The quick-service restaurant group has outlined a multi-pillar strategy to grow Lavazza across China, which includes upgraded store designs, investment in building brand awareness and boosting its direct-to-consumer retail segment
Yum China and Lavazza expect to reach 1,000 stores within the next three-five years | Photo credit: Yum China
Yum China has highlighted ‘encouraging progress’ in its joint venture with Italian coffee roaster Lavazza over the last two years, with more than 100 Lavazza coffee shops now open across 11 Chinese cities.
Quick-service restaurant group Yum China partnered with Lavazza in April 2020 with a debut flagship store in Shanghai’s fashionable Jing'an district. The following year, the two organisations pledged $200m to grow the concept to 1,000 stores by 2025.
Following slower than expected outlet growth, the two businesses now forecast they will reach that milestone within the next three-five years.
At an Investor Day in Xi’an on 14 September 2023, Yum China announced it will be upgrading its Lavazza store design and investing in brand building as part of a multi-pillar strategy to further grow the brand in the country.
In his presentation, Yum China’s General Manager for the Lavazza JV, Adrian Ding, said the partnership will seek to ‘build emotional engagement’ with consumers through co-branding and will ‘amplify brand exposure’ via sponsoring sports events, such as the Rolex Shanghai Masters tennis tournament.
Ding also announced Yum China will refine Lavazza’s menu to include a mix of ‘authentic Italian and locally-inspired' beverage and food items, including Lavazza’s single origin Yunnan packaged retail coffee.
The joint venture is also seeking to expand its digital presence and delivery capabilities. In the first six months of 2023, approximately 70% of Lavazza sales came from mobile and delivery orders.
Additionally, Yum China will leverage Lavazza’s ‘renowned coffee quality’ to further expand its retail business through collaborations with premium hotels and boutique restaurants, alongside seeking a greater presence in direct-to-consumer channels.
Yum China operates more than 13,600 stores across its foodservice portfolio and has a goal of reaching 20,000 outlets by 2026. The group expects KFC to hit its 10,000-store milestone before the end of the year and recently surpassed 3,000 Pizza Hut sites in China in June 2023.
In the former segment, Yum China CEO Joey Watt said the business plans to expand its KCoffee offering. As well as being served in all KFC stores, Yum China now operates more than 200 stand-alone KCoffee units.
Yum China’s Investor Day presentations also show that the quick-service restaurant group sees potential in branching its Pizza Hut brand into new categories, including coffee.