king a 3 per cent increase year-on-year with net income rose by 10 per cent to $911 million. In the fourth quarter alone, system sales grew by 4 per cent year-on-year, surpassing the overall restaurant industry’s growth rate. Operating profit surged 36 per cent to $151 million during the period. “We closed the year with a strong fourth quarter, propelling us to a number of record highs in 2024,” said Joey Wat, CEO of Yum China. “Our dual focus on operational efficiency and innovation yielded excellent results, laying a solid foundation for future growth.” “Despite a challenging environment and value-minded consumers, our efforts have led to eight consecutive quarters of positive transaction growth,” Wat added.  The company opened 1751 net new stores during the year, increasing 12 per cent year on year. Besides KFC and Pizza Hut, Yum China also operates other brands including Little Sheep, Taco Bell and Lavazza. The company’s board declared a 50 per cent increase in its cash dividend for the fourth quarter, raising it to 24 US cents a share, from 16 US cents in the same period of 2023. Yum China, which spun off from Yum Brands in 2016, operates six restaurant chains in about 2200 towns and cities in China, employing around 400,000 people. Strategy paid off  Yum China’s strong performance comes against the backdrop of China’s challenging economic environment. Rising youth unemployment and stagnant wage growth have dampened spending, particularly in the mid-to-premium dining segments. However, Yum China’s emphasis on value-driven promotions and digital integration has enabled it to capture demand even as discretionary spending tightens. For example, Pizza Hut Wow’s offerings focus on smaller portions and lower prices to tap into the growing solo dinners and value-conscious customers.  KFC grew system sales by 6 per cent last year, exceeding industry levels, with coffee as a key growth driver. The company sold 250 million cups of KCoffee last year, up 30 per cent.  “Our breakthrough KCoffee Cafe model expanded from around 50 cafes in 2023 to 700 cafes in 2024. We plan to expand the model to 1300 locations by the end of 2025. KFC and KCoffee Cafe generated synergies, driving incremental sales and profit,” Adrian Ding, acting CFO at Yum China, said.  “Our innovative measures – from menu evolution to the introduction of breakthrough business models like KCoffee Cafes and Pizza Hut Wow – have expanded our addressable market and increased our market share,” Wat said.  The KCoffee Cafe model features a distinct dining area and menu but shares kitchen and operational resources with normal KFC stores. Meanwhile, Pizza Hut Wow caters to the potential in the growing solo dinners and value-conscious customers. Ding also added that franchise stores help the company unlock “incremental opportunities” in lower-tier cities, remote areas, and strategic locations such as highways, campuses, and tourist areas.  Room for growth despite economic challenges  Yum China aims to open up to 1800 new stores this year with a focus on lower-tier cities. It also targets capital expenditures in the range of approximately $700 million to $800 million for the 2025 fiscal year. Ding noted that China “is still a very big market. And our market share, relatively speaking, is still very small, even though we are the biggest player in the market”. “There’s still a lot of opportunity for us to expand the business, have more market share by going to lower-tier cities and going for the incremental franchise stores,” he said.  “With tailored store models, we are expanding through both company-owned stores and franchise stores and are on track to achieve our goal of 20,000 stores by 2026,” Wat said.  Further reading: How Yum China’s growth strategy is paying off.