Yum China’s coffee venture, KCOFFEE, is showing strong growth, with the opening of its 500th store during the third quarter of 2024. The coffee brand, which originated as a limited KFC coffee offering in 2015, was spun off as a standalone entity in 2022.
Currently, KCOFFEE is available across 11,200 licensed KFC locations in China, with the company adopting a “side-by-side” strategy, opening KCOFFEE stores adjacent to KFC outlets. This model not only reduces property costs but also generates operational efficiencies by sharing equipment, kitchen space, and staff between the two brands.
Yum China reached a significant milestone in early 2024, expanding KCOFFEE to 200 locations in the first quarter. Since then, the coffee chain’s footprint has more than doubled in tandem with the growth of KFC outlets. The company expects to open a total of 600 KCOFFEE stores by the end of 2024, building on the success of its flagship KFC brand, which opened 352 net new locations in the third quarter alone.
Joey Wat, CEO of Yum China, commented on the success of the company’s innovative business models, including the side-by-side KCOFFEE cafés and Pizza Hut WOW concept. These models have enabled Yum China to reach a broader customer base, with 500 KCOFFEE stores and 150 Pizza Hut WOW locations now operating.
KCOFFEE’s value-focused approach is proving to be a strong competitive edge in China’s increasingly crowded coffee market. The brand offers some beverages, such as Sparkling Americanos, starting at just RMB 9.9 (approximately $1.39), competing directly with promotions from major players like Luckin Coffee and Cotti Coffee. Additionally, KCOFFEE has launched an RMB 88 ($12.39) monthly subscription, allowing customers to enjoy discounted coffee for just RMB 5 ($0.73) per day.
In response to rising demand for unique coffee offerings, KCOFFEE has also introduced innovative products such as the ‘Egg Tart Dirty Coffee’ in June and the Original Recipe Chicken Latte in September 2024, tapping into a growing trend for unusual coffee infusions in China.
KFC, the largest brand in Yum China’s portfolio, represents 71% of the group’s 15,861 restaurant locations. The brand posted a 6% year-on-year sales growth for the third quarter of 2024, although like-for-like sales fell by 2%. Overall, Yum China saw a 5% increase in year-on-year revenue, reaching $3.07 billion in the third quarter. In addition to KFC and KCOFFEE, the company operates Pizza Hut and Taco Bell outlets and has a joint venture with premium Italian coffee roaster Lavazza, with 110 stores now open.
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