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Finger-licking good quarter for Yum China sales

Continued strength at KFC underpinned same-store sales growth of 3 per cent and a 7 per cent increase in system sales for restaurant group Yum China Holdings’ second quarter to the end of May.

Yum China sales grew 8 per cent at KFC and 7 per cent at Pizza Hut. Same-store sales grew 4 per cent at KFC, but were flat at Pizza Hut.

Total restaurant margin increased 2.7 points to 15.3 per cent, primarily through retail tax structure reform and also driven by same-store sales. For the year to date, restaurant margin increased 3.1 points to 18.7 per cent.

Operating profit increased 64 per cent, but was negatively impacted by foreign exchange to the tune of US$8 million. Net income grew 39 per cent to $107 million.

“We are making progress in the key themes we are investing in – loyalty programs, digital and delivery capabilities, and continued upgrade of restaurant assets and optimisation of store formats,” says CEO Micky Pant.

Loyalty members for KFC and Pizza Hut surpassed 100 million  (83 million for KFC and26 million for Pizza Hut), and mobile payments exceeded 40 per cent of company sales in the second quarter.  More than $900 million in company sales were settled by cashless payment methods during the quarter.

In the same period, more than 4900 of the group’s restaurants offered delivery service, with delivery sales accounting for 13 per cent of sales.

During the quarter, the group acquired an 80 per cent stake in food-delivery service Daojia for a cash consideration of $36.7 million to the shareholders and a concurrent capital contribution of $25 million.

Founded in 2010, Daojia targets higher-end orders in four tier-one cities. It also runs Sherpa’s, a premium food-delivery platform specialising in English-speaking services.

“We see this acquisition as complementary to our existing delivery business, and it provides valuable operational and technological expertise,” says Pant.

Founder Hank Sun will continue to lead the business.

During the quarter, Yum China opened 90 restaurants (223 year to date) and remodelled 197 outlets (229 year to date), led by KFC.

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