When the history books are written, the fourth quarter of 2022 will likely be portrayed as the end of a long, dark tunnel spanning three years of China’s battle to contain the Covid-19 virus. The latest quarterly results from Yum China Inc. (YUMC.US) show just how dark that tunnel was at the end, but also point to a brighter road ahead, following China’s sudden decision to abandon its “zero Covid” policy at the end of 2022.
Yum China’s results show how China’s three-year battle to contain the virus wrapped up in spectacular fashion, as major cities across the country locked down compounds and even entire districts, including nearby shops and restaurants. At the height of the lockdowns in late November, Yum China, which operates KFC and Pizza Hut restaurants on the Chinese mainland, had to shut down or limit operations at a staggering 4,300 stores – about a third of its total.
We’ll look at some of the other fourth-quarter fallout for Yum China and other major restaurant operators shortly, even though most of these companies are probably trying hard to forget this difficult period. But first we’ll look forward to some of the signs from Yum China’s results that show spring could finally be coming for China’s embattled retailers after the long Covid winter.