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, BBC reported.
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 rose.
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, the report said.