Pizza Hut weighs on Yum China growth

China Daily (Hong Kong) - - BUSINESS -

SHANG­HAI/BENGALURU — Yum China Hold­ings Inc, the oper­a­tor of KFC, Pizza Hut and Taco Bell in the world’s sec­ond-largest econ­omy, posted quar­terly sales slightly be­low es­ti­mates.

This was due to slug­gish growth at Pizza Hut amid a turn­around drive.

The firm, which spun off from Yum Brands Inc late last year, said same-store sales rose 3 per­cent in the sec­ond quar­ter of 2017, driven by a 4 per­cent jump at fried chicken chain KFC. Pizza Hut’s same­store sales were flat.

Yum, China’s big­gest fast food chain with 7,685 out­lets, has been look­ing to rev up growth in the mar­ket which has slowed since 2012, hit by food safety scares, chang­ing con­sumer tastes and a wider eco­nomic slow­down.

The Pizza Hut di­vi­sion, which has been off-set­ting stronger growth at KFC since be­fore Yum China’s list­ing, fell short of an­a­lyst es­ti­mates of a 1.5 per­cent same-store sales rise, ac­cord­ing to re­search firm Con­sen­sus Metrix.

Joey Wat, Yum China’s pres­i­dent and chief op­er­at­ing offi- cer, told an­a­lysts af­ter the re­sults that the pizza unit had been strug­gling and there were “quite a few key as­pects of the fun­da­men­tals of the busi­ness that we have to fix”.

“There is a still a long way to go to turn around Pizza Hut and we are work­ing dili­gently to get things done,” she said.

Ja­son Yu, gen­eral man­ager of Kan­tar World­panel China,

said that in China, Pizza Hut, which tar­gets mid­dle-class fam­i­lies, has faced tremen­dous com­pe­ti­tion from high­end res­tau­rants fea­tur­ing healthy life­styles or other unique char­ac­ter­is­tics. Low­erend fast food chains such as McDon­ald’s have rolled out in­no­va­tions to fur­ther en­hance their mar­ket pres­ence.

“Pizza Hut is caught in the mid­dle,” said Yu.

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