Yum China Holdings Inc., operator of the KFC and Pizza Hut fast food chains in China, said it will buy control of takeout delivery service Sherpa's. Above, a KFC custormer orders from a kiosk inside a restaurant in Shanghai in October 2015. Photo: Visual China

(Beijing) — Yum China Holdings Inc., operator of the KFC and Pizza Hut fast food chains in China, said it will buy control of a high-end takeout dining specialist, joining a crowded field of local firms clamoring for a large but fiercely competitive market.

The China license holder for the KFC and Pizza Hut brands, both owned by U.S. restaurant giant Yum Brands Inc., said it will receive a controlling stake in Daojia.com.cn, owner of the Sherpa’s takeout delivery service, under a newly signed agreement that is expected to close at the end of this month.

No financial details were given by Yum China, which was spun off and separately listed late last year. The spinoff came under pressure from shareholders, and was part of a broader effort to give the company more flexibility to overhaul its aging China operations. Even before the spinoff, Yum had begun to retool the KFC and Pizza Hut brands in China by redesigning stores, adding new menu items and placing more focus on high-tech touches like mobile payments and in-store Wi-Fi.

“This transaction marks another step in executing Yum China’s strategy to accelerate growth through digital and delivery by building know-how and expertise in this growing segment,” Yum said in a statement on Monday.

Set up in 2010, Sherpa’s is one of China’s oldest takeout dining services that accepts orders for a wide range of restaurants and then delivers food using its own fleet of drivers. The company began as a specialist for the foreign community in China, focused on higher-end restaurants. Since then, a number of newer names like Ele.me, Meituan and Baidu takeout have set up shop, targeting a more-Chinese mass audience and creating a cutthroat market for such services.

Yum said Daojia’s founder, Hank Sun, will continue to lead the company, which currently operates in the cities of Shanghai, Beijing, Guangzhou and Shenzhen.

“We are honored to integrate our business with Yum China, which operates China’s two leading restaurant brands, KFC and Pizza Hut,” Sun said. “With the combination of the Yum China business and our technological infrastructure, we look forward to achieving digital and delivery synergies for both of us.”

Updates earlier story to say that Yum China is the China license holder of the KFC and Pizza Hut brands owned by Yum Brands Inc.



Contact reporter Yang Ge (geyang@caixin.com)