Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Q1 2024 Earnings Presentation
33 slides from Yum China's earnings presentation, Apr 30, 2024
Slide 1: First Quarter 2024 Results
First Quarter 2024 Results 30 April 2024 NYSE: YUMC and HKEX: 9987
Slide 2: Cautionary Statement
Cautionary Statement 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 provisions of the Private Sec
Slide 3: A Solid First Quarter 2024
A Solid First Quarter 2024 Solid Growth Despite High Base Last Year System Sales Growth1 Diluted EPS Operating Profit On top of 17% growth in Q1’23 Grew YoY to $0.71 OP Core OP2 +6% YoY +4% or +10% ex F/X $374 mn $396 mn Fueling Growth and Returning to Shareholders Net New Stores Total Stores Divide
Slide 4: Surpassed 15,000 Stores with Accelerated Store Openings
Surpassed 15,000 Stores with Accelerated Store Openings Total Stores 15,022 378 net new stores in Q1 <4 years 8% net new unit >10,000 contribution to sales in 8 years Q11 Targets >5,000 • To open 1,500-1,700 Net New Stores in 25 years 2024 1 • To reach 20,000 stores by 2026 24'Q1 2000 2001 2002 2003
Slide 5: Maintaining Healthy New Store Payback Through Flexible Store Formats and Reduced Capex
Maintaining Healthy New Store Payback Through Flexible Store Formats and Reduced Capex Penetrating into More Cities Reduced Healthy New Leveraging Franchisees Strategically Average Capex Store Payback3 #1 Western QSR in China1 Net New Total 24 Q1 10,603 ~2 years Total Stores Stores Stores 2,000+ ~1.
Slide 6: Record Cash Return to Shareholders, Supported by Strong Cash Generation
Record Cash Return to Shareholders, Supported by Strong Cash Generation and Healthy Cash Position Returns to Shareholders1 $mn FY Target2 $3.7bn $3bn+ $3.1bn ~1,500 Returned since Target to return Net Cash by end spin-off in 2024-262 of Mar 2024 833 745 Quarterly Cash Dividends +23% 668 $0.10 $0.12
Slide 7: Driving Incremental Transactions and Sales
Driving Incremental Transactions and Sales Q1 2024 +6% Sales System Growth +15% System Transactions Growth +5% Same-store Transactions Growth Exciting New Products Widen Price Range Collaborate with IPs Expand Customer Base Happy fried egg in spicy sauce Double layer beef burger combo at Chinese New
Slide 8: Delivery Sales Grew Double Digits
Delivery Sales Grew Double Digits Delivery Sales +12% YoY in Q1 ~31% ~32% • KFC lowered delivery fee and ~53% ~53% ~53% expanded one-person meal options ~71% to attract smaller orders ~33% ~29% ~10% ~10% • Took actions to reduce rider costs – ~29% e.g., introducing platform riders at ~5% select loca
Slide 9: Engaging Members to Enhance Loyalty
Engaging Members to Enhance Loyalty Grow Digital Sales Grow Members Drive Online Traffic Digital order1 Members (mn) 2 Member sales % 3 65% 65% 89% 89% 89% 63% 62% 86% 60% 80% 52% 470+ ~485 Mini 410+ program 360+ 55% 300+ Super APP 240+ Local services Delivery aggregators 2019 2020 2021 2022 2023 20
Slide 10: KFC Continues to Thrive
KFC Continues to Thrive Q1 2024 +7% System sales growth1 ` 307 Net new stores 19.3% Restaurant margin $372mn Operating profit Photo: KFC store in Wuhan MAX Zone (武汉MAX科技园) 1Exclude the impact of foreign exchange 10
Slide 11: Establishing Successful Product Categories
Establishing Successful Product Categories Crayfish Chicken Burger Beef Burger Juicy Whole Chicken Double Down Changsha-style spicy flavor New pineapple/crunchy fries beef burgers Original and spicy whole chicken, New durian cheese and bacon chicken Weekend special price at RMB 29.9 double down at R
Slide 12: Capturing Diverse Occasions with Wide Range of Choices
