Business Intelligence on Retailing, Franchising, and Consumerism in China


Yum Expects 4% Individual Restaurant Sales Decline In China

The international food and beverage group Yum! Brands Inc. announced its operating revenue expectations for the fourth quarter of 2012, and said the individual restaurant sales in China may decrease by 4% year-on-year.

During the first three quarters of 2012, Yum's profit rate already saw obvious decline. In the first quarter, its profit rate decreased from 25.1% in the same period of last year to 23.6%; in the second quarter, its profit rate decreased from 15.4% to 11.6%; while in the third quarter, its profit rate saw a slight increase from 21.3% to 21.4%.

At the same time, Yum's individual restaurant sales also showed a decreasing trend. In the first quarter, its individual restaurant sales increased by 14% year-on-year; in the second quarter, its individual restaurant sales increased by 10% year-on-year, but decreased by 4% over the first quarter; and in the third quarter, its individual restaurant sales increased by 6% year-on-year, but again decreased by 4% over the previous quarter.

A representative from Yum said that the decreased profiting was mainly attributed to the labor and product costs increase in China. To improve its profiting ability, Yum plans to continue to expand its outlets in China, while shutting down underperformed restaurants.





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