KFC, Pizza Hut operator Yum China to open up to 1,300 stores as ‘worst is over’, posts earnings decline for 2022

‘We are full of hope and will keep cautiously optimistic,’ CFO Andy Yeung says

Firm reports 89 per cent year-on-year plunge in net income for the three months ending in December, 55 per cent decline for whole of 2022

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A Pizza Hut restaurant and a KFC restaurant in Beijing. Operator Yum China plans to spend US$700 million to US$900 million on expansion this year. Photo: Bloomberg

Published: 7:36pm, 8 Feb 2023

Yum China Holdings, which owns the KFC and Pizza Hut restaurant chains in mainland China, will open another 1,100 to 1,300 stores this year.

The firm is betting on China’s reopening and hopes “the worst is over”, Andy Yeung, Yum China’s chief financial officer, said during a results briefing late on Wednesday.

“We are full of hope and will keep cautiously optimistic,” he said. “While we have seen some recovery, there are still uncertainties ahead and consumers tend to be careful with their spending.”

The firm reported an 89 per cent year-on-year plunge in net income for the three months ending in December 2022, according to its filing with the Hong Kong stock exchange. Revenue between October and December dropped 9 per cent year on year to US$2.09 billion. Net income for the whole of 2022 was down 55 per cent year on year to US$442 million, while full-year revenue decreased slightly to US$9.57 billion when compared with its 2021 result.

“Due to widespread infections, we experienced a shortage of restaurant staff, which led to over 1,300 stores on average being either temporarily closed or offering limited services in December. As a significant portion of the population was either infected or chose to stay home to avoid infection, dine-in traffic declined substantially,” Yum China said in its filing. Its adjusted earnings per share for the year stood at 13 cents, on par with a consensus among analysts polled by Bloomberg.

The firm plans to spend US$700 million to US$900 million on expansion this year. Its target for 2023 is slightly higher than the net 1,159 new stores it opened last year.

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