On December 24th, the news of KFC's price increase surged to the top of trending topics.
KFC officially stated that the average price increase is 2%, with specific adjustments ranging from 0.5 yuan to 2 yuan. This is the brand's first product price adjustment in nearly two years.
As early as mid-year, consumers had reported on social media that the benefits of KFC's &#34;God Card&#34; had changed, with the description of &#34;60% off breakfast combo&#34; being changed to &#34;starting from 60% off.&#34;
Regarding this price adjustment, a relevant person in charge at KFC stated that the company will regularly assess and cautiously adjust the price structure in light of changes in operating costs. KFC's popular promotional combos, such as the &#34;Crazy Four&#34; discount, &#34;Crazy Day&#34; events, &#34;OK Meal,&#34; and &#34;Kids Meal,&#34; will remain at their original prices.
In the current context of the &#34;Crazy Thursday&#34; promotion becoming normalized, the decline in single-store operating efficiency is a problem that KFC and its parent company, Yum China (9987.HK), must face.
In the third quarter, Yum China's revenue grew by 5% year-on-year to $3.07 billion, setting a new record for quarterly revenue; operating profit increased by 15% year-on-year to $371 million; and core operating profit rose by 18% year-on-year.
However, same-store sales and average transaction value for its two major brands were both lower than the same period last year.
KFC's same-store sales declined by 2% year-on-year in the third quarter, with average transaction value decreasing by 3%; Pizza Hut's same-store sales fell by 4%, with average transaction value dropping by 9%.
Yum China's management mentioned in the third-quarter earnings call that KFC is expanding its price range, with pricing in the third quarter slightly lower than the previous quarter and higher than in 2019. However, in the long run, KFC's pricing will tend to stabilize.
Pizza Hut has chosen to strengthen its &#34;cost-performance&#34; strategy, with the brand implementing a comprehensive price reduction on 30 products at the beginning of December, covering various categories such as pizzas, snacks, and beverages.
When discussing the relationship between volume and price, Yum China's CEO, Joey Wat, stated that in the long run, Yum China will indeed focus on increasing transaction volume.
According to disclosures, KFC and Pizza Hut have achieved positive growth in same-store traffic for seven consecutive quarters.
Additionally, by optimizing its delivery strategy, Yum China has attracted more small orders and gained a larger market share on delivery platforms.
Yum China's store scale is continuously expanding.
In the third quarter, Yum China added a net of 438 new stores, including a net increase of 145 franchise stores, accounting for 33%.
As of September 30, KFC had a total of 11,283 stores, with franchise stores accounting for 12%; Pizza Hut had a total of 3,606 stores, with franchise stores accounting for 5%.
The company expects that in the coming years, the proportion of franchise stores among KFC's net new stores will gradually increase to 40%-50%, while for Pizza Hut, it will rise to 20%-30%.
The new store model, which requires lower investment and is more conducive to market penetration, is highly anticipated.
In May of this year, Pizza Hut launched the WOW restaurant, focusing on &#34;single-person meals&#34; and high cost-performance, with a menu including 9 yuan mushroom soup, 15 yuan pasta, and pizza.
Yum China revealed that after five months of launching WOW, the number of stores has reached 150, covering more than ten provinces. By the end of this year, the number of WOW stores is expected to exceed 200
According to the latest store opening guidelines, YUM China expects to add approximately 1,500 to 1,700 net new stores throughout 2024, with a goal of reaching 20,000 stores by 2026

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- On December 24, KFC announced a price increase averaging 2%, marking its first adjustment in two years, with changes ranging from 0.5 to 2 yuan.  
- Despite this, popular meal deals will remain at their current prices, as KFC evaluates its pricing structure in response to operational costs.  
- Yum China reported a 5% revenue increase in Q3, but same-store sales for KFC and Pizza Hut declined, prompting a focus on volume growth and expansion, with plans to open 1,500 to 1,700 new stores in 2024.

KFC rises, Pizza Hut falls, YUM China continues its ongoing "downward" strategy