Yum China reopening stores as it sees “early signs of recovery”

Almost all stores that remained open since the start of the COVID-19 outbreak experienced “significant” declines in sales.

Yum China said it is seeing “early signs of recovery” as it reels from the impact of social distancing measures due to the COVID-19 pandemic.

The operator of KFC, Pizza Hut and Little Sheep brands across the country said it is gradually re-opening stores “when possible and appropriate to do so”, on a partial or fully-operational basis.

Currently, approximately 95% of our stores in China are either partially or fully open with approximately 10% to 20% of open stores providing only delivery and takeaway services, and some stores continue to have shortened operating hours.

Store closures, it said in its trading update, peaked in February with approximately 35% of restaurants closed. Almost all stores that remained open experienced “significant” declines in traffic. It previously disclosed that same-store sales declined 40% to 50% during the Chinese New Year holiday period, compared to the same period in 2019.

“Traffic at open stores is recovering slowly and remains well below pre-outbreak levels. The pace of recovery varies by region and is slower during weekends as people avoid going out. In recent days, same-store sales were down approximately 20%. Sales performance fluctuates as the recovery is uneven, and the situation continues to evolve,” it said in its update.

Yum China previously launched contactless delivery in late January to enhance preventative health measures. Delivery sales, they said, grew year over year, and its mix as a percentage of company sales approximately doubled during this period.

They subsequently launched contactless pick-up, corporate catering services and a community delivery service for quarantined communities, especially in heavily affected areas.

Since 27 January, KFC and Pizza Hut have provided over 145,000 free meals to over 1,350 hospitals and community health centers in more than 28 provinces across China. Little Sheep, meanwhile, donated 20,000 instant hot-pots to organizations actively involved in efforts to fight the outbreak.

Yum China said new store openings are paused due to outbreak-related traffic restrictions and reduced availability of construction workers. Measures in response to reduced sales include managing inventory down in order to reduce write-offs and “dynamically” scheduling employees to reflect reduced volumes and increased safety protocols.

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