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BEIJING (Reuters) – Yum China Holdings (NYSE:YUMC), owner of the KFC and Pizza Hut chains in mainland China, plans to stick to a goal of opening up to 1,300 stores in 2023, as it still sees growth opportunities despite the slowing economy, its CEO said on Tuesday.
Joey Wat told Reuters in an interview after the company’s results, which showed a 25% rise in second-quarter revenue, Yum intends to stay at a pace of 1,100 to 1,300 new outlets this year, while overall capital spending will be between $700 million to $900 million.
“The market, despite sort of slower GDP growth, it is still much faster, or twice as fast as some developed markets and it is huge. It still offers us amazing growth opportunities,” she said.
“In the last few years we have been opening new stores not only at lower tier cities but also increased density in the top tier city and the results are very good,” she said, referring to the unofficial classification of China’s cities by population size, income and consumer activity.
China’s post-COVID recovery has lost steam in recent months as demand has weakened abroad and remained lacklustre at home, with the Chinese economy growing at a sluggish pace in the second quarter.
Catering and tourism have been one of the few economic bright spots as Chinese residents have sought new experiences and leisure activities.
Wat said people still needed time to adjust to the lifting of the COVID curbs and noted that there had been small waves of infections that had impacted consumption. Still, traffic has returned though spending per person has decreased as consumers were becoming more “rational” in their spending, she added.
“Now we are in summer trading, we see that traffic are building because people are making trips and therefore in tier 2 cities the recovery is going well. It just takes a bit more time … because after three such challenging years you need to give people time to get out of it.”
Yum’s Hong Kong-traded shares rose 1% in morning trading on Tuesday.
