The Chinese quick-service restaurant group expanded its Lavazza café footprint during the fourth quarter of 2022 to reach 85 outlets, but remains significantly behind its 2025 growth target.
Yum China is steadily expanding its premium Lavazza coffee shop concept across China, opening 27 outlets in 2022, but is yet to ‘accelerate’ its store network as outlined in 2021.
Yum China partnered with Italian coffee roaster Lavazza in May 2020 to establish its premium coffee shop concept across the country. In September 2021 the two companies announced a $200m investment to grow the concept to 1,000 stores by 2025.
At the time Yum China CEO Joey Wat said the companies were ‘well positioned to capture the significant coffee opportunity in China with accelerated store network development’.
The quick-service restaurant group’s 2022 results indicate the number of Lavazza café outlets increased 46% over the last 12 months to reach 85 stores across China.
The moderate expansion of the Lavazza café concept coincided with difficult trading conditions across China and 80 net store closures of Yum China’s ‘other’ category of hospitality brands, which includes restaurant chains Taco Bell, Huang Ji Huang and Little Black Sheep.
The quick-service restaurant group, which operates nearly 12,000 stores across its flagship KFC and Pizza Hut franchises, cited China’s zero-Covid policy and increasing inflation as key factors behind a 3% decline in 2022 group revenues.
However, the company opened 1,159 net new stores across its six foodservice brands in the 12 months ended 31 December 2022 to reach 12,947, led by 926 new KFC stores and 313 new Pizza Hut outlets.
KFC began selling freshly ground coffee across its Chinese stores in 2016, with the company reporting it sold 170 million cups of coffee in 2021. In October 2022, the fast-food chain opened its first 'To-Go coffee kiosk in Shanghai.
Yum China said it is ‘cautiously optimistic’ that trading will improve in 2023 as the country enters its new phase of Covid response but warned uncertainties remain.
The company cited consumer spending being more vigilant and suggested inflation and ‘softening global economic conditions may further weigh on customer caution. Yum China expects to open approximately 1,300 net new stores across its brands in 2023.
