Yum China, owner of KFC and Pizza Hut, beats estimates as low-price strategy draws diners

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The fast-food chain posted a net profit of US$212 million for the April to June quarter, beating analysts’ estimates of US$190 million

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Yum China, the operator of KFC and Pizza Hut restaurants in mainland China, said its total store count reached 15,423 at the end of June, with 401 outlets added during the second quarter. Photo: Bloomberg

Daniel Renin Shanghai

Published: 8:15pm, 6 Aug 2024

Yum China Holdings, which owns the KFC and Pizza Hut restaurant chains in mainland China, beat analysts’ earnings estimates after its low-price strategy bolstered sales and increased market share in the second quarter.

The company on Tuesday reported a net profit of US$212 million for the three months to June, a 7 per cent year on year increase. It was 11.6 per cent higher than a median forecast of US$190 million by analysts in a Bloomberg survey. Revenue rose 1 per cent year on year to US$2.68 billion.

Yum China’s Hong Kong-listed shares jumped 10.6 per cent to HK$252.80.

“Our sharp focus on value-for-money and innovative new products worked well, driving robust same-store transaction growth,” CEO Joey Wat said in a statement on Tuesday. “We took proactive actions to improve operational efficiency, stabilising restaurant margin and expanding operating margin year over year.”

Worries about a slowing economy, job prospects and wages have deterred mainland consumers from dining out since the country’s reopening from the Covid-19 pandemic in the first quarter of 2023.

In the second quarter, the world’s second-largest economy expanded by 4.7 per cent from a year earlier, but this was lower than the 5.08 per cent growth predicted by Chinese financial data provider Wind and the 5.3 per cent growth seen in the first quarter.

In June, retail sales rose by 2 per cent on year, compared with 3.7 per cent growth seen in May, the slowest pace since China lifted its coronavirus restrictions.