Yum pur­sues de­liv­ery firm


Yum China Hold­ings Inc is in talks to buy food de­liv­ery ser­vices firm Dao­jia.com for up to $200 mil­lion, two peo­ple fa­mil­iar with the mat­ter told Reuters, as the big­gest op­er­a­tor of fast food on the main­land seeks to boost sales from cus­tomers din­ing at home.

Yum China has long-term am­bi­tions to triple its out­lets in Chi­nese main­land to more than 20,000, but as din­ing habits change in the world’s fastest grow­ing ma­jor econ­omy, food de­liv­ery is also be­com­ing a cru­cial area for restau­rant op­er­a­tors to im­prove sales.

The sources warned that dis­cus­sions are at an early stage and a deal isn’t im­mi­nent.

Yum is keen to make in­vest­ments in the sec­tor, but it is still de­bat­ing in­ter­nally whether to ac­quire a busi­ness or buy smaller stakes in a series of such com­pa­nies and have a mean­ing­ful say in their op­er­a­tions, one source added.

Es­tab­lished in 2010, Dao­jia. com fo­cuses on on­line food or­ders and de­liv­ery ser­vices tar­get­ing China’s mid­dle-class ur­ban­ites in 10 cities.

It has a 3,000-strong lo­gis­tics team, and works with more than 6,000 restau­rants.

Food de­liv­ery apps are gain­ing ground in China as the coun­try’s big­gest in­ter­net firms set up “cut-price ser­vices”.

They in­clude Baidu Inc’s Waimai, Alibaba Group Hold­ing-backed Meituan and Ten­cent Hold­ings -backed Ele.me.

JD.com, China’s sec­ond­largest e-com­merce firm, and Mac­quarie Cap­i­tal were in­vestors in a $50 mil­lion round of fundrais­ing by Dao­jia in 2014.

Yum China and Mac­quarie de­clined to com­ment. Dao­jia and JD.com did not re­spond to re­quests for com­ment.

The sources de­clined to be iden­ti­fied as the dis­cus­sions are con­fi­den­tial.

Yum China was only spun off from US-based fast food gi­ant Yum Brands Inc in Novem­ber. The com­pany’s brands in­clude KFC and Pizza Hut.

Last year Yum said food de­liv­ery apps in China were pos­ing a se­ri­ous chal­lenge for its busi­ness.

Yum China CEO Micky Pant said this month that de­liv­ery was just 10 per­cent of com­pany’s sales, but it was grow­ing at dou­ble dig­its and would be an im­por­tant driver of growth.

The lo­gis­tics and de­liv­ery seg­ment has at­tracted in­vest­ments from China’s deep-pock­eted tech­nol­ogy heavy­weights in­clud­ing JD.com, Alibaba, Baidu and oth­ers.

“It’s a very ag­gres­sive play they’re mak­ing. They’ll have ac­cess to de­liv­ery data across China, it’s very pow­er­ful to un­der­stand what peo­ple are buy­ing, what peo­ple are con­sum­ing,” one of the sources said.

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