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Yum China (YUMC) Boosts Presence in Shanghai With New KFC Store

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Yum China Holdings, Inc. (YUMC - Free Report) recently announced the opening of its new KFC store in Shanghai. This marks the company’s 500th KFC store opening in the region.

The new store offers Chinese and Western elements in its menu and offerings. Additionally, menu items such as Original Recipe Chicken, Dragon Twister, Portuguese egg tart, New Orleans Roasted Chicken Wing, Century Egg & Pork Congee and Great Value Family Bucket have been made available for China markets.

Yum China is focused on the relentless unit growth of restaurants to drive incremental sales. As of Mar 31, 2023, there were over 9,200 KFC stores in China. The company reported a controlling interest of 58%, 70%, 83%, 92% and approximately 60% in the entities that own and operate the KFCs in and around Shanghai, Beijing, Wuxi, Suzhou and Hangzhou, respectively.

Management is optimistic with regards to the new store opening and emphasizes on the continuation of unit expansion in the country. In 2023, the company intends to open 1,100-1,300 new stores across its brands.

Price Performance

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In the past year, shares of the company have gained 29.2% compared with the industry’s 22.7% growth. The company is benefiting from menu innovation, unit expansion and digitalization efforts. The company is gradually shifting toward digital and content marketing to expand customer base. Also, focus on logistics center openings and supply-chain security bode well. With a focus on improving customer experience and operating efficiency, the company stated to continue investments in this direction. Earnings estimates for 2023 have increased in the past 60 days, depicting analysts’ optimism over the stock’s growth potential.

Zacks Rank & Key Picks

Yum China currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Retail-Wholesale sector include:

Dave & Buster's Entertainment, Inc. (PLAY - Free Report) sports a Zacks Rank #1 (Strong Buy). PLAY has a trailing four-quarter earnings surprise of 6.8%, on average. Shares of PLAY have gained 42.8% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for PLAY’s 2023 sales and earnings per share (EPS) indicates a rise of 16.9% and 28%, respectively, from the year-ago period’s levels.

Arcos Dorados Holdings Inc. (ARCO - Free Report) carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth rate of 9.5%. The stock has rallied 67.1% in the past year.

The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales and EPS suggests growth of 13.4% and 4.4%, respectively, from the year-ago period’s levels.

Chuy's Holdings, Inc. carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 23.4%, on average. Shares of CHUY have skyrocketed 102.9% in the past year.

The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests growth of 9.9% and 27.7%, respectively, from the year-ago period’s levels.


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