Blue Whale News, September 12 (Reporters Zhu Xinyue and Zhang Tian) On average, a new K Coffee (K Coffee) store opens in 1.6 days.
According to Yum China's (09987.HK, NYSE: YUMC) interim results report, the first half of this year achieved operating income of 5.637 billion US dollars, an increase of 1.18% over the previous year; core operating profit increased 5% to 0.671 billion US dollars. While the Chinese market was cold, Yum China exceeded expectations and achieved double growth.
Among them, KFC achieved revenue of 4.244 billion US dollars, accounting for more than 75% of Yum China's total revenue.
According to analysis by industry insiders, Kenyue Coffee's rapid development was one of the key factors behind Yum's performance in China exceeding expectations in the first half of the year. Yum China has adopted a “two-wheel drive” strategy. On the one hand, it has attracted the attention of a large number of consumers by launching an affordable 9.9 yuan coffee to explore and rapidly expand the Chinese coffee market; on the other hand, Kenyue Coffee, as KFC's new revenue selling point, has further enhanced the attractiveness and profitability of KFC stores and achieved win-win cooperation among brands.
The results of this strategy have been remarkable, and the number of Kenyue Coffee stores has exploded in a short period of time. According to Yum China's latest announcement, the total number of stores will reach 500-600 by the end of this year. From 100 stores at the end of March this year to successfully opening the 300th store in the Wutai Mountain Scenic Area in Xinzhou on August 12, a new Kenyue Coffee store opened in an average of 1.6 days.
Kanyue Coffee's expansion path was supported by KFC's strong backing. As of June 30, the total number of Yum stores in China reached 0.015 million, of which the number of KFC stores was 0.0109 million. By cleverly arranging the Kanyue Coffee store next to KFC, the two share kitchen resources, effectively reducing operating costs and maximizing customer traffic. This strategy not only accelerated Kenyue Coffee's market penetration, but also further strengthened KFC's market position.
According to the data, KFC has sold more than 1 billion cups of coffee in 10 years since it began selling coffee in stores in 2014. In the first half of this year alone, KFC sold nearly 0.12 billion cups of coffee, up 36% year on year. Sales exceeded 1 billion yuan, up 26% year on year, and revenue was very impressive.
Therefore, some analysts believe that the rapid expansion of Kenyue Coffee may be that Yum China has smelled a gradual coolness in the restaurant market and played a secondary card.
According to data, China's restaurant chain rate has risen steadily from 19% in 2022 to 21% in 2023, with more and more food brands for consumers to choose from; while the scale of China's coffee industry is expected to grow to 313.3 billion yuan in 2024. The annual coffee consumption in China will rise from 9 cups to 16.74 cups, and the market consumption potential is huge.
It is worth noting that Kenyue Coffee has followed KFC's strategy of taking root in the sinking market in recent years, and has set its sights on more promising second- and third-tier cities and sinking markets, and has avoided fiercely competitive first-tier and new-tier cities.
By the end of 2023, the urbanization rate of China's resident population had reached 66.2%. Kenyue Coffee's strategic deployment points to the growing demand for coffee consumption among young people in small towns. Meanwhile, Yum China's official government has clearly stated that in the future, KFC will use small town mini stores to find new opportunities in low-tier cities.