After years of consumer insight, we have launched games, marathon clubs, and even one of the largest online children’s bookstores on our KFC app.” Qu Cuirong said.

It is worth noting that the epidemic has also boosted Yum China to open up a new business of “enterprise delivery”.

“We have signed a multi person meal delivery program with more than 10000 companies, bringing a new customer base to Yum China.” “As a result, we are not only resuming sales, but also innovating our business model,” Qu said

She said KFC has been trying to expand its business into the “B2B2C” area, that is, the development of enterprise delivery. “We have been preparing for this, and the epidemic provides us with an excellent opportunity to promote.” She said that this year’s epidemic is not only a challenge but also an opportunity for Yum China to transform its short-term and long-term business model through innovation.

“I’m proud of what has been achieved so far, but our goal is more than that. From semi-finished dishes, corporate specials and overnight deliveries, we all have the scale, resources and vision to seize these future opportunities. ” Qu Cuirong said.

10000 stores

Qu Cuirong pointed out at the meeting that in a very challenging environment, yum China has made three “important achievements”.

“First, we opened our 10000 store in July.” She said. On the day of the second quarter report, yum! China announced that it had more than 10000 restaurants and celebrated the opening of KFC restaurant in Boao, Hainan, which marks the 10000 stores. It is worth noting that among the 10000 restaurants in Yum China, more than 600 restaurants owned by Huang Jihuang were acquired earlier this year.

Qu Cuirong, CEO of Yum China

It can be seen that in recent years, the number of stores in China has increased from 7562 at the end of 2016 to more than 9200 at the end of 2019, with a compound annual growth rate of 7%. In 2019, the number of new stores will reach a new record of 1006, with an average of nearly three new stores opening every day.

As of June 2020, yum! Brands China has 9954 restaurants in more than 1400 cities and towns, up 13.75% from 8751 restaurants at the end of June last year. Its catering brands include KFC, pizza hut, Taco Bell, Dongfang Jibai, Xiaofeiyang, Huang Jihuang and coffei & joy.

During the outbreak, the catering giant did not stop expanding. According to the latest financial report, KFC has opened 142 new stores in the second quarter of this year, with 6749 restaurants by the end of June; pizza hut has opened 8 new restaurants, with the number of 2258 by the end of June.

Referring to the other two “achievements”, Qu Cuirong said that this year marks the 30th anniversary of Pizza Hut’s entry into China. Since June, it has launched a new “Pizza Hut 30th anniversary platinum menu” and buffet promotion activities. “We see people in long lines and attract new customers.” She said.

In addition, she noted that Yum China has become the official catering service sponsor for the 2022 Winter Olympics and winter Paralympic Games in Beijing.

Looking forward to 2020, Qu Cuirong expressed “cautious and optimistic” at the meeting. The company’s management reiterated its goal of opening 800 to 850 new stores this year, and said it would continue to invest in digital, technology and supply chain. This year’s capital expenditure plan will remain unchanged between $500 million and $550 million.

Yang Jiawei said the outlook for 2020 will be based on the following key realities: first, traffic and tourist flows continue to be weak. Second, delayed and shortened summer vacation will affect sales momentum; third, the epidemic situation is unpredictable. Due to its continuous impact and local recurrence, business recovery is expected to remain nonlinear and unbalanced; fourth, with the gradual cancellation of one-off government and rent preferential policies, profit margins will continue to be under pressure.

“The situation is still changing. Resilience, adaptability and innovation are key strengths when we experience an unprecedented environment. ” He said.

This article is published by foodinc account of xiaoshidai, August 3, 2020

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