There was a 20 per cent fall in the sales in the first two weeks of March, according to the owner of KFC and Pizza Hut, as a wave of new Covid-19 outbreaks emerge from more p[laces across China.
Yum China warned that “the situation has drastically deteriorated,” citing regional lockdowns as a means of containing the outbreak.
More than 1,100 of its stores are temporarily closed or only offer takeout, and sales are “continuing to decline.”
China’s lockdowns are among the most severe since the outbreak began.
As the number of new infections of the Omicron variety of Covid rises, they include Jilin province, which is home to firms like Toyota and Volkswagen, as well as technological hub Shenzhen.
Yum China said: “Entering March, the situation has rapidly deteriorated with the highly transmissible Omicron variant causing outbreaks across China, including economically important regions of Guangdong, Shanghai, Shandong and Jilin.”
It added: “Our operations are significantly impacted by the latest outbreaks and the tighter public health measures which resulted in a further reduction of social activities, travelling and consumption.”
Lockdowns have caused Toyota, Volkswagen, and Apple’s Foxconn to shut down activities in the impacted areas.
Foxconn said on Wednesday that after installing a closed loop system on its campus, it was able to restart some manufacturing in Shenzhen. It means that Foxconn workers in the area are unable to leave the group.
Foxconn said: “This process, which can only be done on campuses that include both employee housing and production facilities, adheres to strict industry guidelines and closed-loop management policies issued by the Shenzhen government.”
There are fears that the limitations may disrupt global supply lines.
“Our robust supply chain management has shielded us from material business disruptions,” said But Yum China’s chief executive Joey Wat.
From 500 in January to 1,100 in March, Yum China said it has stopped or reduced take-out services at more than half of its locations.
“We will keep our restaurants open and provide food services to customers wherever it is possible and safe to do so,” Wat said. “What you see is a ghost city”
Birol Dincli, a restaurateur in Shenzhen’s Futian area who runs three steakhouses, believes the situation will be more worse this time than when the Covid pandemic began in 2020.
The Futian commercial district’s restaurants have been told to close. During the lockdown, however, they are prohibited from providing takeaway or delivery services, according to Dincli.
“What you see is a ghost city,” he told the BBC. “Everything is shut.”
Although the Shenzhen lockdown is due to expire on March 20, Dincli believes it will last much longer. Some of his 30 colleagues have been ordered to return to their hometowns to ride out the storm.
“In 2020, we faced the same problem so they are understanding. We motivate them to just wait and (be on) standby,” he said.
“Let’s see what will happen and then we will keep going.”
On Monday, the whole population of the north-eastern province of Jilin was placed under quarantine. People are prohibited from moving around, and anyone wishing to leave the province must first obtain permission from the authorities.
Residents of Changchun, Jilin, are required to remain at home. Every two days, only one individual from each household is permitted to leave to purchase food and other supplies.
A five-day lockdown has been imposed on the 12.5 million residents of Shenzhen, China’s Silicon Valley.
Many businesses in the impacted areas have closed or are requiring staff to work from home.
(Adapted from RandNews.com)