Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Investor Day (2023)
24 slides from Yum China's investor day presentation, 2023
Slide 1: Joey Wat, Chief Executive Officer
Joey Wat Chief Executive Officer
Slide 2: Cautionary Statements
Cautionary Statements Forward-Looking Statements. This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor
Slide 3: Recap: We Launched RGM Strategy in 2021
Recap: We Launched RGM Strategy in 2021 Resilience Growth Moat 2
Slide 4: Maintained Robust Performance During Pandemic
KFC Maintained Robust Performance During Pandemic Net New Stores1 Operating Profit Shareholder Return 2 2020 - 2023 1H 2020 - 2023 1H 2020 - 2023 1H 4,402 $3.6bn+ ~$1.3bn Profitable Every Quarter 1. Includes the consolidation of Huang Ji Huang from 2020 2. In share repurchases and dividends 3. Gener
Slide 5: Transformed Portfolio, Operation Model and Cost
KFC Transformed Portfolio, Operation Model and Cost Quality Growth Resilient Operation Improved Cost Structure Total Store Count1 Digital Orders2 Top 3 Fixed Costs per Store3 55 % ~51 % ~90 % 20-25 % 2023 1H vs 2019 1H 2019 1H 2023 1H 2023 1H vs 2019 1H New Unit Payback4 Off-Premise Sales2 Cash In
Slide 6: Emerged from Pandemic: Stronger & Better Positioned
KFC Emerged from Pandemic: Stronger & Better Positioned 2023 1H vs 2022 1H vs 2019 1H Store Count 13,602 1 +12% +55% Total Revenues2 $5.6bn +16% +26% Operating Profit2 $673mn +147% +33% Restaurant Margin 18.3% +530bps +160bps 1. Includes the consolidation of Huang Ji Huang from 2020 2. Growth stated
Slide 7: Going Forward: From RGM1.0 to RGM2.0
Going Forward: From RGM1.0 to RGM2.0 Growth Resilience Moat Footprint Growth | Sales Growth | Profit Growth 6
Slide 8: Accelerating Growth in Store Footprint in Last Decade Despite Slowing GDP Growth
KFC Accelerating Growth in Store Footprint in Last Decade Despite Slowing GDP Growth China GDP Growth Rate %1 13,602 Stores YUMC Stores One of the 14% 10,000 World’s Stores Largest QSR 12% Operator by Equity Store Count 5,000 Stores 5.5% 1,000 Stores 2% 1987 2003 2012 2020 2023 1H 1. Data from Natio
Slide 9: Scale of Economy Fuels Our Growth to 20,000 Stores
KFC of Economy Fuels Our Growth to 20,000 Stores Scale 20,000 Stores YUMC Stores China GDP 10,000 Stores China ≈ 18% 5,000 Stores World GDP 2022 1,000 Stores 1987 2003 2012 2020 2026E 8
Slide 10: Scale Yields Fast Expanding Addressable Market
KFC Scale Yields Fast Expanding Addressable Market China’s GDP Growth1 Rising Middle Class & Urbanization Store Density China GDP: 5% Vietnam Total Middle Class Urbanization # of Stores per mn People4 Growth in 2023E GDP 2022 Population2 (mn) Rate3 (bn USD) ~900 700+ 71% 24 65% >2X 450+ 3~4X Series
Slide 11: Lower Capex, Flexible Formats, and Franchising
KFC Capex, Flexible Formats, and Franchising Lower Enable Store Expansion in Previously Uneconomic Locations Continuous Capex Optimization Flexible Store Formats Cash Investment per Store1 (RMB) Low Tier Models -50% -60% Flexible Formats 3mn+ 3mn+ 1.5mn+ 1.2mn+ 2014 2022 2014 2022 Untapped Potential
Slide 12: Innovate Food At Scale – The $100mn Club
KFC Innovate Food At Scale – “The $100mn Club” Net Sales (USD) 1987-1991 2000-2010 2014 to 2022 1 $100mn+ $200mn+ $250mn+ $100mn+ ~$200mn Durian Pizza2 Single-Bone Chicken2 Beef Burger2 Juicy Whole Chicken2 KCOFFEE2 1. Based on the time of the product or the series of products being included in perm
Slide 13: Strong Brands Enable Growth from Extensions to Disruptive Innovations
