What’s new: Yum China, the country’s largest restaurant operator, reported a profit plunge of nearly 90% in the fourth quarter of 2022 as widespread Covid outbreaks hurt business.
The operator of KFC and Pizza Hut in China recorded a 9% year-on-year drop in fourth quarter revenue to $2.09 billion. Net profit during the period slumped 89% to $53 million, the company reported Wednesday.
For the whole of 2022, Yum China’s total revenue was $9.57 billion, down 3% from a year earlier. Net profit dropped 55% to $442 million.
The context: The business weakness mainly reflected disruptions caused by repeated Covid outbreaks and virus control measures, the company said. The number of stores that were either temporarily closed or offered only takeaway and delivery services increased in October and November, peaking at more than 4,300 in late November, Yum China said.
In December, China quickly abandoned restrictive measures, but the subsequent spread of infections led to a shortage of staff and limited services, Yum China said.
China’s catering industry recorded a revenue decline of more than 10% in the fourth quarter, data from the National Statistics Bureau showed.
Yum China said it was still “cautiously optimistic” on the business outlook into the new year. Sales in January improved, driven by the resumption of normal services and the Lunar New Year holiday, it said. The company said it aims to make new investments and expand.
Spun off from Yum! in 2016, Yum China operated 12,947 stores in the Chinese mainland as of the end of 2022. It had 1,159 net new store openings during the year and plans to add a net 1,100 to 1,300 new outlets this year.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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