The company that owns Pizza Hut and KFC in China has admitted that coronavirus will hurt its business this year as it admitted it has no idea when stores shut down by the outbreak will reopen.
Yum China, which operates 9,200 restaurants, recently set a record by opening 1,000 new sites in the space of a year. But a third of its stores are temporarily closed with parts of China on lockdown due to the virus.
“Looking ahead, while it is difficult to fully ascertain the expected impact of the coronavirus outbreak at this time, we can reasonably expect it to materially affect our 2020 sales and profits,” said Andy Yeung, CFO of Yum China yesterday.
The firm described the situation as “complex and rapidly evolving”, and revealed it had taken a number of measures to protect its employees, customers and business partners, including the temporary closure of more than 30% of its restaurants in China.
For restaurants that remain open, same-store sales since the Chinese New Year holiday period were down 40% to 50% compared to the comparable Chinese New Year holiday period in 2019, due to shortened operating hours, reduced traffic and other factors related to the outbreak.
Yum China said it could not forecast when the closed restaurants will re-open, at what rate or when levels of traffic would be restored.
It also warned that it may have to close additional stores, reduce operating hours, or take other steps, as the situation warrants.
Joey Wat, CEO of Yum China, said: “We have implemented various preventative measures across our restaurants and other workplaces to help protect our employees and customers. We will continue to monitor this fluid situation and respond accordingly. Despite this challenge and disruption to our business, we remain confident in the long-term market potential in China.”
Solid profit growth and a healthy balance sheet enabled Yum China to return $442m to shareholders through dividends and share repurchases last year.
Coronavirus, which originated in the city of Wuhan, has infected more than 28,000 people worldwide.