Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Q3 2023 Earnings Presentation
24 slides from Yum China's earnings presentation, Oct 31, 2023
Slide 1: Third Quarter 2023 Results
Third Quarter 2023 Results 1 November 2023 NYSE: YUMC and HKEX: 9987
Slide 2: Cautionary Statement on Forward-Looking Statements & Non-GAAP Measures
Cautionary Statement on Forward-Looking Statements & Non-GAAP Measures 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 covere
Slide 3: Solid Performance in Third Quarter
Solid Performance in Third Quarter RMB to USD rate vs prior year Q3 Q3: ~6% depreciation 2021 2022 2023 YoY Vs 19 Third Quarter Total stores 11,415 12,409 14,102 +14% +58% Revenue +15% YoY Net new stores 392 239 500 in constant currency Revenue ($bn)1 2.55 2.68 2.91 +9% +26% Adjusted Op Profit exclu
Slide 4: Delivered ~$1 billion Operating Profit Year-to-date
Delivered ~ $1 billion Operating Profit Year-to-date RMB to USD rate vs prior year YTD Q3 YTD: ~7% depreciation 2021 2022 2023 YoY Vs 19 Year-to-date Total stores 11,415 12,409 14,102 +14% +58% Record net new stores of 1,155 Net new stores 909 621 1,155 On track to reach full year target Revenue ($b
Slide 5: Delivery Mix Pulled Back Slightly as Dine-in Recovered
Delivery Mix Pulled Back Slightly as Dine-in Recovered Delivery Takeaway Off-premise % of Company sales1 % of Company sales1 % of Company sales1 ~65% ~64% ~37% ~60% ~35% ~32% ~29% ~29% ~28% Q3 2021 Q3 2022 Q3 2023 ~41% ~49% ~38% ~45% ~45% ~36% ~7% ~8% ~9% 1 Includes KFC (Hangzhou KFC included since
Slide 6: Continued to Expand Membership Program and Improve Member Engagement
Continued to Expand Membership Program and Improve Member Engagement Digital Orders Members2 Member sales3 % of Company sales1 Million % of System sales ~88% ~90% ~89% 430+ 370+ ~63% ~65% 320+ ~61% Q3 2021 Q3 2022 Q3 2023 ~92% ~91% ~85% 150+ ~66% ~65% 125+ ~62% 105+ KFC Privilege for Students 1 Incl
Slide 7: Maintained New Unit Payback Periods – 2 Years for KFC; 3 Years for Pizza Hut
Maintained New Unit Payback Periods – 2 Years for KFC; 3 Years for Pizza Hut Expanding Store Portfolio Penetrating into Lower-tier Cities Maintained New Unit Payback1 Gross New Stores Q1-3 23 Net New Stores Total Stores By Year of Opening 1,520 ~2 yrs ~2 yrs ~2 yrs 1,243 1,171 38 44 % 56 % 62 % % YT
Slide 8: KFC: Stores, Sales and Profits All Increased
KFC: Stores, Sales and Profits All Increased Q3 2022 2023 YoY Vs 19 Total stores 8,675 9,917 +14% +57% Net new stores 165 355 System sales +5% +15% growth1 Same-store sales Flat +4% growth1 Restaurant margin 20.6% 18.6% Operating profit 328 342 +4% +16% ($ mn)2 +10% in constant Delivery sales3 ~37%
Slide 9: Introducing Delicious and Innovative Food
Introducing Delicious and Innovative Food Beef Burger CP (Couple) Burgers Chinese-style Breakfast Juicy Whole Chicken Ultra Cheese 2.0 Beef Burger Spicy Sichuan Mouth-watering Chicken Chaozhou-style Beef Ball Congee Sichuan-style Spicy Whole Chicken Burger and Spicy Hunan-style Stir-fried and Songyu
Slide 10: Offering Amazing Value
Offering Amazing Value Buy One Get One Free Crazy Thursday KCOFFEE Holiday Bucket New Flavor ¥8.8 Member Offer Iced Sparkling Americano with Zesty Lemon National Day & Mid-Autumn Festival 9 pieces of Spicy Nuggets at ¥9.9 Limited to once a week Campaign from Aug 7 to Sep 3 10
Slide 11: Pizza Hut: Accelerated Store Openings
Pizza Hut: Accelerated Store Openings Q3 2022 2023 YoY Vs 19 Total stores 2,806 3,202 +14% +42% Net new stores 95 130 System sales +7% +13% growth1 Same-store sales +2% +2% growth1 Restaurant margin 13.4% 12.7% Operating profit 49 47 (5)% +24% ($ mn)2 +1% in Delivery sales3 ~41% ~36% constant curren
Slide 12: Enriching Pizza Selections
Enriching Pizza Selections 12 12
