Key Takeaways:
- Yum China repurchased 17.9 million of its shares this year through April 23, well ahead of the 12.4 million shares it bought back in all of 2023 and 10.6 million in 2022
- The company recently passed the 15,000-store milestone in China and launched a new standalone coffee chain attached to existing KFCs, with plans to ramp up the model
By Doug Young
In the race for China’s fast-food market, Yum China Holdings Inc. (NYSE: YUMC) is staying well ahead of the pack. The operator of KFC and Pizza Hut restaurants in China passed a major milestone in the first quarter with its 15,000th store opening, as it boosted its presence in the many smaller cities that are home to much of country’s population.
That’s one of the top highlights from the company’s latest quarterly report issued on Tuesday. Another shows Yum China spent a record $745 million on share buybacks and dividends, often collectively referred to as “returning money to shareholders,” in the first three months of the year. It did that by buying back more of its shares in a single quarter than in any year in its 8-year history as a publicly traded company. It also boosted its quarterly dividend to a new high.
It repaid investors as it continued with its breakneck expansion in a market that still has plenty of room to grow despite more cautious consumer spending. Among other things, it ramped up its drive into China’s smaller cities by rolling out new smaller store formats that can be opened for as little as one-third of its current average cost. It also ramped up its push into franchising, leveraging its strong know-how and operational capability and taking advantage of experienced third-party partners to expand more quickly, especially in smaller markets and harder-to-reach channels like hospitals, universities or even highway service stations.
The company also threw down the gauntlet to coffee shop operators like Starbucks (NASDAQ: SBUX) and local leader Luckin (OTC: LKNCY), with KFC rolling out separate storefronts for KCOFFEE, its coffee segment, side-by-side with ...