What a US foodservice recovery could look like

Mike Troy
Editorial Director
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Operations have begun to normalize for Yum China Holding's 9,200 restaurants.

As retailers and food service look ahead for a resumption of normalized operations, one of the largest restaurant operators in China is offering an update on what that could look like.

Yum China Holdings said about 95% of its 9,200 Pizza Hut, Taco Bell, KFC and other restaurants in more than 9,200 cities, are either fully or partially open. The company said it is seeing, “early signs of recovery, as business gradually resumed and people returned to work in China. However, restaurant traffic is still heavily impacted as people continue to implement social distancing measures.”

The company’s store closures peaked in February when approximately 35% of its restaurants closed while others operated with reduced hours or restrictive policies. Almost all stores that remained open experienced significant declines in traffic and as the company previously disclosed, same-store sales declined 40% to 50% during the Chinese New Year holiday period.

“Traffic at open stores is recovering slowly and remains well below pre-outbreak levels. The pace of recovery varies by region and is slower during weekends as people avoid going out. In recent days, same-store sales were down approximately 20%. Sales performance fluctuates as the recovery is uneven, and the situation continues to evolve,” the company said in an update to investors.

During the outbreak, food delivery became a more popular option and Yum benefitted as it was perceived as having high safety standards. The company implemented contactless delivery in late January to enhance preventative health measures. That service proved popular with customers and has supported the delivery business during a period of reduced dine-in traffic. Delivery sales grew year over year, and its mix as a percentage of company sales approximately doubled during this period.