What's going on?

Yum China, the largest restaurant operator in China, saw its stock jump over 10% on Thursday after it announced that its sales and profits in the last quarter beat Wall Street�s expectations.

What does this mean?

Yum China, which operates Pizza Hut, KFC and Taco Bell in China (among other restaurants), used to be owned by Yum Brands, the company that owns and operates those brands in America. But last year Yum China became a totally separate company, partly so it could independently focus on the challenges inside of China.


Yum China has managed to start growing sales after a few slow years by focusing on things like digitized menus, cashless payments and its own delivery service.

Why should I care?

The bigger picture: Keeping delivery in-house is one way for companies to optimize customers� experiences.

Another part of Yum China�s recent turnaround was a new offering for home delivery at a low flat-rate. The service is already turning a profit and accounts for 12% of the company�s total sales. Unlike many restaurants, Yum China has kept its delivery services in-house (Domino�s Pizza in the US and UK is another example). By not relying on a third-party platform, these companies may be building themselves a competitive advantage by controlling their customers� entire experience � from online advertising to native apps to in-house delivery services.

For the markets: Yum China lets US investors place a bet on the future of China�s huge consumer market.

One of the attractions of the stock, which trades in New York, is that it offers US investors an easy way to bet on the fortunes of the Chinese consumer (Alibaba is another, but there aren�t many other US-listed stocks that are so exposed to Chinese consumer demand). Economic growth in China has picked up over the past year, which is probably helping to support Yum�s sales. Investors in the stock are benefitting: it�s up 15% this year.