Meals and buckets of bubble tea: How Yum China turns

Meals and buckets of bubble tea: How Yum China turns

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Yum China (YUMC), the local owner of KFC, Pizza Hut and Taco Bell, is using new ways to reach customers at home as the pandemic continues to dampen its business.

The company, which reported better-than-expected earnings on Thursday, said home delivery and take-offs now account for more than 50% of sales. Revenue grew by 11% to almost $ 2.3 billion, although sales in the same store fell by 4% in the December quarter, compared to the previous year.

“Home consumption is a growing trend. The pandemic has accelerated it,” CEO Joey Wat told CNN Business.

Yum China is now trying to earn further on the shift with a push in meals, encouraging people to make their own “KFC” at home. The product range is an offshoot of KFC called ‘Kai Feng Cai’, which is a Chinese nickname for the brand. But this is no ordinary bucket of fried chicken. Instead, the kit contains dishes such as chicken breasts, chicken soup and chicken “luosifen”, a snail-based rice noodle dish that has become hugely popular in China.

Which said that the initiative, launched in 2000 in 2000 stores, was not just a pandemic. After an “encouraging” display of results, the company plans to expand the offering to more cities.

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Yum China, which has about 10,000 stores and 400,000 employees, has experimented a lot to bring its business back to pre-pandemic levels, even though China has recovered faster than most major economies.
Over the past year, it has launched smart boxes for customers to pick up their pickup trucks, self-driving pickups that serve breakfast for office workers, plant meals and home delivery of Pizza Hut steaks. It even started letting customers buy 1.5-liter buckets of bubble tea to take home, which was ‘sold out within days’, Wat said.
Yum China started selling oversized buckets of bubble tea for home consumption. The new products "sold out within days," according to its CEO.

The company has reason to hold on to any new idea that remains. It warned Thursday of a shaky recovery, which Chief Financial Officer Andy Yeung attributed to ‘regional outbreaks’ [of coronavirus], reduced travel and delaying effects on consumer behavior. “

The upcoming lunar New Year holiday – usually an important time for sales – is likely to be ‘subdued’, ‘he told analysts.

A year ago, the picture was even darker. When the pandemic first occurred, the company was forced to take a step back and map out how long it could survive on no sales, Wat said.

“We worked it out – if we had no business, our business could continue for a year,” she said. The amount of runway is ‘much better than the average player in the industry’, she noted, but ‘still not as long as I would like to see.’

The company has taken some risks. Last year, Yum set up more than 1,100 new stores across the country, a record level of new openings. This year, the firm plans to open another 1,000 stores.

A driverless van deployed by KFC. Last November, the brand launched a fleet of "dining carts" in the streets of Shanghai.

“It’s still a very careful, thoughtful process,” Wat said. “We are not just opening stores for the sake of opening new stores.”

Some branches follow what the company calls a ‘small town format’, which requires less investment and offers a slightly different menu.

Which argues that new initiatives are not just too fun; it is a necessity.

“In a very competitive market and a very rapidly changing market like China, we believe that innovation is not only the key to survival, but also to success,” she said. “We have a very big task here to protect, to support the work of 400,000 people. We have to make sure we try our best.”

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