Yum China eyes uneven recovery

Yum China (9987), the KFC and Pizza Hut operator in mainland China, does not expect a "linear recovery" of its business from the coronavorus pandemic, said chief financial officer Andy Yeung Ka-wai.

The recovery will be uneven, Yeung said, For example, sales of restaurants in the railway stations and airports are still affected by the pandemic due to fewer business trips and domestic travel.

Chief executive Joey Wat Chui-yung added ice cream sales plunged as customers need to wear face masks, but it only accounted for a small portion of total sales.

Yum China's operating profit also is expected to be affected as the central government would eliminate the subsidy for social security contributions for big companies, and landlords would cancel rent concessions given the economic recovery.

The company keeps its store network expansion target unchanged, planning to open between 800 and 850 new restaurants in 2020.

Yeung said Yum China is confident of achieving the annual goal. In the frst half, 350 new restaurants have been opened. 

Yum China wants to double its restaurant network to 20,000 in mainland China, without giving a timetable.

Wat projects demands for food delivery and takeaway will continue to rise after the pandemic as sales from dine-in accounted for less than 50 percent in KFC and Pizza Hut in the first half.

Yum China has downsized some restaurants and increased restaurant density to meet the growing needs for delivery and takeaway, Yeung said.

The initial investment of opening a new restaurant dropped to 1.5 million yuan from 3.6 million in the past, he said.