Yum fails to spice up same-store sales

A customer walks out of a KFC restaurant in Shanghai on Oct 9, 2015.[Photo/Agencies]

Yum China Holdings Inc, the spinoff of the US fast-food chain which runs household names including KFC and Pizza Hut, registered flat same-store sales in 2016, three months after its New York listing.

Reporting for the first time as a standalone company, Yum China said a 3 percent rise in sales at its KFC outlets was offset by a 7 percent drop at Pizza Hut.

But becoming a separate company has lent it extra momentum for expansion. The fourth quarter alone saw Yum China add 302 new restaurants, accounting for more than half of the 575 new outlets it built last year.

The company also posted profit of 17 cents per share, beating analysts' expectations.

"Right now, our top priority is consistently delivering positive same-store sales growth," said Yum China Chief Executive Officer Micky Pant.

Apart from restaurant refurbishment, digital and delivery services are key to improving performance at existing stores. Yum China said 17 percent of its sales took place through mobile payments, and delivery accounted for 10 percent of its business.

With more 7,500 outlets by December, Yum China is the country's largest fast-food chain, according to market research firm Mintel. It claimed around 23 percent of the country's fast-food industry in 2015, followed by McDonald's Corp at 13.8 percent, said consultant Euromonitor International.

The firm plans to open 600 new stores annually over the next five years, Pant said in an earlier interview. It also brought back Mexican-themed chain Taco Bell to the Chinese mainland in January in Shanghai.

Shaun Rein, managing director of China Market Research Group, said that by becoming a separate company, Yum China can react quicker to changing Chinese consumer norms.

Yum's growth has stalled in China in recent years as competition heats up and the growing number of middle-class consumers seek healthier and more sophisticated dining experiences.