KFC Strong Brands Enable Growth Along Entire Continuum from Extensions to Disruptive Innovations Expand Boundary of Fundamentals Incubate Disruptive Innovations Strengthen Viral UGC1 Extend Expand Convenient Fun Core Campaigns Daypart Category Occasion Experience Beef Burger Crazy Thursday Late Nigh
Slide 14: KFC: Most Powerful QSR Brand in China Enables Rapid Growth
KFC KFC: Most Powerful QSR Brand in China Enables Rapid Growth 1 Penetrated Cities2 Total Stores2 Key Strategic Focus 1,900+ 9,562 Expand Footprint Through New Models and Franchising 3-Year Total Net New Builds Continue to Build Core Menu and New Growth Pillars ~2,500 Expand Signature Campaigns ~1,3
Slide 15: Pizza Hut: Leading CDR Brand Revitalized and Taking Off
KFC Pizza Hut: Leading CDR Brand Revitalized and Taking Off 1 Penetrated Cities2 Total Stores2 Key Strategic Focus 650+ 3,072 Accelerate Expansion Through Flexible Formats Reinforce Pizza Leadership and 3-Year Total Net New Builds Drive Off-premise Business 600+ Create More Affordable Moments 200 Tr
Slide 16: Emerging Brands: Cultivate Future Growth Engines
KFC Emerging Brands: Cultivate Future Growth Engines ~1,000 Total Stores1 The Italian Iconic Mexican Trailblazer in Inner-Mongolia Coffee Icon QSR Brand Simmer Pot Hotpot Expert 1. As of Jun 30, 2023 15
Slide 17: Transform Supply Chain with Collaboration and Innovation
KFC Transform Supply Chain with Collaboration and Innovation 122 Market Price Index of Poultry1 109 Cost Index of “Original Recipe Chicken”2 100 2017 2018 2019 2020 2021 2022 2023 1H All price indices are cumulative, 2017 index = 100 1. Market price index of poultry, data from National Bureau of Sta
Slide 18: Migrate to a More Resilient Rent Structure
KFC to a More Resilient Rent Structure Migrate Rent Costs as a % of Company Sales 10.8% 8.7% ~70% New Leases1 with Variable Rent 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1H 1. Company stores of KFC and Pizza Hut 17
Slide 19: Improved Labor Capability Supported by Technology and Process Design
KFC Improved Labor Capability Supported by Investment in Technology and Process Design Total Store Count +80% 2016 2019 2023H1 Total # of Employees FLAT 420k+ 450k+ 430k+ 18
Slide 20: Drive Growth by Investments in Cutting-Edge Technologies
KFC Growth by Investments in Cutting-Edge Technologies Drive Footprint Growth Sales Growth Profit Growth Digital Pocket Manager Brand Super APPs ‘Super Brain’ Store Management AI-based Site Development Smart Delivery Service Smart Inventory Replenishment Digital Supply Chain Management Intelligent C
Slide 21: Fair Care Pride
“RGM No.1” KFC Fair Care Pride 1. Restaurant General Manager Recognized 5 Consecutive Years, Ranked 1st in the Industry in 2022 9% RGM1 Turnover Rate in 2022 20
Slide 22: We Care Deeply for Our Communities
KFCCare Deeply for Our Communities We ONE YUAN 16 Years of FOOD 500+ KFC & 40+ DONATION Commitment BANK Pizza Hut Stores LITTLE MIGRATORY 2,000 Reading GROW LOCAL 3,400+ BIRDS FUND Corners INITIATIVE Participants As of Jun 30, 2023 21
Slide 23: Protect the Planet as We Expand
KFC the Planet as We Expand Protect GHG Emissions Reduction Goal by 20351 63% 66.3% Scope 1 & 2 Scope 3 Climate Action Net-Zero Value Chain by 2050 Circular Economy Upstream Collaboration 1. Science-Based Target: reduce absolute Scope 1 and 2 GHG emissions by 63%, and reduce Scope 3 GHG emissions fr
Slide 24: Meet Our Leadership Team
KFC Our Leadership Team Meet 23