Yum to open restaurants in appliance retail stores
Updated: 2012-05-10 08:06
By Li Woke in Nanjing (China Daily)
A Suning Appliance Co Ltd outlet in Shanghai. Yum! Brands Inc has opened trial KFC and Pizza Hut restaurants in Suning stores in 17 cities including Nanjing, Beijing, Shanghai and Dalian. Chen Jingwei / for China Daily
Suning agrees to host KFC, Pizza Hut and Little Sheep in 150 outlets
The fast-food giant Yum! Brands Inc said on Wednesday that it will open KFC and Pizza Hut restaurants inside stores operated by one of the largest electrical appliance retailers in China.
According to the agreement, Yum will open 150 restaurants in the next five years in stores run by Suning Appliance Co Ltd. They will include KFC, Pizza Hut, Little Sheep and East Dawning brand restaurants.
"Yum highly values the cooperation with Suning," said Mark Chu, president and chief operating officer of Yum China Division. "The cooperation can give full play for both parties on business arrangement, chain store management, brand influence, as well as better meeting customers' needs."
The companies said Yum has opened trial KFC and Pizza Hut restaurants in Suning stores in 17 cities including Nanjing, Beijing, Shanghai, Shenyang and Dalian.
Since Yum brought its first restaurant to the Chinese mainland - a KFC that opened in Beijing in 1987 - the US company has expanded quickly in the emerging market. It now has more than 5,000 restaurants in the country and aims to open at least 600 restaurants a year in the near future.
"The new partnership lets Yum have access to prime store locations across the country through Suning's large business network," said Gong Bo, an industry analyst with Beijing United Innovation Capital Ltd.
"At the same time, through the partnership, Suning will expand the types of business in its traditional stores as well as enrich its business formats."
The Nanjing-based home appliance giant is aiming to open more than 400 outlets this year and now has more than 1,700 stores at home and abroad.
Besides adding to its stock of traditional stores, Suning also has plans to move into other sorts of business, such as online sales.
"The value of sales in China's home appliance market will increase to 3.1 trillion yuan ($475 billion) by 2020," said Zhang Jindong, Suning's chairman.
"Suning intends to occupy about 20 percent of China's home appliance market by then. For that time, our target for online sales is 300 billion yuan, while our target for online sales for this year is 30 billion yuan," Zhang said.
The site will sell daily necessities, clocks, musical instruments and other goods, besides electrical appliances, he added.
"In the current situation for retail, this cooperation between the two retailing giants will lower the cost of opening stores and drum up more customers for both sides, which will lead to more innovation in the industry," said Yang Qingsong, deputy secretary-general of the China Chain Store and Franchise Association.
(China Daily 05/10/2012 page17)