Foreign fast food companies continue to compete in market share in China by building more stores. (Photo : Getty Images)
Yum China Holdings Inc. plans to add 600 stores in the country annually. It is reported that it has more than 7,500 outlets in China at the end of last year.
This move comes after a rival company, McDonald's Corporation, said that it plans to add more than 1,500 stores in China over the next five years.
Starbucks Corporation is also growing and wil add 500 outlets annually.
McDonald's agreed to sell a controlling stake in its Hong Kong and Chinese mainland operations last month.
Yum China topped earnings estimate in its inaugural quarterly results through the help of its growing KFC chain. It is a Chinese fast food company that was spun off from its U.S. parent October last year.
The company posted an increased in their profit, growing from 17 cents a share from its average estimate of 10 cents a share. Although its Pizza Hut division performed worse than expected, the same-store sales growth from its KFC chains helped bolster this result.
Overall, the results showed that Yum China had a respectable start as an independent company even though it faces headwinds.
The company added 575 outlets last year. More than half of this was added in the fourth quarter of the year in its goal of aggressive expansion in order to keep it ahead of other U.S. fast food chains in China.
Micky Pant, Chief Executive Officer of Yum China, said: "We believe the majority of our restaurants in China are yet to be built. Right now, our top priority is consistently delivering positive same-store sales growth."
The same-store sales of its KFC chains grew by 1 percent in the fourth quarter of 2016.
Analysts said that this resulted in an estimated 0.4 percent gain for Yum China.
Pizza hut declined by 3 percent, which resulted in Yum China missing 2.3 percent growth projection. With this combined, the company's sales were flat in the period.
The performance of Pizza Hut in China has been sluggish in recent years. This is due to the local competitors taking market share, as well as middle-class consumers increasingly seeking a more upmarket dining experience.