Yum China is optimistic about ‘further penetrating’ China’s convenience coffee shop market following strong outlet growth for its KCOFFEE brand in the first quarter.  

 
The Shanghai-based quick-service restaurant group launched KCOFFEE as an in-store KFC coffee offer in 2015 and now serves it across its 10,600 KFC restaurants in China.  

 
Seeking to tap into rising consumer demand for convenience, Yum China opened its first standalone KCOFFEE outlet in Shanghai in October 2022. The business has since accelerated the expansion of its KCOFFEE store network through a combination of stand-alone outlets and concession coffee shops within KFC stores and exceeded 200 sites across both formats in the first quarter. 
 

In December 2023, Yum China outlined a goal to reach 300 KCOFFEE outlets across China by the end of 2024 with a focus on China’s lower-tier cities.  

The Shanghai-based quick-service restaurant group sold approximately 50 million KCOFFEE beverages during the three months ending 31 March 2024, representing 30% year-on-year volume growth.  

“We are constantly searching for new growth pillars. KCOFFEE continued to grow nicely, achieving a 30% increase in cups sold in the quarter. We are excited about further penetrating this segment of a growing coffee market,” said Joey Wat, CEO, Yum China. 

In an earnings call with investors, Wat also reported progress in opening Lavazza-branded coffee shops across China and scaling the Italian brand’s business-to-business reach with new deals with 5-star hotels and Michelin-starred restaurants. 

Yum China partnered with the premium Italian coffee roaster in April 2020 and debuted with a flagship store in Shanghai’s fashionable Jing'an district later the same month. The joint venture has now reached 120 stores across China. 

“Lavazza’s dual growth engines, coffee shop and retail, are making good progress in driving synergies. We further reduced the capex of our latest small store formats and improved store economics,” Wat added. 

Yum China is working with Lavazza on opportunities to partner with a local roastery in China to reduce production costs, improve supply chain efficiency and produce fresher coffee. 

Yum China operates more than 15,000 stores across its foodservice portfolio, which is primarily made up of KFC and Pizza Hut stores – with 10,603 and 3,425 outlets respectively. The business achieved 1% year-on-year sales growth in the quarter to $2.96bn. Yum China’s total 2023 revenues reached $10.98bn.