Yum China Holdings, Inc. (YUMC): Business Model Canvas [11-2024 Updated]

Yum China Holdings, Inc. (YUMC) stands as a leading player in the fast-food industry, operating iconic brands like KFC and Pizza Hut across China. Their Business Model Canvas reveals a well-structured approach that leverages key partnerships and a robust supply chain to deliver value to a diverse customer base. Discover how they navigate the competitive landscape through innovative strategies and a focus on customer engagement, driving growth and profitability in a dynamic market.

Yum China Holdings, Inc. (YUMC) - Business Model: Key Partnerships

Franchise relationships with KFC and Pizza Hut

Yum China operates franchise relationships with KFC and Pizza Hut, which are pivotal to its business model. As of September 30, 2024, Yum China had a total of 13,571 company-owned restaurants and 2,290 franchised locations, marking a 20% increase in franchise units year-over-year. Franchise fees and income for the quarter ended September 30, 2024, amounted to $25 million, up from $23 million in the same quarter of the previous year.

Supply chain partnerships for food and paper products

Yum China has established significant supply chain partnerships to support its operations. For the quarter ended September 30, 2024, the company reported costs of $918 million for food and paper products, compared to $858 million in the same quarter of 2023. Notably, Yum China purchased inventories of $119 million from Sunner for the quarter ended September 30, 2024.

Supply Partner	Q3 2024 Purchases (in millions)	Q3 2023 Purchases (in millions)	Year-to-Date 2024 Purchases (in millions)	Year-to-Date 2023 Purchases (in millions)
Sunner	119	136	366	392

Collaborations with delivery service providers

Yum China has formed collaborations with delivery service providers, including Meituan. The company initially invested approximately $74 million in Meituan, a leading food delivery aggregator in China. As of September 30, 2024, the fair value of the investment in Meituan was recorded at $123 million. These partnerships enhance Yum China's distribution capabilities, contributing to its competitive edge in the fast-food market.

Marketing partnerships for advertising campaigns

Yum China engages in various marketing partnerships to bolster its brand presence. The company's advertising expenses for the quarter ended September 30, 2024, were significantly influenced by these collaborations. The overall net income for Yum China for the quarter was $297 million, reflecting the effectiveness of its marketing strategies. Advertising-related revenues contributed $35 million in other revenues for the same quarter.

Marketing Partnership Type	Q3 2024 Revenue (in millions)	Q3 2023 Revenue (in millions)
Advertising Revenues	35	32

Yum China Holdings, Inc. (YUMC) - Business Model: Key Activities

Restaurant operations and management

As of September 30, 2024, Yum China operated a total of 15,861 restaurants, which includes 13,571 company-owned locations and 2,290 franchisee locations. The company reported total revenues of $8,708 million for the year-to-date ended September 30, 2024, an increase from $8,485 million in the same period of 2023.

Development of new store locations

In 2024, Yum China has focused on expanding its footprint by adding new locations. The company achieved a 12% increase in total unit count compared to the previous year. The net new unit contribution was approximately 7% for the quarter ended September 30, 2024, contributing significantly to the overall company sales.

Metric	Q3 2023	Q3 2024	Year to Date 2023	Year to Date 2024
Company Sales ($ millions)	$2,759	$2,895	$8,048	$8,217
Net New Units (%)	N/A	7%	N/A	8%

Franchise support and training

Yum China continues to invest in franchise support, providing comprehensive training and resources. Franchise fees and income reached $72 million for the year-to-date ended September 30, 2024, up from $69 million in the same period in 2023. This growth reflects the company’s commitment to enhancing franchise operations and ensuring quality service across its network.

E-commerce and digital marketing initiatives

The company has made significant strides in e-commerce and digital marketing, focusing on improving customer engagement through digital platforms. In 2024, Yum China’s digital sales accounted for approximately 30% of total sales, driven by enhanced online ordering systems and marketing campaigns. The company’s investment in technology and digital infrastructure is aimed at bolstering customer experience and operational efficiency.

Yum China Holdings, Inc. (YUMC) - Business Model: Key Resources

Brand equity and reputation of KFC and Pizza Hut

The brand equity of KFC and Pizza Hut significantly contributes to Yum China Holdings, Inc.'s market position in the competitive landscape of the Chinese fast-food industry. As of September 30, 2024, KFC generated approximately $6.45 billion in company sales, while Pizza Hut contributed around $1.72 billion. The brands are recognized for their quality, consistency, and innovation, which enhances customer loyalty and drives sales growth.

