# Franchisees accounted for 52% of KFC China’s net new restaurants in Q3

> Source: https://qsr.pro/articles/kfc-china-franchise-growth-small-town-investment
> Publisher: QSR Pro
> Last content update: 2026-11-04T13:50:57.827313+00:00


In 2025, Yum China estimated investment at 500,000 to 700,000 yuan per restaurant for its small-town KFC format.

Published: 2026-11-04T13:50:57.827313+00:00

By QSR Pro Staff

![Franchisees accounted for 52% of KFC China’s net new restaurants in Q3](https://gadzwjyojqpwmxtgebnh.supabase.co/storage/v1/object/public/article-images/kfc-china-q3-franchise-net-additions-7248501cf19e.webp)

*AI-generated illustration: QSR.pro, using Yum China’s third-quarter results.*

KFC’s restaurant count in mainland China rose by 518 in the third quarter of 2026. Franchisees accounted for 269 of those net additions, or 52%, Yum China reported November 3. On September 30, franchisees operated 2,558 of the chain’s 14,307 restaurants, about 18%. [Quarterly results](https://ir.yumchina.com/static-files/ab29f031-ae79-4160-aebf-5d26823fb175)

At its November 2025 investor day, Yum China used a franchised restaurant in Henan province to illustrate its small-town KFC format. Management put the investment per restaurant at 500,000 to 700,000 yuan and said franchisees could recover it in two to three years. The quarterly figures cover all KFC formats and don’t measure small-town payback. [Investor day transcript](https://yumchinaholdingsinc.gcs-web.com/static-files/49043920-a006-40d5-9828-aac117585ecc) and [quarterly results](https://ir.yumchina.com/static-files/ab29f031-ae79-4160-aebf-5d26823fb175)

Yum China operates and franchises KFC in mainland China. Its annual report for 2025 describes what franchisees fund before opening. The operator pays the initial franchise fee and secures rights to the site and building by purchase or lease. It also pays for equipment, signs, seating and opening inventory. FoodInc reported that in March 2025 Yum China announced plans to simplify its main franchise charges at KFC and Pizza Hut to lower the upfront cost for operators. [Annual filing](https://www.sec.gov/Archives/edgar/data/1673358/000119312526082824/yumc-20251231.htm) and [FoodInc’s report](https://www.foodinc.com.cn/2025/03/17/20250317001/)

## Who can bring KFC a site

In an interview with FoodInc that March, He Min, Yum China’s chief development officer, described two kinds of partners the company sought for KFC and Pizza Hut. Some companies had access to hard-to-enter sites such as universities, highway stops or gas stations. Others had businesses in small towns or remote areas, such as local retail chains. KFC later told investors its franchisees had helped it enter Xiamen University and Mount Tai. [FoodInc interview](https://www.foodinc.com.cn/2025/03/17/20250317001/) and [investor day transcript](https://yumchinaholdingsinc.gcs-web.com/static-files/49043920-a006-40d5-9828-aac117585ecc)

KFC calls the first group channel partners. Its application asks whether a company has substantial property holdings of its own or access to many sites in a particular channel or region. Applicants also need the funds and management capacity to run several restaurants. After applying online, the company discusses the proposal with KFC and interviews with its franchise committee. The parties can sign a development agreement while the proposed address still awaits approval. KFC lists site evaluation and approval as a separate step before preparations to open. [Channel partner application](https://www.yumchina.com/kfcjiameng/apply_flow.html)

## What goes into payback

KFC told investors that company and franchise restaurants followed the same design and equipment standards, while rent terms varied by format. The small-town estimate did not itemize those costs. A franchisee planning to lease a site would need to check whether the estimate includes pre-opening rent. A partner who already owns the building faces a different outlay. [Investor day transcript](https://yumchinaholdingsinc.gcs-web.com/static-files/49043920-a006-40d5-9828-aac117585ecc) and [annual filing](https://www.sec.gov/Archives/edgar/data/1673358/000119312526082824/yumc-20251231.htm)

Once the restaurant opens, Yum China collects a royalty based on the franchisee’s sales. A store can therefore owe a royalty even in a month when it earns no profit. Franchisees also buy food and packaging from Yum China and pay it for services such as advertising and delivery. [Yum China’s revenue accounting](https://www.sec.gov/Archives/edgar/data/1673358/000119312526082824/yumc-20251231.htm)

FoodInc described a small-town mini KFC with a shorter menu and less floor space than a standard store. He Min said demand in smaller cities surged during holidays when schools let out and workers returned home. KFC was studying how to lay out the mini restaurants to serve those crowds and ordinary weekday customers. To forecast payback, an owner needs to estimate the cash left after expenses in both busy and quiet weeks. [FoodInc interview](https://www.foodinc.com.cn/2025/03/17/20250317001/)

Category: [Finance & Economics](https://qsr.pro/categories/finance)