Yum China acquires controlling stake in Chinese casual dining franchise business

CHINA – Yum China Holdings, the KFC, Pizza Hut and Taco Bell operator in mainland China has acquired a controlling interest in the Huang Ji Huang group, one of the leading Chinese-style casual dining franchise business. 

Founded in 2004 and headquartered in Beijing, Huang Ji Huang has over 640 restaurants in China and internationally.

The group operates primarily under a franchise model and its brand portfolio consists of “Huang Ji Huang,” an industry-leading simmer pot brand, as well as “San Fen Bao,” a newly launched Chinese fast food concept in China.

Following the acquisition, Yum China will establish a Chinese Dining Business Unit comprising three core Chinese dining brands, Little Sheep, East Dawning, and Huang Ji Huang.

The company aims to gain a stronger foothold and enhanced know-how in the Chinese dining space, which represents a significant share of the dining market in China.

With Yum China’s scale and system capabilities, and Huang Ji Huang’s track record and capabilities of product R&D, franchisee management, and Chinese dining know-how, the company said that it expects the acquisition to create synergies.

Yum China also owns the Little Sheep, COFFii & JOY and East Dawning concepts outright. The company had 9,200 restaurants in over 1,300 cities at the end of December 2019.

Yum China recently reiterated its commitment to stepping up investment in innovation throughout the Company, particularly in the areas of digital, technology and supply chain.

This is expected to further drive profitable innovation-led growth, increase operational flexibility and agility and ensure first class execution that consistently exceeds customer expectations.

Yum China has been recognized among the top 10 most innovative companies in China and was recently named to Fast Company’s prestigious annual list of the World’s Most Innovative Companies for 2020.

The recognition illustrated the company’s focus on food and digital innovation. According to Fast Company, Yum China “aggressively makes technological enhancements to the customer experience, and new menu items are the secret herbs and spices for its business.

A relentless commitment to innovation is the major force behind Yum China’s growth strategy. The company’s powerful digital ecosystem, that integrates online platforms with offline stores, is key to enhancing customer experience and engagement throughout the customer journey.

Data and AI capabilities are enabling Yum China to make more informed and improved decisions throughout the entire business, including menu innovation, delivery, marketing, store operations and supply chain management.

Digital orders, which include delivery, mobile orders and kiosk orders, accounted for 61% of Yum China’s sales in 2019. Delivery is a key growth driver for Yum China, especially as the company continues to expand into lower-tier cities.

The company, which is listed on the New York Stock Exchange, has also been reported to be working with China International Capital Corp and Goldman Sachs on the preparations of a second listing in Hong Kong.

According to a report by Bloomberg earlier this year, the listing was expected to take place as soon as this year. IFR reported that Yum China was considering to raise US$2 billion in the Hong Kong listing.

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