Yum China Plans 20,000 Stores by 2026 as Delivery Costs Pressure Margins
Yum China projects 20,000 restaurants by end-2026 with franchisees driving most openings. It warned that higher delivery sales mix will pressure near-term margins despite expecting rider cost relief and slight full-year profit margin expansion through efficiency measures.
1. Delivery Cost and Margin Pressure
Yum China said the growing mix of delivery sales will drive higher rider costs and compress near-term margins. Management noted early signs of more disciplined competition among delivery platforms, expecting sequential improvement in same-store sales growth in Q2.
2. Aggressive Store Expansion
The company plans to reach 20,000 outlets by the end of 2026, with franchise partners accounting for the majority of new openings. This expansion spans KFC, Pizza Hut and emerging concepts, reinforcing market penetration across urban and Tier 3 cities.
3. Full-Year Margin Guidance
CFO Adrian Ding confirmed full-year operating profit margins are expected to tick up slightly despite delivery cost headwinds. He flagged that moderating rider subsidies in H2 plus efficiency initiatives and favorable rental conditions will support margin targets.
4. KPRO Performance and Growth
CEO Joey Wat highlighted KPRO’s strong performance, noting a 20% sales uplift at parent stores and plans to accelerate growth to around 600 outlets. Trials in Tier 3 cities have shown promising demand for its health-focused menu and beverage offerings.