Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Q2 2023 Earnings Presentation
23 slides from Yum China's earnings presentation, Aug 1, 2023
Slide 1: Second Quarter 2023 Results
Second Quarter 2023 Results 1 August 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: Reached New Heights in Second Quarter
Reached New Heights in Second Quarter RMB to USD rate vs prior year Q2 Q2: ~6% depreciation 2021 2022 2023 YoY Vs 19 Record Q2 net new stores Total stores 11,023 12,170 13,602 +12% +55% 1,900+ cities nationwide Net new stores 298 53 422 Revenue ($bn)1 2.45 2.13 2.65 +25% +25% Record Q2 revenue +25%
Slide 4: First Half Operating Profit Exceeded 2022 Full Year
First Half Operating Profit Exceeded 2022 Full Year RMB to USD rate vs prior year 1H 1H: ~7% depreciation 2021 2022 2023 YoY Vs 19 Record 1H net new stores Total stores 11,023 12,170 13,602 +12% +55% On track to full year target Net new stores 517 382 655 Record 1H revenue Revenue ($bn) 1 5.01 4.80
Slide 5: Dine-in, Takeaway and Delivery All Grew
Dine-in, Takeaway and Delivery All Grew KFC Delivery Delivery Off-premise Get extra items at ¥1+, New delivery member only % of Company sales1 Delivery sales growth2 % of Company sales1 65%+ ~65% ~37% ~35% 55%+ ~29% +25% vs Q2 22 Q2 Q2 2021 2022 2023 ~43% ~52% ~36% ~45% ~35% ~41% +9% vs Q2 22 Q2 Q2
Slide 6: Continued to Expand Membership Program and Improve Member Engagement
Continued to Expand Membership Program and Improve Member Engagement Super App Digital Orders Members2 Member sales3 Lucky draw using member points % of Company sales1 Million % of System sales ~86% ~88% ~89% 410+ ~64% ~65% 355+ ~62% 305+ Q2 2021 Q2 2022 Q2 2023 ~92% ~94% ~84% ~67% 145+ ~63% ~61% 11
Slide 7: Bringing Moments of Joy to Customers
Bringing Moments of Joy to Customers Labor Day (May 1) Children’s Day (Jun 1) – Record Daily Transactions Lucky Draw Buy one Bucket get one free KFC x Sanrio Pizza Hut x Pokemon Trip to Maldives 7
Slide 8: 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 1H 23 Net New Stores Total Stores By Year of Opening 898 719 768 ~2 yrs ~2 yrs ~2 yrs 44 44 56 % 56 % % % 1H 21 1H 2
Slide 9: KFC: Going from Strength to Strength
KFC: Going from Strength to Strength Q2 2022 2023 YoY Vs 19 Total stores 8,510 9,562 +12% +55% Net new stores 69 323 System sales (15)% +32% growth1 Same-store sales (16)% +15% growth1 Restaurant margin 13.4% 17.3% +390bp +120bp Operating profit 122 273 +125% +33% ($ mn)2 Delivery sales3 ~37% ~35% O
Slide 10: Introducing Delicious and Innovative Food
Introducing Delicious and Innovative Food “K-zza” Double Down K-Coffee Chinese-style Breakfast Popcorn chicken on thin crust 3-item combo at ¥36.5 Iced sparkling Americano Scallion oil noodles at ¥21 with zesty lemon 10
Slide 11: Offering Amazing Value
Offering Amazing Value Weekday Value Combo Crazy Thursday Sunday Buy More Save More Prepaid Discount Vouchers New burger 3-item combos at 8 mini spring rolls at ¥19.9 34%-50% discount 2 items at￥9.9; For sale on ¥19.9 (Mix-n-match from 15 items) Super APP & 3rd party platforms 11
Slide 12: Pizza Hut: Operating Profit Tripled Year-over-year
Pizza Hut: Operating Profit Tripled Year-over-year Q2 2022 2023 YoY Vs 19 Total stores 2,711 3,072 +13% +36% Net new stores 32 89 System sales (14)% +30% growth1 Same-store sales (15)% +13% growth1 Restaurant margin 8.6% 12.4% +380bp +110bp Operating profit 11 35 +216% +21% ($ mn)2 Delivery sales3 ~
