Yum China opens 500th KCOFFEE store

A KCOFFEE store in Hangzhou East Railway Station | Photo credit: Yum China

Value-focused coffee is yielding strong returns for Yum China, which opened its 500th KCOFFEE store during the third quarter.  
 

First launched as an in-store KFC coffee range in 2015, Shanghai-based Yum China span-off the KCOFFEE brand as a standalone coffee shop concept in 2022. 
 

The KCOFFEE range is now available across 11,200 licensed KFC restaurants in China, with Yum China adopting a ‘side-by-side' growth strategy to open KCOFFEE stores adjacent to KFC restaurants.  

According to Yum China, the model reduces property costs and generates operational efficiencies, such as shared preparation equipment, kitchen spaces and staff.  

Yum China reached 200 KCOFFEE sites in the first quarter of 2024 and has since more than doubled the chain’s footprint in lockstep with KFC outlet expansion. 

The quick-service restaurant group, which opened 352 net new KFC stores in the three months ended 30 September 2024, expects to reach 600 KCOFFEE sites by the end of the year. 

“Our breakthrough business models, side-by-side KCOFFEE cafés and Pizza Hut WOW, enabled us to broaden our addressable market and capture new customer demand, reaching 500 and 150 stores, respectively,” said Joey Wat, CEO, Yum China. 
 

Read related content: How Yum China is tapping into value-focused and premium coffee consumers alike 

A spokesperson for the quick-service restaurant group told World Coffee Portal that KCOFFEE’s focus on value was proving popular in the increasingly competitive Chinese branded coffee shop market.  
 

KCOFFEE prices some beverages, including Sparkling Americanos, as low as RMB 9.9 ($1.39) – on par with promotions regularly offered at China’s largest branded coffee chains Luckin Coffee and Cotti Coffee. The business has also introduced an RMB 88 ($12.39) monthly in-store subscription, which offers customers discounted coffee priced at RMB 5 ($0.73) a day. 

KCOFFEE stores are also tapping into a huge demand for outlandish coffee infusions in China, launching ‘Egg Tart Dirty Coffee’ and Original Recipe Chicken Lattes in June and September 2024 respectively.  

“We continue to drive menu innovations, infusing fresh energy into our flagship products,” said Watt in Yum China’s earnings release.  

KFC is the largest brand in Yum China’s portfolio, making up 71% of the group’s total 15,861 quick-service restaurant footprint. The fast-food chain achieved 6% year-on-year sales growth in the three months ended 30 September 2024 but saw like-for-like sales fall 2%. 
 

Yum China, which also operates licensed Pizza Hut and Taco Bell outlets, achieved 5% year-on-year revenue growth in the third quarter to reach $3.07bn. The business also operates a joint venture with premium Italian coffee roaster Lavazza – a partnership which has been scaled to 110 stores.