Yum China profit plunges 89% in Q4 

The company operates 13,000 restaurants on the mainland.

COVID-19 outbreaks severely impacted the 2022 fourth quarter (Q4) earnings of Yum China Holdings, Inc.

The operator of KFC and Pizza Hut in China saw its net income decrease by 89% to $53m from $475m in the prior year period. Total revenues for the quarter decreased by 9% year-on-year.

For the full year, Yum China’s net income decreased 55% to $442m from $990m in the prior year, primarily due to the decrease in operating profit, partially offset by a loss from mark-to-market investments.

"Regional outbreaks in October and November resulted in strict COVID-related health measures. However, most of these measures were lifted in December. Our operations were significantly disrupted by widespread infections nationwide in the quarter. We took decisive actions to sustain operations, capture off-premise demand, manage costs and drive operational efficiencies. We improved profitability despite lower sales. We also opened a record 538 net new stores in the fourth quarter while maintaining healthy new store payback,” Andy Yeung, CFO of Yum China said.

The operator said they are “cautiously optimistic” this year, with expansion plans in 2023.

"Looking ahead, we are encouraged by the new COVID policy and Chinese New Year holiday trading.  But the real test will be the sales trajectory after the holiday and how the economy will rebound, given the fluid COVID conditions and macroeconomic headwinds. As such, we must stay agile and plan for a range of scenarios. Our priority this year is to drive sales. We also plan to open between 1,100 to 1,300 net new stores in 2023 and continue to invest in technology and infrastructure,” Yeung added.