best way to introduce theory to a kid

Stop with the theory. Teach them opening principles.

No offense but they are 7 and new to chess. They have no comprehension of what chess theory even is.

1. Develop your minor pieces.
Develop center pawns.
Develop towards the center.
Develop knights before bishops (Not written in stone).
2. Castle.
3. Connect your rooks.

Anti-Blunder Check.
After each move ask yourself:
Is my move safe?
Can my opponent take or attack something?
Can my opponent play a forcing move on my half of the board?

Glad to help. I have seen so many kids that are beginners, fall in love with openings and theory, and when they cant play openings like there favorite GM they get frustrated and quit. As with most things in life. Keep it simple. The main problem above what I said is that they just memorize moves and have no understanding of the "why" behind each move.

Use chess tutorials. BiliBili has some good chess tutorials afaik.

Perhaps you already do it, but i would suggest to teach the theory by examples of their daily life. Don't be abstract.

Kids want to play, not attend another lesson. They have enough of them at school, already.

Whatever knowledge you would like to pass to them, do it in the form of a game/contest.

If they want to learn/study something, they will let you know.

And the advice at #8 by @Ysegrim makes perfect sense.