YUM China: Aiming to "Create Another Pizza Hut in Five Years," Pizza Hut Strives to Double Operating Profit by 2029

YUM China (09987.HK) held an investor event, where the general manager of its brand KFC, Wang Tao, stated that the total number of brand stores currently exceeds 12,600, covering 2,500 cities. From 2019 to 2024, system sales and operating profit are expected to grow at a compound annual growth rate of 5%. He mentioned that the goal is to exceed 17,000 stores by 2028 and to surpass 10 billion RMB in operating profit.

The KFC brand's coffee stores, K Coffee, have now exceeded 1,800 locations, and it is expected to surpass 5,000 by 2029; KPRO, which focuses on the light meal market, has opened over 100 stores in more than 20 cities in China, with a target of reaching 1,000 stores within five years.

Regarding another brand under the group, Pizza Hut, general manager Kuai Jun stated that the plan for the next three years is to add more than 600 new stores each year, aiming for a total of over 6,000 stores by 2028, and to double operating profit by 2029 compared to 2024, achieving the goal of "creating another Pizza Hut in five years."

Additionally, the low-cost brand Pizza Hut WOW has opened over 40 new stores in lower-tier cities, entering more than 40 new cities; the investment per store has decreased by nearly 50% compared to traditional stores, approximately 650,000 to 850,000 RMB. Kuai Jun indicated that the new store return cycle will be maintained at 2 to 3 years. For about 1,500 cities that already have KFC but not yet Pizza Hut, Pizza Hut will accelerate penetration in lower-tier cities relying on innovative models like WOW.

The newly launched coffee joint venture brand Lavazza has expanded its coffee shop and retail business, with approximately 118 stores as of the third quarter of this year, and a restaurant profit margin of 5.8%. YUM China's Chief Customer Officer and Lavazza China General Manager Chen Qi stated that as of the third quarter, the stores have begun to turn a profit; in the next three to five years, Lavazza will accelerate expansion in first-tier and some second-tier cities, aiming to exceed 1,000 stores by 2029 and achieve retail sales of 60 million USD