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Yum China CEO: Online ordering surge ‘will continue’ post-pandemic

·3 min read
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Chinese e-commerce giant Alibaba (BABA) beat expectations on Thursday with a 64% revenue surge in the first quarter, suggesting that the shift toward online shopping brought about by the coronavirus pandemic is becoming a lasting trend amid China's reopening.

"Digitization has been the trend in the last few years," Yum China CEO Joey Wat told Yahoo Finance Editor-in-Chief Andy Serwer. "Going forward, I do see the trend will continue to further evolve and consolidate."

Wat is expecting continued growth in online ordering for Yum China, which oversees nearly 11,000 coffee shops and restaurants that include popular brands KFC, Pizza Hut, and Taco Bell. 

GREECE - 2021/05/07: In this photo illustration a Taco Bell logo seen displayed on a smartphone screen with Taco Bell website in the background. (Photo Illustration by Nikolas Joao Kokovlis/SOPA Images/LightRocket via Getty Images)
A Taco Bell logo seen displayed on a smartphone screen. (Photo Illustration by Nikolas Joao Kokovlis/SOPA Images/LightRocket via Getty Images)

Food delivery in China was growing rapidly before the coronavirus pandemic: According to a report from Trustdata, a mobile intelligence platform, transaction volume of China’s online food delivery market grew 30% in 2019, 55% in 2018, and 65% in 2017.

And 2020 saw a notable rise in online ordering, at least for Yum China, which saw an increase in the number of dine-in customers ordering through their phones while seated at the restaurant.

"That includes the casual dining, by the way, includes the table side, because the tables are ordering with your phone," Wat noted. "That certainly was expanding very fast during 2020 and will continue when we continue to improve the interface [with] how easy it is to use the phone to order food inside the restaurant."

Behind the numbers

In the first quarter of 2021, delivery orders made up 28% of Yum China's sales, which marked a 10% increase from the pre-COVID level in first quarter of 2019, Wat said on the company's earnings call last month.

Yum China also saw same-store sales grow 10% year-over-year in the first quarter, and added to its footprint with 315 new locations.

Yum China CEO Joey Wat speaks with Yahoo Finance Editor-in-Chief Andy Serwer on
Yum China CEO Joey Wat speaks with Yahoo Finance Editor-in-Chief Andy Serwer on "Influencers with Andy Serwer."

Meanwhile, digital ordering jumped from about 55% of KFC and Pizza Hut Company sales in 2019 to 80% in 2020, Yum China stated in its 2020 annual report. The company's online membership base eclipsed 300 million, and made up about 60% of sales at KFC and Pizza Hut in 2020.

But Wat did acknowledge that dine-in business "is not back to pre-COVID levels," citing challenges particularly at the company's locations near international airports and train stations, where travel remains sluggish.

"The international airport business is very, very quiet," she said.

Nevertheless, Wat said, the growth of Yum China's online ordering business preceded the pandemic, and will persist as the company expands to new cities. Even further, she added, Yum China saw "very fast" growth last year in the use of ordering by phone among customers who dined in at its restaurants.

"Because we are a big country, I do see this number will continue to expand as we go deeper into lower-tier cities, and the urbanization process continues," Wat said.

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