YUMC - Yum China 'Rediscovers' Its Fast-Food Roots In Budget-Conscious Times | Benzinga
Key Takeaways:
- Yum China reported record third-quarter revenue and adjusted operating profit, which rose 15% and 10% year-on-year, respectively, in constant currency
- The company is widening its food prices to capture an underserved segment at the value end of China’s pizza market and expand the lower range of its KFC offerings
By Doug Young
Times may be getting leaner in China these days, but people still enjoy eating out.
That’s one of the key messages coming through in the latest quarterly results from Yum China Holdings Inc. (NYSE: YUMC), which managed to report record third-quarter revenue and strong profit growth even as China’s own breakneck growth of earlier times showed signs of entering a new phase. The growing consumer caution on spending actually favors fast food outlets like KFC and Pizza Hut, which have a wide range of offerings for value-conscious customers.
China’s slowing economy is showing up in a wide range of indicators lately, from sagging exports to record youth unemployment, falling real estate prices and signs of deflation. As that happens, consumers are growing increasingly careful with their spending. Sellers of big-ticket items like cars, homes and even smartphones were the first to feel the pinch, as the caution slowly creeps down the food chain. Some signs have emerged that a recovery may be underway, such as improvements in exports, even as calls continue for the government to provide more supportive measures.
"It’s important to remember that consumers have continued to be cautious in their spending,” said Yum China CEO Joey Watt on the company’s earnings call following the release of its third-quarter results on Tuesday. "Our formula to capture sales growth has always been simple: good food, good fun, and exceptional value,” she added.
CFO Andy Yeung elaborated on the current sentiment, noting that demand began to soften in September and ...