Widespread outbreaks of covid-19 in mainland China in the fourth quarter of 2022 hurt the profits and revenue of Yum China, the country’s largest restaurant company.
Restaurant operator KFC and Pizza Hut’s profit fell 89 percent from a year earlier to $53 million, the company said in a new filing. Revenue in October-December fell 9% to $2. 09 billion.
However, Yum China is “cautiously optimistic” this year and aims to make new investments and expand.
Leaving Yum! Yum China, operating as an independent company since 2016, is the largest restaurant chain on the mainland, with nearly 13,000 places to eat in 1800 cities in December. CEO Joey Wat was ranked 76th on the Forbes Powerwomen 2022 list released last December.
“In December, the government issued a series of new COVID reaction rules that particularly replaced its COVID policies, adding the elimination of mass testing and central quarantine requirements, as well as the lifting of restrictions,” the company said. “A large wave of infections temporarily swept across the country, spreading from major cities such as Beijing, Guangzhou and Shanghai. “
“Due to widespread infections, we experienced a shortage of staff in places to eat that led to the temporary closure of more than 1300 retail outlets on average or limited supply in December. As a significant portion of the population became inflamed or chose to stay at home to avoid infection, traffic from the place to eat decreased significantly.
Yum China has reallocated the team among the outlets to prioritize the outlets with the highest demand. “Many outlets that remained open were operating with shorter hours and a simplified menu to streamline operations,” he said.
Looking ahead, Yum China said, “As the country enters the new COVID response, we are cautiously optimistic. The overall business environment and customer confidence have improved, but near-term uncertainties remain. “
“Consumers tend to pay more attention to spending after the holidays,” he said. “Experiences in other countries also suggest that new outbreaks following the easing of covid restrictions and the emergence of other covid variants are genuine possibilities. Some of the Populations may remain cautious about government exits, while macroeconomic factors, such as an inflationary environment and the easing of the global economic situation, are likely to influence consumer spending.
However, Yum China said it plans to charge 1100 to 1300 net new retail outlets and spend $700 million to $900 million on capital expenditures in 2023.
Investors who had expected further expansion this year have risen more than 55% in the company’s U. S. -listed shares. It has been in the U. S. since last October, when China began relaxing its strict “zero covid” measures. Its shares are also traded in Hong Kong.
The country’s economic outlook remains higher than that of many countries this year. The International Monetary Fund projects that GDP will grow by 5. 2% this year, up from 3% in 2022.
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