Bubble Tea Meal Kits and Buckets: How Yum China is Spinning

Bubble Tea Meal Kits and Buckets: How Yum China is Spinning

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Yum china (YUMC), the local owner of KFC, Pizza Hut and Taco Bell, is exploring new ways to reach customers at home, as the pandemic continues to affect their businesses.

The company, which reported better-than-expected earnings on Thursday, said home delivery and delivery now account for more than 50% of sales. Revenue grew 11% to almost US $ 2.3 billion, although same-store sales fell 4% in the quarter ended in December, compared to the previous year.

“Domestic consumption is a growing trend. The pandemic has accelerated this,” CEO Joey Wat told CNN Business.

Yum China is now trying to profit even more from the move by pushing for meal kits, which encourage people to make their own “KFC” at home. The product line is a branch of KFC called “Kai Feng Cai”, which is a Chinese nickname for the brand. But it is not an ordinary bucket of fried chicken. Instead, the kit includes dishes like chicken breast, chicken soup and chicken “luosifen”, a noodle soup dish with snail-based rice that has become immensely popular in China.

Wat said the initiative, launched last October at 2,000 stores, was not just a pandemic. After an “encouraging” show of results, the company plans to expand the offer to more cities.

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Yum China, which has about 10,000 stores and 400,000 employees, has been experimenting extensively with trying to bring its business back to pre-pandemic levels, although China has recovered faster than most major economies.
Last year, smart cabinets were launched for customers to remove their autonomous vans that serve breakfast for office workers, plant-based meals and home delivery of Pizza Hut steaks. He even started allowing customers to buy 1.5-liter buckets of bubble tea to take home, which “sold out in a few days,” said Wat.
Yum China started selling large buckets of bubble tea for domestic consumption. The new products "exhausted in a few days," according to your CEO.

The company has reason to stick to any new ideas that remain. On Thursday, he warned of an unstable recovery, which CFO Andy Yeung attributed to “regional outbreaks [of coronavirus], reduced travel and prolonged effect on consumer behavior. “

The next Lunar New Year holiday – typically an important time for sales – is likely “to be moderated,” he told analysts.

A year ago, the picture was even darker. When the pandemic first hit, the company was forced to step back and map out how long it could survive without sales, said Wat.

“We solved that – if we had no business, our business could survive for a year,” she said. That amount of track is “much better than the average player in the industry,” she noted, but “still not as much as I’d like to see”.

The company took some risks. Last year, Yum opened more than 1,100 new stores across the country, a record level of new openings. This year, the company plans to open 1,000 more stores.

A driverless van deployed by KFC. Last November, the brand piloted a fleet of "restaurant cars" on the streets of Shanghai.

“It is still a very careful and well thought out process,” said Wat. “We don’t open stores just to open new stores.”

Some branches follow what the company calls the “small town format”, which requires less investment and offers customers a slightly different menu.

Wat argues that new initiatives are not only pleasant to have; they are a necessity.

“In a highly competitive and ever-changing market like China, we truly believe that innovation is the key not only to survival, but to success,” she said. “We have a lot of work to do here, to protect, to support the jobs of 400,000 people. We need to make sure that we have done our best.”

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