Reuters reports Yum China Holdings is partnering with China’s state-owned oil giants Sinopec Corp and China National Petroleum Corporation (CNPC) to establish KFC restaurants at over 50,000 gas stations nationwide. The initiative, part of the fast-food chain's strategy to diversify revenue streams, will see more than 100 outlets opened within three years, according to CEO Joey Wat.
The New York-listed company, which operates 8,400 outlets in China and aims to reach 10,000 by 2021, cited economic headwinds as a key driver for the expansion. China's growth rate hit a 28-year low in 2019, prompting Yum China to emphasize value promotions and operational adjustments. A 2015 photo shows KFC's presence in Shanghai, highlighting its long-standing market presence.
Wat acknowledged challenges in reviving Pizza Hut's performance, which has seen only three quarters of positive same-store sales growth since 2014. Despite a 6% quarterly sales increase led by KFC, Pizza Hut reported a 2% decline during the same period. The company, spun off from Yum Brands Inc in 2016, faces margin pressures from value-focused strategies but remains committed to returning $1.5 billion to shareholders over three years.
Yum China has implemented new store designs, menu simplifications, and promotional campaigns to revitalize its brands. Wat emphasized that while the 2017 timeline for recovery was ambitious, the company maintains confidence in its long-term strategy. "We're navigating multiple forces to regain momentum," Wat said. "We're on the right track with the initiatives we've undertaken." The firm continues to balance expansion goals with financial stability amid shifting consumer demands.