Capturing Diverse Occasions with Wide Range of Choices Crazy Thursday CNY Buckets & Weekday Value Spring Bucket Since 2018 Combos Combo Valentine Day’s promotion with heart- New beef burger, chicken burger, New double beef burger 10 signature products at RMB 79.9, shaped chicken nuggets at RMB 19.9
Slide 13: KCOFFEE Entering New Growth Phase
KCOFFEE Entering New Growth Phase Innovative products & affordable price: Side-by-side KCOFFEE stores anchoring in our KFC stores; +30% YoY in cups sold in Q1 2024 Distinct store front, dining area and menu Sparkling apple RMB 9.9 per cup Over 100 Side-by-side KCOFFEE stores KCOFFEE exclusive americ
Slide 14: Pizza Hut Accelerating Growth
Pizza Hut Accelerating Growth Q1 2024 +4% System sales growth1 113 Net new stores 12.5% Restaurant margin $47mn Operating profit Photo: Pizza Hut store in Hubei province Lichuan The Landmark (利川 置地广场) 1Exclude the impact of foreign exchange 14
Slide 15: Launching Innovative and Delicious Products
Launching Innovative and Delicious Products Steak w ith Cheese Cilantro, Century Egg Stuffed Crust Pizza w ith Pizza Dough Burger Sauce & Beef Pizza Cheddar Cheese 15
Slide 16: Enriching Entry Price Offerings and Value Proposition
Enriching Entry Price Offerings and Value Proposition Entry Price Point Pizzas Buy One Get One Free All-you-can-eat Scream Wednesday New pizzas from RMB 39.9 2 items for RMB 59, 2nd item RMB 178 per person Pizza at RMB 29.9 or 39.9 redeemable within 30 days 5 days only 16
Slide 17: Lavazza is Making Good Progress
Lavazza is Making Good Progress Store Format Innovation Menu Innovation Whiskey barrel-aged coffee Chicken wrap and beef rolls Photo: Lavazza store in Chengdu SM City (成都SM广场） 17
Slide 18: Pursuing Greater Operational Efficiency to Make our Business Even More Resilient
Pursuing Greater Operational Efficiency to Make our Business Even More Resilient Best in class Best in cost Assess our Focus on operational improving Pass on savings to processes through efficiency, customers and other the eyes of our enhancing agility stakeholders Restaurant General and driving cos
Slide 19: 2024 Targets Remain Unchanged
2024 Targets Remain Unchanged Net new stores 1,500- Capex $mn 1,697 1,700 To step up investment in digital, supply chain and other 1,306 1,282 infrastructure 1,159 Huang Ji 700- Huang 850 716 689 679 710 657 501 ex HJH 470 421 415 435 419 2017 2018 2019 2020 2021 2022 2023 2024 E 2017 2018 2019 2020
Slide 20: 2024-2026 Growth Targets
2024-2026 Growth Targets 20,000 Stores by 2026 3-Year Growth Targets (CAGR) on 2023 Base1 High Single to High Single to Double Digits Double Digits Double Digits System Sales Operating Profit EPS $3bn+ Targeted return of cash to shareholders 2 1 Exclude the impact of foreign exchange 2 Based on curr
Slide 21: Appendix
YumChina Appendix
Slide 22: Solid Q1 Performance Despite High Base
Solid Q1 Performance Despite High Base Q1 2019 2023 2024 Highlights Total stores 8,653 13,180 15,022 Record level! Net new stores 169 233 378 Record level for Q1! Revenue ($bn) 2.30 2.92 2.96 Record level! System sales growth1 +9% +17% +6% +28% 2024 vs 2019 Same-store sales growth1 +4% +8% (3)% Same
Slide 23: Solid Results in First Quarter
Solid Results in First Quarter Revenue/Sales YoY Total Revenue ($bn) 2.96 Key factors for Revenue year-over-year change 2.92 Revenue growth (reported) +1% + Net new unit contribution − Same-store sales decline Revenue growth (ex F/X) +7% − Foreign exchange impact System sales growth1 +6% 23'Q1 24'Q1
