Yum China Holdings taking over delivery service

Yum China Holdings, which runs the KFC and Pizza Hut restaurant chains across Mainland China, is buying a controlling stake in food-delivery service provider Daojia.

The transaction is expected to close this month, says Yum, without revealing figures. A Reuters report has valued the deal at US$200 million.

Daojia, which also runs Sherpas food-delivery services, was founded in 2010 and focuses on higher-value food orders in major cities such as Beijing, Guangzhou, Shanghai and Shenzhen.

Deliveries accounted for about 12 per cent of Yum China’s sales in the first quarter of this year.

“Digital and delivery are long-term strategic drivers of our business, and I am pleased to build on our technological know-how and capabilities in this high-growth area,” says Yum China CEO Micky Pant.

BigData-Research statistics show that the transaction values of China’s food-delivery market reached RMB176 billion (US$25.5 billion) last year, with delivery firms backed by internet giants Alibaba Group Holding, Tencent Holdings and Baidu capturing a 86.6 per cent of the market.

Daojia has completed four rounds of financing totalling US$69.5 million, according to mainland media. Its latest round was in September 2014, led by Chinese e-commerce major JD.com.

More than 4400 of Yum China’s 7663 restaurants offer delivery services.

The company last month reported better-than-expected first-quarter earnings with revenue reaching US$1.28 billion.

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