Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Q1 2021 Earnings Presentation
25 slides from Yum China's earnings presentation, Apr 28, 2021
Slide 1: First Quarter 2021 Results
First Quarter 2021 Results April 2021
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: Business Highlights
Business Highlights Appendix – Financial Results Stores in Photos: KFC - Hangzhou Beishan; Pizza Hut – Fuzhou Antai 3
Slide 4: Recovery Continued in First Quarter
Recovery Continued in First Quarter Sales and Profit Rebounding Accelerated Store Growth Digital Driving Engagement • Total revenue grew 46%1 • Gross new stores: 315 • Q1 Sales were • System sales grew 34%2 • Total stores: 10,725 Digital payment: 98% • Same-store sales grew 10%2 • New store cash p
Slide 5: Powerful Digital Ecosystem
Powerful Digital Ecosystem Mobile Privilege Mobile Tableside Order Program Super Apps Pre-order Online Membership • Improves Program Queuing engagement with customers K-Music • Improves efficiency Delivery K-Run YUMC Pay Smile to Pay V-gold & E-Gifting Book Kingdom Merchandise Payment Operations Mar
Slide 6: Membership Programs and Super Apps Drive Frequency and Spend
Membership Programs and Super Apps Drive Frequency and Spend 290+ mm 90+ mm KFC Members1 Memberships Pizza Hut Members1 ~149 mm ~33 mm Downloads from Downloads from iOS and Android 1 iOS and Android1 ~94 mm ~15 mm MAU2 in Q1 2021 MAU2 in Q1 2021 ~63% ~55% KFC Sales3 Pizza Hut Sales3 ~2x >2x ~11mm AR
Slide 7: Delivery and Takeaway Remains Popular
Delivery and Takeaway Remains Popular Delivery + Takeaway = Off-premise % of Company sales % of Company sales % of Company sales 28% 28% ~30% ~30% 25%+ 19% 15% 55%+ in Q1 2021 2018 2019 2020 21 Q1 2019 2020 21 Q1 36% 35% 24% 25% ~9% ~7% ~5% ~41% in Q1 2021 2018 2019 2020 21 Q1 2019 2020 21 Q1 Note:
Slide 8: New Store Growth with Attractive Paybacks
New Store Growth with Attractive Paybacks Lower Tier Penetration New Unit Payback1 315 2021 Q1 new stores Tier 1-2 Tier 3-6 237 Gross 179 new 39% 39% stores Tier 1-2 Tier 3-6 61% 61% 19 Q1 20 Q1 21 Q1 KFC ~2-3 yrs ~2 yrs 10,725 Total stores Tier 1-2 Tier 3-6 9,295 Pizza Hut ~3-4 yrs ~3-4 yrs 8,653 T
Slide 9: Remodels and New Format Keep Our Restaurants Fresh and Relevant
Remodels and New Format Keep Our Restaurants Fresh and Relevant KFC Pizza Hut Number of remodeled stores in Q1 2021 : KFC 74, Pizza Hut 34 Stores in Photos: KFC – Hangzhou China Central Place; KFC- Chengdu Huada Shopping Mall; Pizza Hut – Nanjing Baima Living Shopping Plaza 9
Slide 10: KFC Remained Resilient
KFC Remained Resilient Q1 2021 Highlights System sales +24%1 253 Restaurant margin Gross new Same-store sales +5%1 Operating profit of stores Or approx. -6%2 vs 19’Q1 19.9% US$327 million3 Transactions -13%2 vs 19’Q1 +6.3 ppts y/y Average ticket +8%2 vs 19’Q1 74 remodels Holiday and Digital campaign
Slide 11: Attractive Campaigns with Abundant Value
Attractive Campaigns with Abundant Value Holiday Celebration Signature Value Co-branded Campaign Privilege Membership Save up to ¥75: Chinese New Year Twin Buckets: ¥39 for 10-piece chicken Theme stores and combos featuring Ox Privilege: ¥9.9 for 14 days; Golden Bucket with stuffed wings, crispy win
Slide 12: Product Innovations Across Categories
Product Innovations Across Categories Chili Pot Burger Stuffed Whole Chicken Rice Dumplings Seasonal Coffee Chongqing chili pot flavored chicken burger Whole chicken stuffed with 8 ingredients Festive rice dumplings with salted egg or Sakura latte macchiato with luncheon pork such as sausages, stick
Slide 13: Remarkable Progress in Pizza Hut
Remarkable Progress in Pizza Hut Q1 2021 Highlights System sales +57%1 44 Gross Restaurant margin Operating profit of Same-store sales +38%1 new stores 15.3% US$60 million3 Or approx. -5%2 vs 19’Q1 +15 ppts y/y Transactions +2%2 vs 19’Q1 34 remodels Average ticket -7%2 vs 19’Q1 ~82% Digital orders N
Slide 14: Innovative Products and Great Prices
