Recently, according to media reports, some KFC stores have taken down their "Free Kitchen" prefabricated products. Today, the reporter checked the KFC mini program and found that there are still "free kitchen" products for sale in the food delivery business of multiple stores in Guangzhou.
At noon, the reporter logged into the KFC mini program and randomly selected three KFC restaurants near Haizhu District, Panyu District, and Tianhe District. On the page, all three restaurants displayed "Free Kitchen", but the products were different. The restaurant side stated that the main reason was the difference in inventory. For example, in the KFC store in Haizhu District, the "Home Fried Chicken" series only has one item, "Explosive Big Chicken Rice Flower"; In addition to the "Big Chicken Rice Flower" variety, the "New Orleans Flavored Chicken Root" variety is also available at KFC restaurant in Tianhe District's "Book Buying Center"; However, the "Free Kitchen" of the "Blessing Colorful World Restaurant" in Panyu District does not have the "Fried Chicken at Home" series.
Insiders in the industry told reporters that from 2021 to 2022, pre made dishes will be concentrated in the C-end market, which is a product of multiple factors such as the combination of stay at home economy and fast-paced life. Enterprises that have partially laid out their supply chains are experiencing rapid development in the consumption of pre packaged food at the C-end. At that time, the home dining table and the new retail market for catering became a "battleground" outside of dine in consumption, and various enterprises were seizing the market through pre made dishes and takeout. First tier cities are the "main battlefield" for pre packaged food. Public data shows that 45.7% of the pre packaged food market share is distributed in first tier cities, with 31.7% of the population in East China, followed by South China, North China, Southwest China, and Central China. The sales of pre made vegetables in East China, North China, and South China account for over 80% of the total sales.
The reporter reviewed the financial reports of Yum! China in recent years and found that both its 2022 and 2023 annual reports consistently mentioned that as part of its revenue growth strategy to promote out of store consumption scenarios, its new retail products aim to meet the needs of home consumption through its online and offline sales channels. We have launched pre made food to further expand our product range, adding some classic restaurant dishes, and also developed our own retail brand, Shao Fan, to sell pre made food through online and offline channels. In other words, pre made food has been included in the new retail business, which is different from the takeaway business. Its existence is to promote "out of store consumption scene income". In its 2023 annual report, KFC also strives to increase revenue from various channels, including dine in, take out, and pre made foods such as egg tarts, chicken rice pudding, and steak.
According to public reports, KFC has officially launched the sale of "pre made dishes" during the 2022 Spring Festival, and multiple platforms such as Dingdong Maicai and Hema have also launched pre made New Year's dishes. In November 2022, KFC's free kitchen baked semi-finished products such as egg tarts and pizzas sold 6 million yuan on Taobao, ranking second on the category list.
With the farewell of the "essential needs" stage and the return of dine in consumption, pre made dishes have also entered a cooling off period. The reporter noticed that on the online side, Tmall's "Kentucky Fried Chicken Free Kitchen Flagship Store" has been closed at present, and the Tiktok account "Kentucky Fried Chicken Free Kitchen Flagship Store" has been closed. Food industry analyst Zhu Danpeng believes that convenience, speed, and deliciousness are the three core factors for pre made meals to solve consumers' eating problems. However, in reality, takeaway can also solve these three pain points.
Yang Huaiyu, an analyst in the consumer goods industry, said that due to the special characteristics of pre packaged food production technology and cold chain preservation, the cost of its products is relatively high. KFC is likely to consider profit margins and remove some of its free kitchen products from certain areas. Zhu Danpeng pointed out that adjusting business strategies in a timely manner according to market conditions is a normal phenomenon.
From the third quarter performance of Yum! China, the performance is commendable, with strong sales growth, improved operating profit margin, and a significant year-on-year increase of 33% in diluted earnings per share. The same store sales index has also increased month on month, achieving the seventh consecutive quarter of same store transaction volume growth. However, the third quarter financial report did not mention new retail and pre packaged food businesses anymore, but instead focused on takeaway and "breakthrough business models". "The takeaway sales increased by 18% year on year, maintaining the annual double-digit growth of Yum! China in the past decade. The takeaway accounts for about 40% of the restaurant revenue of KFC and Pizzahut." The financial report pointed out. Qu Cuirong, CEO of Yum! China, said, "By optimizing the take away strategy, we have attracted more small orders and won a larger market share on the take away platform. The breakthrough business model - Kenyue Coffee and Pizzahut WOW stores" shoulder to shoulder "with KFC restaurants, enables us to further expand the target market and meet the needs of more customers. At present, the number of stores in these two new store models has reached 500 and 150 respectively."
According to financial reports, Yum! China's total revenue reached $3.07 billion in the third quarter of 2024, the highest quarter in history. Revenue increased by 5% year-on-year, operating profit increased by 15% year-on-year, and diluted earnings per share increased by 33% year-on-year, all exceeding market expectations. The core operating profit increased significantly by 18% year-on-year. The system's sales increased by 4% year-on-year, and the same store sales index improved month on month, achieving the seventh consecutive quarter of same store transaction volume growth.