Yum China Holdings, Inc., parent company of the China operations of KFC, Pizza Hut and Taco Bell will open 100 restaurants in partnership with the country’s two largest gas station chains in the next three years.
This undertaking endeavors to boost its fast food presence in the country’s vast highway network. Moreover, it will further diversify non-fuel services at gas station chains. Yum China will collaborate with China Petrochemical Corp (Sinopec) and China National Petroleum Corp.
The first franchised KFC opened at a CNPC gas station in Kunming, Yunnan province. Meanwhile, it was in Dalian, Liaoning province that the first KFC franchisd restaurant in Sinopec opened December 23.
Yum China began opening drive-through restaurants at gas stations using a lease model in 2008. But it was only last year when they acted on using a franchise model with CNPC.
The company revealed that the KFC-franchised restaurant which opened in October 2018 in Tangshan, hebei province has been a big hit; enough proof that the synergies achieved from combining the unique location of gas stations with Yum China’s operating management expertise.
Sinopec and CNPC are responsible for investing in store operations and offering Yum franchising fees, Yum China added. However, the franchising model only applies to KFC restaurants making other Yum brands will be operated using the leasing model in collaboration with Sinopec and CNPC.
Meanwhile, Lin Boqiang, head of Xiamen University’s China Institute for Studies in Energy Policy exclaims that adding retail and catering operations is beneficial for Chinese oil and gas companies to tap new growth potential by leveraging from their massive network.
Moreover, Zhu Danpeng, an independent food and beverage analyst said that the collaboration with the catering giant will further develop the diversification of business offerings and boost income-generating capacities for State-owned enterprises
The two SOEs collectively operate more than 50,000 gas stations across China, of which over 30,000 belong to Sinopec and more than 20,000 to CNPC.
In their attempt to boost profitability, Sinopec and CNPC has included diversification on their respective agenda. Kantar Worldpanel general manager, Jason Yu how the franchise model encourages gas station operators to open restaurants at key locations. It will further drive availability and create new consumption occasions for travelers behind the wheel.
Little Sheep and East Dawning are also owned by Yum China. These brands have more than 8,900 restaurants in over 1,300 cities by the end of September.