Yum sales in China suffer as Omicron cases rise
Yum China Holdings Inc. 9987.HK, YUMNC said a resurgence of COVID-19 in the country in recent weeks weighed on sales in the first quarter, delaying the revival of its KFC, Pizza Hut and Taco Bell joints last year.
Same-store sales were down about 20% year-on-year for the first two weeks of March and were still down in recent days, after falling nearly 4% for the combined two months of March. January and February, Yum China noted.
“Entering March, the situation rapidly deteriorated with the highly transmissible variant of Omicron causing outbreaks across Chinaincluding the economically important regions of Guangdong, Shanghai, Shandong and Jilin,” the company said.
The restaurant chain posted a 1% drop in same-store sales last year, an improvement from the 9% drop in 2020. However, strict travel and dining restrictions due to the spread rapid release of the Omicron coronavirus variant have hurt sales this year. .
The company forecast first-quarter operating profit in the range of $165 million to $200 million, from $342 million a year earlier.
China reported more local symptomatic cases of COVID-19 so far this year than it recorded in 2021, as the highly transmissible variant of Omicron sparks outbreaks from Shanghai to Shenzhen.
More than 1,100 Yum China restaurants were temporarily closed or only offered take-out and delivery services, starting Sunday, March 13. It had more than 12,000 restaurants at the end of February.
Yum ChinaShares of , which have been battered in recent days over an audit dispute between Beijing and Washington, fell 10.5% to $33.55, a three-year low.
Yum China and BYD say China’s COVID restrictions impacted operations
The above news was followed by news that Chinese automaker BYD companies 002594.SZ to the KFC operator Yum China 9987.HK say their operations have already been impacted by the country’s latest COVID-19 restrictions, with more disruption expected as case numbers rise.
The impact on business comes as China is battling its worst outbreak since the coronavirus pandemic began in early 2020. It recorded a sharp rise in daily COVID infections on Tuesday, March 15, with new cases more than doubling from a day earlier to a two-year high.
Yumthe operator of the KFC and Pizza Hut restaurants in Chinasaid late Monday, March 14 during a regular earnings briefing that its operations had been significantly impacted by the latest outbreaks and same-store sales fell 20% year-on-year in the first two weeks of March.
BYD, headquartered in Shenzhen, where most companies have been told to ask staff to work from home, said there has been some impact on production at its site in the city.
“We are actively coordinating a response and carrying out epidemic prevention and control as required by the government,” the company said.
Many provinces and cities across the country have carried out mass testing, with some shutting down public transportation and cordoning off apartment buildings and office buildings.
Other companies that have reported disruptions include Chinese flash storage company Netac Technology 300042.SZ. He said some shipments would be delayed as he had to suspend work at his factory in Shenzhen. Meanwhile Apple AAPL.O Lens Technology supplier 300433.SZ said its Dongguan City unit had stopped production.
Foxconn iPhone Assembler 2317.TWToyota 7203.T and Volkswagen VOWG_p.DE also said on Monday March 14 that they had to close factories.
News by Reuters, edited by Hospitality Ireland. Click on subscribe to register for Hospitality Ireland printed edition.