Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Q4 2020 Earnings Presentation
31 slides from Yum China's earnings presentation, Feb 3, 2021
Slide 1: Fourth Quarter and Fiscal Year 2020 Results
Fourth Quarter and Fiscal Year 2020 Results February 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 - Changsha Yanghushui street ;Pizza Hut - Beijing Jiuxianqiao 3
Slide 4: Proven Resilience and Strong Execution in 2020
Proven Resilience and Strong Execution in 2020 Safety Agility Profitability Ensured safety of our 300mn+ Members $961 mn employees and 80% Digital Order Operating Profit customers 50%+ Off-premise sales $732 mn Adjusted OP1 Innovation Store Growth Portfolio Growth ~500 1,165 New stores New or upgrad
Slide 5: Corporate Responsibility: Going the Extra Mile
Corporate Responsibility: Going the Extra Mile Recognized Commitment Bloomberg Gender Equality Index for the third Industry Leader for the year in 2021 Certified as Top Employer Restaurant and Leisure Facilities China for the third year in 2021 industry of DJSI in 2020 • Provided 170,000+ free New P
Slide 6: Resilience During Challenging Times
Resilience During Challenging Times Resilient Performance in Q4 Profitable Growth Leading Digital Capabilities • Total revenue grew 11%1 • Gross new stores: 1,165 FY • Q4 Sales were • System sales grew 5%2 • Total stores: 10,506 Digital payment: 97% • Same-store sales: 96% of prior year2 • New sto
Slide 7: Re-establishing Momentum
Re-establishing Momentum 11% 1% Total revenue 556 growth1 (%) -11% Operating 320 320 -24% Q1 Q2 Q3 Q4 Profit 180 182 128 132 (US$mn) 97 98 5% 1% Q1 Q2 Q3 Q4 System -4% sales growth2 (%) 83% 78% -20% 61% Q1 Q2 Q3 Q4 Operating 5% Profit -33% growth (%) -66% -35% -4% -67% Same-store -6% Q1 Q2 Q3 Q4 sal
Slide 8: Q4 Operating Profit Increased 90% YoY (78% ex FX)
Q4 Operating Profit Increased 90% YoY (78% ex FX) Operating Profit (US$ mn) 2019 2020 Key Factors for Q4 Year-Over-Year Growth Q4 180 182 105 • Productivity improvement and other store cost 94 savings • Lower commodity prices • New unit contribution Reported Adjusted • Relief provided by landlords a
Slide 9: 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 10: Membership Programs and Super Apps Drive Frequency and Spend
Membership Programs and Super Apps Drive Frequency and Spend 275+ mm 85+ mm KFC Members1 Memberships Pizza Hut Members1 ~140 mm ~30 mm Downloads from Downloads from iOS and Android 1 iOS and Android1 ~89 mm ~13 mm MAU2 in Q4 2020 MAU2 in Q4 2020 ~60% ~53% KFC Sales3 Pizza Hut Sales3 ~2x >2x ~9mm in
Slide 11: Delivery and Takeaway are Key Growth Drivers
Delivery and Takeaway are Key Growth Drivers Delivery + Takeaway = Off-premise % of Company sales % of Company sales % of Company sales 28% ~30% 25%+ 19% 15% 12% 55%+ in Q4 2020 2017 2018 2019 2020 2019 2020 36% 24% 25% 20% ~9% ~5% ~40% in Q4 2020 2017 2018 2019 2020 2019 2020 Note: % of Company sal
Slide 12: New Store Growth with Attractive Paybacks
New Store Growth with Attractive Paybacks 2018 2019 2020 Lower Tier Penetration New Unit Payback1 1,165 2020 new stores Tier 1-2 Tier 3-6 1,006 819 Gross 505 new 42% stores 257 360 58% KFC 51% PH 49% Tier 1-2 Tier 3-6 Q4 Full Year KFC ~2-3 yrs ~2 yrs 10,506 Tier 1-2 Tier 3-6 Total stores Pizza Hut ~
Slide 13: Remodels Keep Our Brands Fresh
Remodels Keep Our Brands Fresh Always Something New 2018 2019 2020 931 972 939 416 297 232 KFC Remodeled Q4 Full Year stores 2020 YTD remodel Others ,2 Pizza Hut, 375 KFC, 562 Pizza Hut Stores in Photos: KFC - Hangzhou EFC shopping mall; Pizza Hut - Shanghai New World shopping mall and Beijing Jiuxi
Slide 14: KFC Remained Resilient
KFC Remained Resilient Q4 2020 Highlights System sales +3%1 Restaurant 306 margin Gross new Operating profit of Same-store sales -4%1 stores Transactions -9% 16.8% US$203 million2 Average ticket +5% +2.3 ppts y/y 166 remodels ~85% Digital orders Holiday campaigns +15ppts y/y Members: 275+ million Va
Slide 15: Attractive Campaigns and Abundant Value
Attractive Campaigns and Abundant Value National Day Celebration Christmas / New Year Member Campaign Crazy Thursday Bucket with 17 items: Extended Crazy Thursday Christmas Giant Bucket at ¥129 Members Only: Buy one get one free ¥65 savings to Wednesday and Friday 15
Slide 16: Product Innovations Across Categories
Product Innovations Across Categories Premium Burger Breakfast Drinks Dessert Sweet pumpkin congee with longan, lotus Hokkaido Caramel Cremia Wagyu Beef Burger New Soymilk Tea seeds and more KFC dessert kiosks only 16
Slide 17: Remarkable Progress in Pizza Hut