Slide 13: New Menu with Innovative Products and Flavors
New Menu with Innovative Products and Flavors Strawberry & coconut milk Mini pineapple pie Bolognese pizza with beef (stuffed crust) Sirloin steak energy bowl 13
Slide 14: Exciting Campaigns That Delight and Engage Customers
Exciting Campaigns That Delight and Engage Customers Genshin Impact Campaign Camping Campaign Scream Wednesday Campaign includes themed stores, special combos, souvenirs and packaging Meal sets with camping box and trolley Pizzas / fried chicken / pasta from ￥29.9 14
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 1H $ million 2021 2022 2023 Disciplined Capital Allocation Cash and short-term investments 4,348 3,653 2,9511 • Maintain sufficient cash for operations and contingencies Cash flow from operating activities 773
Slide 16: Maintaining Net New Units and Capex Targets for 2023
Maintaining Net New Units and Capex Targets for 2023 • Expect to open • Expect capital expenditure in approximately 1,100 to the range of $700mn to 1,300 net new stores $900mn • Continue disciplined • Make significant capex approach in opening high- investments in store network quality new stores ex
Slide 17: Appendix
YumChina Appendix
Slide 18: Key Factors of Year-over-year Change
Key Factors of Year-over-year Change 5.01 4.80 5.57 673 Total Operating 575 Revenue 2.45 2.13 2.65 Profit 233 257 272 ($bn) ($mn) 81 Q2 YTD Q2 YTD Key factors for Q2 year-over-year increase Key factors for Q2 year-over-year increase + Same-store sales growth + Sales leveraging + New unit contributio
Slide 19: KFC Key Financials
KFC Key Financials Sales Growth (%) Restaurant Margin (%) Operating Profit 2 ($ mn) System sales growth 1 32% 19.9% 24% 17.3% 18.4% 16.8% 19% 14.4% 14% 13.4% 693 567 -10% -15% Q2 YTD Q2 YTD 342 Same-store sales growth 1 273 15% 240 11% 2023 vs 2022 Q2 4% 5% 122 Same-store sales +15% - Transactions +
Slide 20: Pizza Hut Key Financials
Pizza Hut Key Financials Sales Growth (%) Restaurant Margin (%) Operating Profit 2 ($ mn) System sales growth 1 14.2% 13.1% 13.3% 12.4% 30% 33% 9.8% 23% 8.6% 16% 99 90 -8% -14% Q2 YTD Q2 YTD Same-store sales growth 1 39 41 35 23% 2023 vs 2022 Q2 11% 13% 10% Same-store sales +13% 11 - Transactions +2
Slide 21: Reconciliation of Reported Results to Non-GAAP Adjusted Measures
Reconciliation of Reported Results to Non-GAAP Adjusted Measures Quarter Ended Year to Date Ended 6/30/2023 6/30/2022 6/30/2023 6/30/2022 Non-GAAP Reconciliations Reconciliation of Operating Profit to Adjusted Operating Profit Operating Profit $ 257 $ 81 $ 673 $ 272 Special Items, Operating Profit (
Slide 22: ESG Key Initiatives
ESG Key Initiatives Climate Action Circular Economy Nutrition & Food Safety People SBTi approved near-term Phasing out plastic Published Yum China People First: greenhouse gas (GHG) packaging Nutrition and Health Fair, Care & Pride reduction targets* Commitments to promote 100% FSC paper napkin** he
Slide 23: 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 13,000 restaurants under six brands across 1,900 cities in China. KFC and Pizza Hut are the leading brands in the quick-ser