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| China’s Plan: 20K ML Outlets by 2026 in New Tech Era |
Yum China Holdings Inc. (NYSE: YUMC and HKEX:9987) is setting out on a bold quest to use cutting edge AI capabilities to improve consumer experience and streamline operations across supply chain logistics, management of restaurants, and human resources. This calculated action is being taken as the corporation prepares to take on a challenging objective: opening 20,000 outlets across the massive nation of China by 2026. At the company's most recent Investor Day celebration in Xi'an, China, the news was made.
Yum China's CEO, Joey Wat, made a statement on the role that technology advancements like generative AI would have in influencing the company's future development and enhancing overall operational effectiveness. "We are committed to continued investments in this domain to ensure our sustained success," Wat said.
Yum China's continuous goal to expand its competitive advantage in a more digitally connected consumer market heavily relies on the development of its digital capabilities. During the first half of 2023, digital orders constituted a noteworthy 90% of the company's total orders, indicating a significant rise from the 51% reported during the same time in 2019. At the same time, the company's loyalty program has seen an astounding growth in members, reaching 445 million—more than tripling the numbers from 2019.
Yum China has been using AI-driven labor scheduling, inventory management, and sales forecasting, among other automated technology solutions, in recent years. Yum China's shops now have far more capability and transparency because to these advances. Surprisingly, the firm has continued to employ a very stable staff while growing its shop count by an astounding 80% since 2016. These technologies will also be crucial to Yum China's future development plans, enabling competent general managers of restaurants to efficiently manage many locations.
Yum China revealed its strategy plan for integrating franchise shops during the Investor Day presentation, with the goal of having them make up 15-20% of all new store openings over the next three years. In an effort to accelerate growth into key markets, the business launched a comprehensive franchise platform for KFC and Pizza Hut. This all-inclusive site simplifies procedures from choosing a franchisee to opening a shop, providing training, and managing day-to-day operations. This guarantees consistent managerial and operational standards for every franchise location.
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Yum China is constantly building an intelligent digitalized supply chain as part of its innovative endeavors. It is using cutting-edge technology to monitor and refill inventories in real-time, all the while keeping food safety as its top priority. Product iterations have been accelerated and product testing efficiency has increased thanks to the deployment of intelligent replenishment systems, which have greatly increased the accuracy of anticipating the demand for new items.
Yum China is putting up effort to advance its generative AI capabilities in the future, primarily to improve customer experience and maximize operational effectiveness. This involves investigating broad uses of artificial intelligence-generated content (AIGC) to improve consumer interaction and support. Artificial intelligence (AI)-generated creatives, including digital avatars made for interactive livestream events, and AI-powered customer care agents who can engage with clients and cater to their individual requirements are two areas of special interest.
Yum China also understands how much AI can do to improve its human resources department. It has already been shown that using AI to help with interview scheduling and applicant screening may shorten the time needed to fill vacancies. The organization hopes to increase employee learning and development via the usage of AIGC, giving workers a more tailored and satisfying work environment.
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Yum China has set aside capital expenditures between $500 million and $1 billion to support its digitization activities from 2024 to 2026 as part of its recently announced "RGM 2.0" plan. These efforts, which include increased artificial intelligence (AI) capabilities, Internet of Things (IoT) integration, cloud computing, and automation, will strengthen the company's technical competitive edge.
"We firmly believe that strategic investments in AI and cutting-edge technologies will not only revamp the customer experience but also enhance employee efficiency, thus fortifying our ecosystem alongside our valued partners," Yum China Chief Technology Officer Leila Zhang said. We're going to expand and strengthen our digital buffer."
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