Remarkable Progress in Pizza Hut Q4 2020 Highlights System sales -3%1 96 Gross Restaurant margin Operating profit of new stores Same-store sales -5%1 10.4% US$14 million2 Transactions -2% +3.7 ppts y/y Average ticket -3% 130 remodels ~75% Digital orders Menu innovation +40 ppts y/y Members: 85+ mill
Slide 18: Innovative Products for Dine-In and Off-Premise
Innovative Products for Dine-In and Off-Premise Dine-In Campaigns Delivery Campaigns Thick-cut fillet pizza 4-person combo, save up to ¥300 Crayfish with mozzarella cheese Portuguese chicken curry 18
Slide 19: Strong Digital and Membership Programs
Strong Digital and Membership Programs Scream Wednesday Delivery Member Acquisition Super Privilege Plus Online Campaign @¥158, members enjoy discounts and free Extended Scream Wednesday Delivery new members only: ¥9.9 pizza delivery at Pizza Hut for 1 year, and Double 12: Buy one get one free to Mo
Slide 20: Driving Synergies between Huang Ji Huang and Little Sheep
Driving Synergies between Huang Ji Huang and Little Sheep Huang Ji Huang Little Sheep East Dawning 649 stores 270 stores 8 stores Hot pot soup base Self-heating instant hot pot Salty duck Steamed bun + Soy milk Stores in photos: Huang Ji Huang - Guangzhou New Park; Little Sheep - Lanzhou Wanda Plaza
Slide 21: Three Distinct Coffee Brands
Three Distinct Coffee Brands Simply a good cup of coffee and great price Specialty coffee at affordable price Premium coffee & indulgent atmosphere KFC stores 42 stores 4 stores Osmanthus coffee Coffee capsules Winter hot drinks Pasta lunch set Christmas dessert Christmas drinks Stores in photos: KF
Slide 22: Taco Bell Expanded to 12 Stores
Taco Bell Expanded to 12 Stores Expanded to 4 new cities in 2020 Localized Products at Great Value Beijing Ningbo Chengdu Shenzhen Mexican style spicy chicken Christmas/New Year combo rice bowl and wrap for 2 person at 99 yuan Stores in photos: Beijing - Hello Mart; Ningbo - The Mixc; Chengdu - The
Slide 23: Launched Ready Meals
Launched Ready Meals KAIFENGCAI Pizza Hut “LuoSiFen” – Spicy noodle soup – a popular dish famous for its smell Cheese stuffed chicken breast / Chicken soup Ready-to-cook steak and pasta Low fat chicken breast Fried rice in 3 different style 23
Slide 24: 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 • Stay agile and adapt to the fluid situations STRATEGIC • Grow our store footprint and develop emerging br
Slide 25: Capital Allocation Powers Business Growth
Capital Allocation Powers Business Growth Cash Capital Expenditure Shareholder Returns M&A and Investment US$4.3 bn cash and short To accelerate store expansion US$1.2bn (since spin-off) To remain disciplined term investment and remodeling Resumed cash dividends in To explore opportunities
Slide 26: Appendix – Financial Results
Business Highlights Appendix – Financial Results Stores in Photos: KFC - Changsha Yanghushui street ;Pizza Hut - Beijing Jiuxianqiao 26
Slide 27: Q4 Results Improved Sequentially
Q4 Results Improved Sequentially Sales Growth1 Profit Margin Net Income & EPS System sales growth (%) Restaurant Margin (%) Net Income (NI) (US$ mn) 8% 9% 6% 784 5% 5% 708 713 15.7% 16.0% 15.1% 14.9% 12.4% 11.5% 151 -5% 74 90 Q4 Full Year Q4 Full Year Q4 Full Year Same-store sales growth (%) Operati
Slide 28: KFC Reported $801 million Operating Profit in 2020
KFC Reported $801 million Operating Profit1 in 2020 Sales Growth2 (%) Restaurant Margin (%) Operating Profit1 (US$ mn) System sales growth 949 17.9%17.8% 895 11% 9% 10% 7% 801 16.8% 3% 16.3% -5% 14.3%14.5% Q4 Full Year Same-store sales growth 3% 3% 4% 2% 203 161 136 -4% -8% Q4 Full Year Q4 Full Year
Slide 29: Pizza Hut Achieved Solid Margin and Profit
Pizza Hut Achieved Solid Margin and Profit Sales Growth1 (%) Restaurant Margin (%) Operating Profit2 (US$ mn) System sales growth 3% 11.1% 114 1% 10.5% 10.4% 10.3% 98 -2% -1% -3% -15% 6.7% 62 Q4 Full Year Same-store sales growth 4.9% 0% 1% 14 -4% -5% -5% -3 -9 -14% Q4 Full Year Q4 Full Year Q4 Full
Slide 30: Growing Popularity of Membership and Digital
Growing Popularity of Membership and Digital Members (mn) Member Sales1 Digital Order2 MAU3 275+ 62% 215+ 54% 84% 160+ 44% 63% 110+ 32% 89 mm in Q4 2020 17 YE 18 YE 19 YE 20 YE 17 FY 18 FY 19 FY 20 FY 19 FY 20 FY 85+ 52% 46% 44% 70+ 67% 50+ 35+ 18% 31% 13 mm in Q4 2020 17 YE 18 YE 19 YE 20 YE 17 FY
Slide 31: Reconciliation of Reported Results to Non-GAAP Measures
Reconciliation of Reported Results to Non-GAAP Measures Quarter Ended Year to Date Ended 12/31/2020 12/31/2019 12/31/2020 12/31/2019 Non-GAAP Reconciliations Reconciliation of Operating Profit to Adjusted Operating Profit Operating Profit $ 180 $ 94 $ 961 $ 901 Special Items, Operating Profit (2 ) (