On Friday, Yum China CEO Joey Wat informed CNBC in an interview that the company is going to invest more in technology. This investment will permit the operation to open more stores without having to recruit extra staff. Moreover, Wat pointed out that they are currently considering the possibility of using generative AI to enable store managers to have a better understanding and examination of store information, though it is still in the initial stage.
Yum China, the operator of KFC and Pizza Hut restaurants in China, announced on Thursday that they had increased their net new store target for the year by 300, as well as welcoming the return of $3 billion to shareholders over the next three years. In an interview on Friday, CEO Joey Wat revealed that the company has managed to largely remain with the same staff size of 430,000 people from 2016 to the present, thanks to the increased investment in technology. This investment has allowed them to open more stores without having to hire more employees - while staff have been promoted to manage multiple stores in order to increase the opening of new locations. The company is also investing $3.5-$5 billion in the next three years to build their store network, strengthen their supply chain and bolster digital capabilities, with at least $700-$900 million being allocated to this year alone.
When the Covid-19 pandemic struck, the company started investing in technology to improve its insight into its supply chain and stock levels while some stores could have to close because of lockdown. Technology has been a help in China for businesses ranging from Alibaba to Sam's Club, Walmart to facilitate warehouse and supermarket stock control and to offer services like one-hour grocery delivery. According to Wat, Yum China is developing more of its own logistics centers to blend more tech into the supply chain and decrease carbon emissions. Ultimately the aspiration is to own 30% of its logistics centers, rather than renting.
Store managers no longer have to order inventory with the aid of AI-based forecasting which Wat said reduces labor and operational costs, as well as food waste. Yum China has 33 logistics centers and plans to add at least 12 more in the next three to five years. Wat mentioned the possibility of using generative AI to help store managers better understand and analyze store data, but it is in a very early stage of consideration. To further develop this idea, the company is deciding what components can be handled internally and which need external support. Generative AI quickly produces results that can mimic those from a human without the same time commitment.
To meet tech investment and company growth targets, Wat didn't specify if Yum China would be increasing its personnel. She declared that they didn't lay any people off, even during the pandemic. China's economic recovery from COVID-19 has weakened recently, with joblessness among 16-24 year olds near 20%. The overall unemployment rate in cities, meanwhile, is around 5.2%. Consumer spending has dropped due to financial instability. Yum China anticipates same-store sales for 2021 to reach 90% of 2019's numbers. Wat noted that half of the company's stores opened afterwards, and they are split between cities and rural areas. Summer has been a peak period, with local tourism additional, and transactions held "stable" after the commencement of the school year. A Yum China-Lavazza joint venture now has over 100 stores in China, and the company is exploring which food items to add to the Lavazza brand in the country.
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