Extensive restaurant network in China

Yum China operates a vast network of restaurants across China, with a total of 15,861 locations as of September 30, 2024. This includes 13,571 company-owned restaurants and 2,290 franchisee-operated locations, marking a 12% increase in the total unit count compared to the previous year. This extensive footprint allows Yum China to effectively reach a broad customer base and capitalize on the growing demand for fast food in urban and rural areas alike.

Strong supply chain infrastructure

The company has developed a robust supply chain infrastructure that supports its operational efficiency and product quality. Yum China sources ingredients from local suppliers, ensuring freshness and compliance with local standards. In the third quarter of 2024, the operating profit margin stood at 12.1%, reflecting the effectiveness of its supply chain management. The strategic partnerships with suppliers also help mitigate risks associated with price fluctuations and supply disruptions.

Proprietary recipes and operational systems

Yum China leverages proprietary recipes and operational systems that enhance its menu offerings and streamline processes. The company invests in research and development to innovate menu items that cater to local tastes, which has proven successful in driving customer engagement. In 2024, adjusted EBITDA reached approximately $1.395 billion, indicating the financial strength derived from its unique offerings and operational efficiencies.

Key Resource	Description	Financial Impact (2024)
Brand Equity	Strong recognition of KFC and Pizza Hut in the Chinese market.	KFC Sales: $6.45 billion; Pizza Hut Sales: $1.72 billion
Restaurant Network	15,861 total locations; 13,571 company-owned and 2,290 franchises.	12% increase in total unit count
Supply Chain	Robust infrastructure with local sourcing for quality and freshness.	Operating profit margin: 12.1%
Proprietary Recipes	Innovative menu tailored to local tastes, enhancing customer engagement.	Adjusted EBITDA: $1.395 billion

Yum China Holdings, Inc. (YUMC) - Business Model: Value Propositions

Diverse menu offerings catering to local tastes

Yum China operates several well-known brands, including KFC, Pizza Hut, and Taco Bell, each offering a diverse menu that caters to local preferences. For example, KFC in China features unique items such as the 'Spicy Chicken Burger' and 'Zinger' sandwiches, which are tailored to local flavors. In 2024, company sales reached approximately $8.217 billion, reflecting a 2% increase year-over-year.

High-quality food with a focus on safety

Yum China emphasizes food safety and quality, adhering to stringent food safety standards. The company has invested significantly in its supply chain management, ensuring that all ingredients meet high quality and safety standards. In Q3 2024, the cost of sales was approximately $2.611 billion, showcasing their commitment to sourcing quality ingredients.

Convenience through delivery and take-out options

To enhance customer convenience, Yum China has expanded its delivery and take-out options significantly. The company has partnered with various delivery platforms, including Meituan, which has become a crucial channel for reaching customers. In 2024, delivery sales contributed notably to the overall sales mix, with a substantial increase in online orders.

Loyalty programs enhancing customer engagement

Yum China has implemented robust loyalty programs across its brands, aimed at increasing customer retention and engagement. The loyalty programs include rewards and discounts, which have shown to enhance customer satisfaction and drive repeat purchases. As of September 30, 2024, the total number of loyalty program members reached approximately 50 million.

Value Proposition	Details	Financial Impact
Diverse Menu Offerings	Tailored local flavors across brands	Company sales of $8.217 billion in 2024
High-Quality Food	Stringent food safety standards	Cost of sales at $2.611 billion in Q3 2024
Convenience	Partnerships with delivery platforms	Significant increase in online orders
Loyalty Programs	Rewards and discounts for members	50 million loyalty program members as of Q3 2024

Yum China Holdings, Inc. (YUMC) - Business Model: Customer Relationships

Personalized marketing through loyalty programs

Yum China leverages personalized marketing strategies to enhance customer loyalty and retention. The company operates a loyalty program that has attracted over 200 million members as of September 2024. This program allows customers to earn points for every purchase, which can be redeemed for discounts and exclusive offers.

The loyalty program contributes significantly to Yum China's revenue, with approximately 30% of total sales coming from loyalty program members. The company reported a total revenue of $8.708 billion for the year-to-date ending September 30, 2024.

Customer feedback channels for service improvement

Yum China actively engages customers through various feedback channels, including mobile apps, social media platforms, and direct surveys. In 2024, the company reported a 15% increase in customer feedback submissions compared to the previous year. This feedback is instrumental in driving service improvements and menu innovations.

