SHANGHAI, China – Yum China Holdings, Inc. today updated its first quarter 2022 business performance in light of the recent COVID-19 development in China. As we mentioned in the fourth quarter earnings release, same-store sales in January 2022 improved modestly from the fourth quarter, but were still down year over year, compared to the comparable Chinese New Year Holiday period in 2021.
Entering March, the situation has rapidly deteriorated with the highly transmissible Omicron variant causing outbreaks across China, including economically important regions of Guangdong, Shanghai, Shandong and Jilin. Daily cases have hit a two-year high.
Quarter-to-date case counts for 2022 have surpassed that of full year 2021. Stricter preventive health measures and containment measures have been observed nationwide, including multiple rounds of city-wide testing and partial or complete city lockdowns.
Our operations are significantly impacted by the latest outbreaks and the tighter public health measures which resulted in a further reduction of social activities, travelling and consumption. Although the situation is still rapidly developing, we are providing the following first quarter 2022 update based on latest trends:
- Same-store sales
- Decreased approximately 4% year over year for the two months combined in January and February.
- Decreased approximately 20% year over year for the first two weeks of March and is still trending down in recent days.
- Operating profit
- Declined approximately 20% year over year for the two months combined in January and February, primarily due to the significant sales deleveraging and cost inflation.
- Based on the latest trend, we currently estimate that Operating profit for the first quarter to be in the range of $165 to $200 million.
- Stores temporarily closed or offered only takeaway and delivery services
- Over 500 stores at the peak in January 2022.
- Over 1,100 stores as of March 13, 2022.
- Total store count reached 12,163 as of February 28, 2022, with 375 net new store openings for the two months combined in January and February.
Joey Wat, CEO of Yum China, commented, “As the country battles the surge in COVID-19 cases, we are staying vigilant to ensure the health and safety of our employees and customers. We will keep our restaurants open and provide food services to customers wherever it is possible and safe to do so. Our robust supply chain management has shielded us from material business disruptions. We will continue to drive sales especially in delivery and takeaway occasions.
We will also manage costs diligently, and adjust our operations as well as promotion offers as the situation evolves. With our resilient business models, operational excellence and leading digital and delivery capabilities, we are confident we will overcome this challenging and volatile situation. We will continue to execute our RGM strategic framework to fortify resilience, accelerate growth and widen our strategic moat. We believe that this combination of efforts will enable us to drive long-term growth and generate substantial shareholder value in the years ahead.”
