KFC China Celebrates the Opening of Its 10,000th Store

Yum China Holdings, Inc. (NYSE: YUMC and HKEX: 9987) today celebrated the opening of KFC China's 10,000th store, marking a significant milestone in KFC China's 36-year growth journey in the country.

Jan 2, 2024 - 09:18
Jan 2, 2024 - 09:18
KFC China Celebrates the Opening of Its 10,000th Store

Yum China Holdings, Inc. (NYSE: YUMC and HKEX: 9987) today celebrated the opening of KFC China's 10,000th store, marking a significant milestone in KFC China's 36-year growth journey in the country.

Situated in Hangzhou, KFC China's 10,000th store is located on the banks of the Beijing-Hangzhou Grand Canal, a historically important link connecting northern and southern China. Since opening its first store in Beijing in 1987, KFC has grown into the country's largest QSR brand in terms of system sales. This growth has been underpinned by a world-class in-house supply chain management system developed over three decades.

"As the first western QSR restaurant brand in China to reach this incredible milestone, KFC China's 10,000th store opening is a proud moment for all of us, demonstrating the brand's deep bond with Chinese consumers across generations for over 36 years. Strategically positioned for sustained growth, KFC China stands to benefit from its large and rapidly expanding store network, substantial economies of scale and access to an even broader customer base," said Joey Wat, CEO of Yum China. "Presently serving just one-third of China's population, our goal is for KFC China to reach over half by 2026. By leveraging our solid foundation of success and tremendous untapped potential for future growth, we are confident that KFC China will continue to be China's leading restaurant brand for many years to come."

"In pursuit of our ambitious growth targets, we are committed to establishing KFC China as the preferred daily choice for an increasingly diverse customer base," said Warton Wang, General Manager of KFC China. "KFC China remains at the forefront of pioneering new formats and groundbreaking concepts to accelerate store expansion into untapped cities, while also staying ahead of evolving consumer preferences and emerging consumption trends. Going forward, KFC China will continue to offer a diverse array of innovative meal choices across price ranges, ensuring that consumers can enjoy KFC anytime and anywhere."

Strategic Footprint Expansion for Greater Reach

Despite having already established an extensive presence in over 1,900 cities as of the end of Q3 2023, KFC China continues to actively expand its addressable market, with 1,100 untapped cities on the brand's radar for entry. Over the past five years, KFC China has seen remarkable growth, with average annual growth in net new KFC stores exceeding 22%, all while maintaining an average store payback period of approximately two years. At the same time, KFC China has been accelerating store openings in lower-tier cities while increasing store density in higher-tier cities.

Innovative Offerings to Satisfy New Demand

Through the introduction of innovative products and development of new categories, KFC China is proactively broadening its consumer base and catering to the evolving needs of Chinese consumers. Recent successes include the introduction of Juicy Whole Chicken and Beef Burgers, with both products generating annual sales exceeding $100 million. KFC China is also widening its menu to introduce more entry-level price point offerings, ensuring its products better cater to the needs and preferences of a broader range of consumers. Meanwhile, KFC China continues to expand its in-house coffee brand, KCOFFEE, aiming to open more than 300 standalone KCOFFEE stores by the end of 2024.

Revolutionizing Convenience and Accessibility in Delivery Services

In tandem with increased store density across various regions, KFC China is redefining convenience and making its delivery services more accessible. Notably, a double-digit surge in small-ticket delivery orders of 40 RMB or less across major fast food players represents an area of opportunity for KFC China.

Furthermore, KFC China has showcased a steadfast commitment to maintaining robust margins, enabled by procurement excellence, continuous product innovation, and full chicken utilization. Additionally, the brand has embraced cutting-edge technologies, including in-store Internet of Things (IoT), automation, and artificial intelligence (AI) to enhance operational efficiency.

Looking forward, KFC China plans to further accelerate its annual net new store openings to exceed 1,200 in the next three years, with 15% to 20% expected to be franchise stores, aligning with Yum China's overarching goal to reach 20,000 stores by 2026. KFC China's future strategy encompasses a diverse range of store models and modules – ranging from standard stores to future concept stores, mini-stores, and stores strategically positioned in lower-tier cities. This approach underscores KFC China's commitment to innovation-empowered growth and adaptability in the dynamic Chinese market.