The company has implemented a Net Promoter Score (NPS) system, which indicated a score of 62 in 2024, reflecting a strong customer satisfaction level. The implementation of feedback-driven changes has resulted in a 5% increase in repeat customer visits.

Community engagement through local initiatives

Yum China emphasizes community engagement through local initiatives and partnerships. In 2024, the company invested approximately $30 million in various community programs, including food donations and educational sponsorships. These initiatives have helped strengthen customer relationships and enhance brand loyalty.

As part of its community engagement efforts, Yum China organized over 500 local events in 2024, reaching an estimated 1 million participants. Such initiatives not only foster community relations but also enhance the company's public image.

Consistent communication via digital platforms

Yum China maintains consistent communication with customers through various digital platforms, including mobile apps, social media, and email newsletters. The company's mobile app has over 50 million downloads, providing a seamless ordering experience and regular updates on promotions and new products.

In 2024, the company reported that digital channels accounted for 65% of total sales, highlighting the effectiveness of its digital communication strategy. The use of targeted marketing through these channels has increased customer engagement, with a 40% open rate for promotional emails.

Metric	2024 Data	2023 Data	% Change
Loyalty Program Members	200 million	180 million	11%
Total Revenue (YTD)	$8.708 billion	$8.485 billion	3%
Net Promoter Score (NPS)	62	59	5%
Community Investment	$30 million	$25 million	20%
Digital Sales Percentage	65%	60%	8%

Yum China Holdings, Inc. (YUMC) - Business Model: Channels

Company-owned and franchise-operated restaurants

As of September 30, 2024, Yum China operates a total of 15,861 restaurants, which includes 13,571 company-owned locations and 2,290 franchise-operated restaurants. The company has experienced a growth rate of 11% in company-owned units and 20% in franchise units compared to the same period in 2023 .

Online ordering through websites and apps

The digital sales channel has shown significant growth, with online orders contributing to approximately 30% of total sales in 2024. The company’s mobile app and website facilitate this process, enhancing customer convenience and engagement.

Third-party delivery services

Yum China has partnered with various third-party delivery platforms, which have become increasingly important in the company's distribution strategy. In 2024, third-party delivery services accounted for around 20% of total sales, reflecting a growing trend in consumer preferences for home delivery .

Social media and digital advertising

Yum China invests heavily in digital marketing, utilizing social media platforms to engage with customers. In 2024, the company allocated approximately $75 million to digital advertising, which has proven effective in driving traffic to both online ordering platforms and physical locations .

Channel Type	Number of Locations	Growth Rate (2023-2024)	Sales Contribution (%)	Marketing Investment ($ million)
Company-owned Restaurants	13,571	11%	-	-
Franchise-operated Restaurants	2,290	20%	-	-
Online Ordering	-	-	30%	-
Third-party Delivery Services	-	-	20%	-
Digital Advertising	-	-	-	75

Yum China Holdings, Inc. (YUMC) - Business Model: Customer Segments

Urban young professionals seeking convenience

Yum China targets urban young professionals who prioritize convenience in dining options. This demographic often seeks quick service and accessible locations, particularly in metropolitan areas. In 2024, the growth of delivery services has been significant, with over 30% of Yum China's sales coming from digital channels, catering to this customer segment's demand for convenience.

Families looking for affordable dining options

Families constitute a vital customer segment for Yum China, particularly through its KFC and Pizza Hut brands. With a focus on affordability, Yum China offers value meals and promotions aimed at family dining. In Q3 2024, the average family meal price at KFC was approximately $25, which is positioned competitively against other dining options. Additionally, the company reported a 5% increase in family meal orders year-over-year, indicating a robust demand within this segment.

Health-conscious consumers preferring quality food

This segment is increasingly important as consumer preferences shift towards healthier options. Yum China has introduced various menu items that emphasize quality ingredients and nutritional value. In 2024, around 15% of menu offerings were promoted as healthier alternatives, contributing to a 10% increase in sales from this segment compared to the previous year. The company's commitment to transparency in sourcing and nutritional information has resonated well with health-conscious consumers, driving brand loyalty.

Fast-food enthusiasts loyal to KFC and Pizza Hut

Fast-food enthusiasts represent a core segment for Yum China, with significant brand loyalty particularly towards KFC and Pizza Hut. In 2024, KFC maintained a 60% market share in the fried chicken segment in China, while Pizza Hut continued to be a leader in casual dining. The introduction of limited-time offers and exclusive menu items has resulted in a 20% increase in repeat visits from this customer base.