Slide 13: Expanding Price Range to Drive Incremental Sales
Expanding Price Range to Drive Incremental Sales Pizzas Below RMB 50 Scream Wednesday New Snack ￥29 Hawaiian 1-person pizza ￥39 Bolognese Pizza ￥49 BBQ Sausage Pizza Nine pizza options priced below RMB50: Offers range from ¥19.9 to ¥59.9 Cheese tart at ¥9 Four 1-person pizzas & five regular size piz
Slide 14: Collaborating with Popular Icons / Events to Create Excitement and Acquire New Customers
Collaborating with Popular Icons / Events to Create Excitement and Acquire New Customers KFC x Pleasant Goat KFC x Star Rail KFC x Ultraman Pizza Hut x Asian Games and Big Big Wolf Combo / Bucket includes Combos at ¥42 and ¥49.9 Combo at ¥55 with specially designed Combo at ¥159 souvenirs and game g
Slide 15: Capital Allocation Balances Operations Needs, Long-term Growth and Return to Shareholders
Capital Allocation Balances Operations Needs, Long-term Growth and Return to Shareholders Q3 Year-to-date $ million Disciplined Capital Allocation 2021 2022 2023 Net Cash Position 4,377 4,037 4,1591 • Maintain sufficient cash for operations and contingencies Cash flow from operating activities 1,074
Slide 16: 2023 Outlook
2023 Outlook Net new store: 1,100-1,300 1,400-1,600 Capital expenditure: $700-900mn 16
Slide 17: 2024-2026 Growth Targets: 20,000 Stores by 2026
2024-2026 Growth Targets 20,000 Stores by 2026 3-Year Growth Targets on 2023 Base1 High Single to High Single to Double Digits Double Digits Double Digits System Sales Operating Profit EPS ~$3bn Targeted return of cash to shareholders 2 1. In constant currency 17 2. Based on current expectations, wh
Slide 18: Appendix
YumChina Appendix
Slide 19: Key Factors of Year-over-year Change
Key Factors of Year-over-year Change 8.49 7.56 7.48 996 Total Operating 753 Revenue Profit 588 2.55 2.68 2.91 ($mn) 316 323 ($bn) 178 Q3 YTD Q3 YTD Key factors for Q3 year-over-year increase Key factors for Q3 year-over-year increase + New unit contribution + Sales leveraging + Same-store sales grow
Slide 20: KFC Key Financials
KFC Key Financials Sales Growth (%) Restaurant Margin (%) Operating Profit 2 ($ mn) System sales growth 1 20.6% 21% 18.6% 19.4% 16.8%16.6% 15% 13.6% 12% 1,035 5% 1% 763 -5% 670 Q3 YTD Q3 YTD Same-store sales growth 1 328 342 9% 2023 vs 2022 Q3 196 4% 0% 0% Same-store sales +4% - Transactions +9% - A
Slide 21: Pizza Hut Key Financials
Pizza Hut Key Financials Sales Growth (%) Restaurant Margin (%) Operating Profit 2 ($ mn) System sales growth 1 13.4% 13.1% 12.7% 12.2% 11.1% 20% 19% 8.2% 137 13% 7% 1% 117 -3% 90 Q3 YTD Q3 YTD Same-store sales growth 1 49 47 11% 2023 vs 2022 Q3 7% 18 Same-store sales +2% 2% 2% - Transactions 12% -
Slide 22: Reconciliation of Reported Results to Non-GAAP Adjusted Measures
Reconciliation of Reported Results to Non-GAAP Adjusted Measures Quarter Ended Year to Date Ended 9/30/2023 9/30/2022 9/30/2023 9/30/2022 Non-GAAP Reconciliations Reconciliation of Operating Profit to Adjusted Operating Profit Operating Profit $ 323 $ 316 $ 996 $ 588 Special Items, Operating Profit
Slide 23: ESG Key Initiatives
ESG Key Initiatives Climate Action Circular Economy Nutrition & Food Safety People SBTi approved near-term Phased out plastic packaging Published Yum China People First: greenhouse gas reduction and introduced serving Nutrition and Health Fair, Care & Pride targets1 baskets made with 10% Commitments
Slide 24: About Yum China
About Yum China Yum China is the largest restaurant company in China with a mission to make every life taste beautiful. The Company has over 400,000 employees and operates over 14,000 restaurants under six brands across 1,900 cities in China. KFC and Pizza Hut are the leading brands in the quick-ser