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KFC overshadows Pizza Hut in Yum China results

An aggressive store rollout program is helping Yum China achieve sales growth, but its Pizza Hut business continues to struggle.

In year-end results released overnight, Yum China said fourth-quarter system sales rose 6 per cent in constant currency, but same-store sales rose by a more modest 2 per cent.

The company, which owns the Chinese operations of KFC and Pizza Hut, opened 819 new stores last year, taking its combined network to 8484 stores across more than 1200 cities. The company plans between 600 and 650 additional stores this calendar year.

For the full year, total system sales grew 5 per cent over 2017, with a solid 7 per cent growth at KFC partially offset by a 1 per cent decline at Pizza Hut, (excluding foreign exchange impacts). Same-store sales increased 1 per cent overall, up 2 per cent at KFC and down 5 per cent at Pizza Hut.

Full-year revenue reached US$8.42 billion with net Income up 78 per cent to $708 million, from $398 million.

Joey Wat, CEO of Yum China, said the results marked the ninth consecutive quarter of system sales growth since the company was spun off from former US parent Yum! Brands.

“This strong growth was led by accelerated new store openings and a robust performance at KFC, which delivered 3 per cent same-store sales growth and 9 per cent system-sales growth during the quarter. Although Pizza Hut’s sales remained soft, we are pleased to see same-store traffic growth of 1 per cent and positive trends in customer feedback.”

Wat said the aggressive store rollout program last year further strengthened the company’s market position, laying a solid foundation for growth.

“While the macro backdrop is relatively soft, with our resilient business model and leadership in digital and delivery, we are confident that we have the right strategy and capabilities to maintain our growth trajectory and capitalise on the long-term potential of the China market,” she said.

Among the highlights of last year was exceeding 160 million members of the company’s KFC loyalty program and 50 million members of the Pizza Hut program, increases of 50 million and 15 million, respectively.

Mobile payments accounted for 65 per cent of the company’s sales in the fourth quarter, an increase of 11 percentage points year on year. Digital payments accounted for more than 86 per cent of company sales in the quarter, an increase of 14 percentage points.

And delivery services – now offered in 1118 cities – accounted for 19 per cent of sales in the fourth quarter of 2018, an increase of three percentage points year on year.

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