It may be a long while before life returns to normal, but Yum China Holdings (NYSE:YUMC) provided investors with a business update on Monday that illuminated a few bright spots and early signs of business traction as the COVID-19 pandemic continues to subside in China.
Management of the mainland China KFC and Pizza Hut licensee relayed that 95% of stores are now open, while between 10% and 20% are only providing takeout and delivery services. This compares to an open-store percentage of just 65% at the peak of the coronavirus emergency in China in February.
Management noted that recovery among stores is uneven and that some locations are still operating under shortened hours. Same-store sales over the last several days are down 20% against prior-year measurements.
On a more promising note, the company honed its delivery acumen during the outbreak, introducing contactless delivery in China. This has understandably become a popular sales channel during the crisis -- delivery sales are growing year-over-year, and they've recently doubled as a percentage of total company sales.
Capitalizing on changed dining patterns, Yum "subsequently launched contactless pick-up and corporate catering services as highly sanitary options for consumers and corporate customers," while providing delivery services to heavily impacted quarantined communities in February and March.
Getting 95% of its restaurants back in operation -- even as many maintain reduced hours -- is a positive step for Yum Brands. While it's extremely hard to predict when the company will achieve pre-crisis sales levels, it's likely to see a long-term benefit in the form of increased delivery and catering, and it may also gain from its contactless service innovations. Investors will receive a clearer financial outlook when the company reports first-quarter earnings in a little over four weeks, on April 28.