The company centrally purchases most food and paper products to maintain quality control and secure better pricing through volume buying. Its restaurant operations depend on reliable sources of large quantities of raw materials, including poultry, pork, beef, seafood, cheese, oil, flour, and vegetables such as potatoes and lettuce. Raw material prices are subject to fluctuations influenced by supply and demand, international trade policies, climate conditions, natural disasters, and disease outbreaks, including the African swine flu in China in 2019, which increased protein prices. Price volatility can lead suppliers to renegotiate or fail to fulfill agreements, resulting in higher costs. The company and its franchisees offer competitively priced food, which limits their ability to pass increased commodity costs to customers and may affect profit margins.
Yum China Holdings Inc's Comment on Supply Chain
The company centrally purchases most food and paper products to maintain quality control and secure better pricing through volume buying. Its restaurant operations depend on reliable sources of large quantities of raw materials, including poultry, pork, beef, seafood, cheese, oil, flour, and vegetables such as potatoes and lettuce. Raw material prices are subject to fluctuations influenced by supply and demand, international trade policies, climate conditions, natural disasters, and disease outbreaks, including the African swine flu in China in 2019, which increased protein prices. Price volatility can lead suppliers to renegotiate or fail to fulfill agreements, resulting in higher costs. The company and its franchisees offer competitively priced food, which limits their ability to pass increased commodity costs to customers and may affect profit margins.
Sources:
Yum China Holdings Inc 's official press releases and regulatory filings; CSIMarket.com's supply-chain research; and the financial filings and press releases of other companies cited in this report.
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