Buoyant third quarter for Yum China
KFC is proving a golden nugget for Yum China Holdings, while sister fast-food brand Pizza Hut has had a relatively flat performance for the third quarter to the end of August.
Yum’s unaudited results for the period show same-store sales growth of 6 per cent, including 7 per cent at KFC and no change at Pizza Hut.
Total system sales grew 10 per cent, including 11 per cent growth at KFC and 7 per cent at Pizza Hut. Total restaurant margin increased 0.8 points to 20 per cent, primarily driven by same-store sales leverage.
Revenues exceeded US$2 billion in the quarter. Operating profit grew 11 per cent (13 per cent excluding foreign currency translation), primarily driven by same-store sales growth. Foreign currency translation hit reported operating profit by $5 million.
Net income rose 9 per cent to $211 million, while adjusted EBITDA similarly increased to $425 million.
“We opened 129 restaurants in the quarter and are on track to achieve our development target of 550 to 600 new stores in the year,” says Yum China CEO Micky Pant.
“Our strategic initiatives on digital and delivery continued to show encouraging development, which we believe will enable our long-term growth. The connection with our more than 120 million loyalty members is growing stronger.
“The growth in mobile payments and cashless settlement methods for sales continued to outperform previous quarters. With more than 5100 restaurants across China offering delivery service, this contributed more than 14 per cent of company sales in the third quarter.”
Pant says the group has opened 352 restaurants so far this year. During the quarter, 200 outlets were remodelled (429 year to date), led by KFC.
Meanwhile, Yum China has announced that Pant will transition to the roles of vice-chairman of the board and senior advisor to the company. President/COO Joey Wat will succeed Pant as CEO with effect from March 1.
Pant has been CEO and a member of the board of directors of Yum China since its spin-off from Yum! Brands, and before that was CEO of Yum! Restaurants China, a division of Yum.
Board chairman Dr Fred Hu says Wat has a strong track record of achieving results. “With her ability to translate vision and strategy into future world-class operations, I have no doubt the Yum China business will continue to grow under her strong leadership.”
Wat has held her present posts since February, and was appointed a member of the board in July. She joined Yum China in September 2014 as president of KFC China, and was promoted to CEO of KFC China in August 2015. Before that, Wat served in both management and strategy positions at AS Watson of Hutchison Group in the UK, and was previously in management consulting, including three years with McKinsey & Company’s Hong Kong office.