Yum China Reports Sequential Recovery Amid Clustered Outbreaks


Yum China Holdings Inc. reported a sequential improvement in fourth-quarter sales and said it plans to open 1,000 new locations this year -- a sign the company sees a recovery taking hold.

  • The owner of KFC and Pizza Hut in China said same-store sales fell 4% in the period ended Dec. 31, marking the fourth consecutive quarter of declines. That compared with the average analyst estimate of a 3.3% drop, according to Consensus Metrix.

Key Insights

  • Yum China continues to call the pace of recovery “uneven and non-linear,” with October sales benefiting from the timing of the National Day long holiday, but November and December sales dampened by virus resurgence in certain regions.
  • Clustered, regional virus outbreaks have continued to hit sales in early 2021, resulting in “significant headwinds in the first quarter.” In the first few days of the Chinese New Year travel season, beginning late January, the number of travelers fell more than 70% from a year earlier, the company said. “Our teams are closely monitoring this fluid situation and adjusting marketing programs and operations accordingly,” it said.
  • Delivery, which accounted for about 29% of the company’s sales, is playing an increasingly important role for restaurants amid regional virus outbreaks and shutdowns. Last quarter, the company saw about 83% of orders coming from digital channels, which include delivery, mobile orders and kiosk orders, up 22 percentage points from a year ago.

Market Reaction

  • Shares rose 1.8% at 4:37 p.m. in New York after the close of regular trading, before paring some of the gains. The stock rose 19% in 2020.

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