Slide 24: First Quarter Key Performance Highlights – KFC & Pizza Hut
First Quarter Key Performance Highlights – KFC & Pizza Hut Digital 24’Q1 YoY Sales Growth Channel Mix Members order System Same-store Same-store Average Total off- Member Sales sales transactions ticket Delivery Million Sales % premise sales % YoY YoY YoY YoY +7% (2)% +4% (6)% 39% 68% 450+ 64% 89% L
Slide 25: Reconciliation of Reported Results to Non-GAAP Measures
Reconciliation of Reported Results to Non-GAAP Measures (in $mn) Quarter Ended 3/31/2024 3/31/2023 N on-G AAP Reconciliations Reconciliation of Operating Profit to Adjus ted Operating Profit Operating Profit $ 374 $ 416 Special Items, Operating Profit — (3) Adjusted Operating Profit $ 374 $ 419 Deta
Slide 26: Reconciliation of Operating Profit to Core Operating Profit
Reconciliation of Operating Profit to Core Operating Profit* (in $mn) Yum China Quarter ended % Change 3/31/2024 3/31/2023 B/(W) Reconciliation of Operating Profit to Core Operating Profit Operating profit $ 374 $ 416 (10) Special Items, Operating Profit — 3 Adjusted Operating Profit $ 374 $ 419 (11
Slide 27: Reconciliation of Operating Profit to Core Operating Profit
Reconciliation of Operating Profit to Core Operating Profit (in $mn) Quarter Ended KFC Pizza Hut 3/31/2024 3/31/2023 3/31/2024 3/31/2023 GAAP Operating Profit (Loss) $ 372 $ 420 $ 47 $ 55 Special Items, Operating Profit — — — — Adjusted Operating Profit $ 372 $ 420 $ 47 $ 55 Items Affecting Comparab
Slide 28: Reconciliation of Operating Profit to Restaurant Profit
Reconciliation of Operating Profit to Restaurant Profit (in $mn) Yum China Quarter Ended 3/31/2024 3/31/2023 GAAP Operating Profit (Loss) $ 374 $ 416 Less: Franchise fees and income 25 25 Revenues from transactions with franchisees (1) 107 93 Other revenues 32 27 Add: General and administrative expe
Slide 29: Reconciliation of Operating Profit to Restaurant Profit
Reconciliation of Operating Profit to Restaurant Profit (in $mn) Quarter Ended KFC Pizza Hut 3/31/2024 3/31/2023 3/31/2024 3/31/2023 GAAP Operating Profit (Loss) $ 372 $ 420 $ 47 $ 55 Less: Franchise fees and income 18 17 2 2 Revenues from transactions with franchisees (1) 14 10 1 1 Other revenues 5
Slide 30: Items Affecting Comparability – 2023 by Quarter
Items Affecting Comparability – 2023 by Quarter (in $mn) Yum China 23Q1 23Q2 23Q3 23Q4 Items Affecting Comparability Temporary relief from landlords (8) (2) — (1) Temporary relief from government agencies (2) (1) (1) (3) VAT deductions (19) (9) (14) (2) Amortization of reacquired franchise rights 2
Slide 31: ESG Key Initiatives
ESG Key Initiatives Climate Action Circular Economy1 Nutrition & Food Safety People 2050 net-zero targets Baskets and serving trays Published Yum China People First: submitted to SBTi for containing recycled coffee Nutrition and Health Fair, Care & Pride validation ground rolled out in over Commitme
Slide 32: ESG Ratings and Awards
ESG Ratings and Awards ESG Rating People & Community 4th Year Industry Best 6th Year Joined in August 2023 Industry highest score MSCI ESG ‘AA’ rating Industry best for the 3rd year To support UN SDG1 Industry Leader Leadership 5th Year 2nd Year Climate Supplier Engagement One of the only three comp
Slide 33: About Yum China
About Yum China Largest restaurant Fortune 500 6 restaurant company in China1 company brands 15,000+ 2,000+ 400,000+ restaurants cities in China employees Vision: To be the world’s most innovative pioneer in the restaurant industry World-class, Strong digital capabilities & Strategic Moat: digitaliz