More than 80 million people have signed up during the past year for KFC and Pizza Hut loyalty programs in China, giving Yum China Holdings “unprecedented insight into consumer behavior,” said CEO Micky Pant.
In early 2016, the loyalty programs had roughly 10 million, but by the end of March, membership had ballooned to more than 90 million, Yum China executives said during a conference call with analysts last night (or this morning for those in China).
Through the programs, customers get coupons and other special benefits. For example, Yum China is driving sales up at KFC on Tuesdays, a typically slower business day, by calling it Members Day and offering weekly incentives.
Yum China has gotten an “encouraging response” from the promotion, said Joey Wat, the new company’s president and chief operating officer.
In honor of the opening of the first KFC in China 30 years ago, KFC also sent out coupons to loyalty program members offering original recipe chicken and mashed potatoes with gravy at the original 1987 price.
According to Yum China executives, the promotion generated a lot of chatter on social media, including 70 million views on Weibo, a prominent social site similar to Twitter.
“This was a great way to make a nostalgic connection with visitors across China, many of whom cherish their first visit to a KFC,” Pant said.
In return for membership, Yum China has access to millions of data points about its customers, including what locations they eat at, what they buy and how much they’re spending.
“This feedback is providing rich information on how to improve our products and service,” Pant said.
Currently, loyalty program members account for 25 percent of Yum China’s business, but executives will look to mine the data for ways to increase the number of times a customer visits KFC or Pizza Hut in a month or year.
Yum China reported positive numbers during the first quarter of 2017, its first full quarter as its own company separate from Louisville-based Yum Brands. Net income rose 21 percent, to $175 million during the quarter, and diluted earnings per share went up 12 percent, to $0.44, the company reported.
Same-store sales at KFC China rose 1 percent compared to the same quarter in 2016, which may seem low but Pant pointed out that KFC was lapping “daunting numbers” — a 12 percent increase in same-store sales (stores open for at least a year) from the first quarter of 2016.
Pizza Hut had a 2 percent increase in same-store sales compared to the same period a year ago. It was the chain’s first increase in 10 quarters, Wat noted, adding that Yum China will look to lift Pizza Hut sales by combining its casual dining and delivery concepts as delivery and digital ordering are a fast-growing sector of the restaurant industry in China.
Yum China did not release predictions for same-store sales growth in the coming quarters. Shares of Yum China were up more than 8 percent, to $30.53, in afternoon trading on the New York Stock Exchange.
The China market is known for its volatility, which is part of the reason Yum Brands spun it off. And if the relationship between China and the United States worsens — President Donald J. Trump is meeting with China Presidentstarting Thursday — it could sour sales at KFC, which to the Chinese is synonymous with America.