e entire middle class in China. She thinks that the remaining 1 billion people are still up for grabs, and the company is going all out to capture the rest of the market. To recap, Yum China is the country’s largest restaurant company that operates over 13,000 restaurants in over 1900 cities and towns across mainland China. The company operates KFC, Pizza Hut, Taco Bell and partners with Lavazza to develop coffee shop concepts too. Key highlights In her presentation during the Investor Day, Wat unveiled some key financial highlights for the company and outlined future expansion plans in China. From 2020 to the first half of 2023, the company added 4402 new stores in China and raked in an operating profit of $3.6 billion. The current store count stands at 13,602, with total revenues at $5.6 billion and an operating profit of $673 million. The company expects to have 20,000 stores by 2026. Internal research has shown that the middle-class population in China is expected to hit 700 million by 2030, up from 450 million currently. The company believes there is untapped potential that can be unlocked from franchising models that can be used in 3000 college campuses, 6000 highway service centres and 36,000 hospitals. KFC is easily the most powerful QSR brand in China, as it has penetrated 1,900 cities and has a total of 9562 stores. Pizza Hut has a presence in  650 cities with a total of 3,072 stores.  The digital factor According to Wat, customers now enter 90 per cent of their orders digitally, while off-premise consumption, which is a combination of delivery and takeaway, accounts for over 60 per cent of sales. While the company already has 445 million customers, there are at least 1 billion more who are still up for grabs. Wat mentioned that this is the opportunity that the company is trying to capitalise on. She mentioned that the penetration of China’s QSR is still very low, with only seven stores per million, compared to Japan, where it’s at 24 stores per million people. As such, she concludes that demand is still way bigger than supply in China’s QSR space. Innovation is key According to a presentation by Leila Zhang, the chief technology officer of Yum China, the company has combined smart hardware with data and Artificial Intelligence (AI) capabilities to open up end-to-end functionality from farm to customer. A very important part is its “farm to store” digital and intelligent supply chain. Yum China is using radio frequency identification (RFID) and Internet of Things (IoT) technology to enable automatic inventory checking, as well as monitoring to reduce human error. Its smart replenishment system reduces the risk of inventory losses while ensuring it meets sales requirements. Through the supply chain management dashboard, the company can also monitor core suppliers, logistics and store data, enabling more intelligent decision-making. Leveraging a knowledge graph algorithm, its AI-based food safety risk monitoring system proactively identifies and mitigates risks based on big data on food safety.  Embracing AI According to Zhang, the company is fully embracing AI as part of its future plans. On top of its existing decision-making AI capabilities, the company is introducing new generative AI capabilities. Going forward, it will be using AI-generated content (AIGC) to improve the customer experience. It will use this tech to innovate new business scenarios and solutions, such as media creatives generation, digital avatars, live streaming and customer service. Zhang said that generative AI will also be used for employee recruitment, training, evaluation, promotion and store operations. There are also plans to use the technology to explore new business scenarios, such as proactive equipment maintenance and dynamic business planning. She believes in the future digital blueprint of the company, with AI acting as an important cornerstone.