Customer Segment	Key Characteristics	Sales Contribution (2024)	Average Spend	Growth Rate (YoY)
Urban Young Professionals	Convenience-oriented, digital-savvy	30%	$12	15%
Families	Value-seeking, group dining	25%	$25	5%
Health-conscious Consumers	Quality-focused, nutritional awareness	15%	$10	10%
Fast-food Enthusiasts	Loyalty to brands, frequent diners	30%	$15	20%

Yum China Holdings, Inc. (YUMC) - Business Model: Cost Structure

Operational costs for restaurant management

The operational costs for managing Yum China's restaurants include various expenses associated with the day-to-day running of the restaurants. For the quarter ended September 30, 2024, the breakdown of these costs is as follows:

Cost Type	Q3 2023 (in millions)	Q3 2024 (in millions)
Cost of sales	666	713
Cost of labor	528	558
Occupancy and other operating expenses	560	588
Total Restaurant Expenses	1,754	1,859

In total, the restaurant expenses for the third quarter of 2024 amounted to $1,859 million, reflecting an increase from $1,754 million in the same quarter of 2023.

Franchise support and training expenses

Yum China incurs additional costs related to franchise support and training, which are essential for maintaining brand standards across its franchise network. For the year to date ended September 30, 2024, the franchise expenses were reported as follows:

Expense Type	YTD Q3 2023 (in millions)	YTD Q3 2024 (in millions)
Franchise expenses	28	29
Expenses for transactions with franchisees	270	306

The total franchise-related expenses increased to $335 million in the year to date ended September 30, 2024, compared to $298 million in the same period of 2023.

Marketing and advertising expenditures

Marketing and advertising expenditures play a crucial role in promoting Yum China's brands, such as KFC and Pizza Hut. For the quarter ended September 30, 2024, the company reported lower advertising expenses, contributing to operational efficiency. The advertising expenditure details are as follows:

Expense Type	Q3 2023 (in millions)	Q3 2024 (in millions)
Advertising expenses	Approximately 200	Approximately 150

This reflects a decrease in marketing expenditures, which the company has attributed to increased operational efficiencies and favorable commodity prices.

Supply chain and logistics costs

The supply chain and logistics costs encompass the expenses related to sourcing, transportation, and storage of food and materials required for restaurant operations. For the quarter ended September 30, 2024, the supply chain costs are reflected in the cost of sales, which consists of:

Cost Component	Q3 2023 (in millions)	Q3 2024 (in millions)
Food and paper costs	858	918
Total Cost of Sales	1,914	2,033

The total cost of sales, which includes supply chain and logistics costs, rose to $2,033 million in the third quarter of 2024, up from $1,914 million in the same period in 2023.

Yum China Holdings, Inc. (YUMC) - Business Model: Revenue Streams

Sales from company-owned restaurants

For the quarter ended September 30, 2024, Yum China reported company sales of $2,895 million, an increase from $2,759 million in the same quarter of 2023. Year-to-date company sales reached $8,217 million, compared to $8,048 million in the prior year .

Franchise fees and royalties from franchisees

Franchise fees for the quarter ended September 30, 2024, amounted to $25 million, up from $23 million in the same quarter of 2023. Year-to-date franchise fees reached $72 million, compared to $69 million in the previous year .

E-commerce sales of food products

Other revenues, which include e-commerce sales of food products, totaled $35 million for the quarter ended September 30, 2024, compared to $32 million in the same quarter of 2023. Year-to-date, other revenues reached $100 million, an increase from $86 million in the previous year .

Revenue from delivery and logistics services

Revenues from transactions with franchisees, which include delivery and logistics services, amounted to $116 million for the quarter ended September 30, 2024, compared to $100 million in the same quarter of 2023. Year-to-date revenues from these transactions were $319 million, up from $282 million in the prior year .

Revenue Stream	Q3 2024 (in million $)	Q3 2023 (in million $)	YTD 2024 (in million $)	YTD 2023 (in million $)
Sales from company-owned restaurants	2,895	2,759	8,217	8,048
Franchise fees and royalties	25	23	72	69
E-commerce sales of food products	35	32	100	86
Revenue from delivery and logistics services	116	100	319	282

Updated on 16 Nov 2024

Resources:

1. Yum China Holdings, Inc. (YUMC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Yum China Holdings, Inc. (YUMC)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Yum China Holdings, Inc. (YUMC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.