The owner of KFC and Pizza Hut said sales plunged by 20% in the first two weeks of March as a surge of new Covid-19 cases spread across China.
Yum China said “the situation has rapidly deteriorated” as regional lockdowns have been put in place to stem the outbreak.
More than 1,100 of its stores are temporarily closed or offering takeaway and sales are “still trending down”.
China’s lockdowns are among its biggest since the beginning of the pandemic.
They include the Jilin province – home to companies such as carmakers Toyota and Volkswagen – as well as technology hub Shenzhen as the number of new infections of the Omicron variant of Covid-19 rise.
Yum China said: “Entering March, the situation has rapidly deteriorated with the highly transmissible Omicron variant causing outbreaks across China, including economically important regions of Guangdong, Shanghai, Shandong and Jilin.”
It added: “Our operations are significantly impacted by the latest outbreaks and the tighter public health measures which resulted in a further reduction of social activities, travelling and consumption.”
Toyota, Volkswagen and iPhone-maker Foxconn have been forced to close operations in affected regions due to lockdowns.
Although Foxconn said on Wednesday it was able to restart some production in Shenzhen after putting in place a closed loop system on its campus. It means that Foxconn employees working in the space cannot move outside the group.
Foxconn said: “This process, which can only be done on campuses that include both employee housing and production facilities, adheres to strict industry guidelines and closed-loop management policies issued by the Shenzhen government.”
There are concerns the restrictions could have an impact on global supply chains.
But Yum China’s chief executive Joey Wat, said: “Our robust supply chain management has shielded us from material business disruptions.” Yum China said it had more than doubled the number of stores it had closed or restricted to take-out services from 500 in January to 1,100 in March.
Mr Wat pledged: “We will keep our restaurants open and provide food services to customers wherever it is possible and safe to do so.”