Innovative Products and Great Prices Innovative Products for the Festive Seasons Great Value for Every Occasion Flower-shaped stuffed crust pizza; Year of the Ox holiday feast sets French toast breakfast combo: “Fortune” cake gift set Free wings for new members with signature products save up to ¥54
Slide 15: Refreshed Menu in March
Refreshed Menu in March Jasmine: get a nice picture of the new menu like this without the Chinese text and without the white box inside? Mango and pineapple juice Surf and Turf platter with with yogurt cap Beef Wellington seabass and steak Seafood Supreme pizza with cod Mustard grilled filet pizza S
Slide 16: 2021 Outlook and Strategic Priorities
2021 Outlook and Strategic Priorities 2021 • ~1,000 gross new stores FINANCIAL • ~$600 million Capex TARGETS • Top priority is to safeguard the health and safety of our employees and customers • Drive sales recovery and stay agile STRATEGIC • Grow our store footprint and develop emerging brands PRIO
Slide 17: Capital Allocation Powers Business Growth
Capital Allocation Powers Business Growth Cash Capital Expenditure Shareholder Returns M&A and Investment US$4.1 bn cash and short Target to spend ~US$600 mn US$1.2bn (since spin-off) To remain disciplined and explore term investment in 2021 opportunities in: Resumed cash dividends in Stro
Slide 18: Being a Responsible Corporate Citizen
Being a Responsible Corporate Citizen Recognized Commitment Bloomberg Gender Equality Index for the third Industry Leader for the year in 2021 Certified as Top Employer Restaurant and Leisure Facilities China for the third year in 2021 industry of DJSI in 2020 • Provided 170,000+ free New Plastic •
Slide 19: Appendix – Financial Results
Business Highlights Appendix – Financial Results Stores in Photos: KFC - Hangzhou Beishan; Pizza Hut – Fuzhou Antai 19
Slide 20: Q1 Results Improved Year-over-year
Q1 Results Improved Year-over-year Sales Growth1 Profit Margin Net Income & EPS System sales growth (%) Restaurant Margin (%) Net Income (NI) (US$ mn) 34% 18.5% 18.7% 230 222 9% 10.7% 62 -20% 19 Q1 20 Q1 21 Q1 19 Q1 20 Q1 21 Q1 19 Q1 20 Q1 21 Q1 Same-store sales growth (%) Operating Profit (OP) (US$
Slide 21: Solid Sales Growth and Operating Profit
Solid Sales Growth and Operating Profit 2,557 342 2,304 303 1,754 +46% 320 Total Operating +250% Revenue Profit 97 (US$mn) (US$mn) 19 Q1 20 Q1 21 Q1 19 Q1 20 Q1 21 Q1 Key factors for year-over-year growth Key factors for year-over-year growth + Same store sales growth + Sales leverage and new unit c
Slide 22: KFC System Sales Grew Double Digit
KFC System Sales Grew Double Digit Sales Growth1 (%) Restaurant Margin (%) Operating Profit2 (US$ mn) System sales growth 24% 327 11% 20.0% 19.9% 288 -15% 13.6% 19 Q1 20 Q1 21 Q1 153 Same-store sales growth 5% 5% 19 Q1 20 Q1 21 Q1 19 Q1 20 Q1 21 Q1 -11% 19 Q1 20 Q1 21 Q1 1 Stated on a constant curre
Slide 23: Pizza Hut Margin and Operating Profit Beat 2019 Q1
Pizza Hut Margin and Operating Profit Beat 2019 Q1 Sales Growth1 (%) Restaurant Margin (%) Operating Profit2 (US$ mn) System sales growth 57% 60 3% 15.3% 14.3% 50 -38% 19 Q1 20 Q1 21 Q1 Same-store sales growth 38% 1% 0.3% -28 19 Q1 20 Q1 21 Q1 19 Q1 20 Q1 21 Q1 -31% 19 Q1 20 Q1 21 Q1 1 Stated on a c
Slide 24: Growing Popularity of Membership and Digital
Growing Popularity of Membership and Digital Members (mn) Member Sales1 Digital Order2 MAU3 62% 63% 54% 84% 85% 275+ 290+ 44% 63% 215+ 160+ ~94 mm in Q1 2021 18 YE 19 YE 20 YE 21 Q1 18 FY 19 FY 20 FY 21 Q1 19 Q1 20 Q1 21 Q1 85+ 90+ 52% 55% 44% 46% 82% 70+ 65% 50+ ~15 mm 31% in Q1 2021 18 YE 19 YE 20
Slide 25: Reconciliation of Reported Results to Non-GAAP Measures
Reconciliation of Reported Results to Non-GAAP Measures Quarter Ended 3/31/2021 3/31/2020 Non-GAAP Reconciliations Reconciliation of Operating Profit to Adjusted Operating Profit Operating Profit $ 342 $ 97 Special Items, Operating Profit Adjusted Operating Profit $ 345 (3 ) $ (1 ) 98 Details of Spe