Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Q4 2022 Earnings Presentation
29 slides from Yum China's earnings presentation, Feb 7, 2023
Slide 1: Fourth Quarter and Fiscal Year 2022 Results
Fourth Quarter and Fiscal Year 2022 Results 8 February 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: Exemplary Performance Underpinned by RGM Strategy
Exemplary Performance Underpinned by RGM Strategy Three Years 2020-2022 From 2019 to 2022 +3,747 ~$1.9bn $1bn+ ~20% ~39% ~55% ~89% Net New Free Cash Share Repurchases Delivery Sales2 Digital Orders %3 Stores1 Flow & Cash Dividends Resilience Growth Moat • Remained profitable since the • Maintain
Slide 4: Delivered Solid Q4 and FY Profit and Growth Despite Significant Operational Challenges
Delivered Solid Q4 and FY Profit and Growth Despite Significant Operational Challenges RMB to USD rate vs prior year Q4 Full Year Fourth Quarter: • Q4: ~11% depreciation • FY: ~4% depreciation 2021 2022 2021 2022 • Improved restaurant margin by Total stores 11,788 12,947 11,788 12,947 290 basis poin
Slide 5: Off-premise Demand Surged in 2022
Off-premise Demand Surged in 2022 KFC Takeaway Delivery Off-premise % of Company sales1 Delivery sales growth2 % of Company sales1 ~70% ~38% ~60% ~28% ~31% ~55% +18% vs 21 FY FY 2020 2021 2022 ~43% ~52% ~45% ~43% ~36% ~36% +15% vs 21 FY FY Recommending customers to order takeaway 1 Includes KFC (Suz
Slide 6: Capturing At-Home Demand with New Retail Offerings
Capturing At-Home Demand with New Retail Offerings Packaged Food Sales KFC Pizza Hut ¥ mn Grew 50%+ vs 2021 ~900 ~500 FY 2021 FY 2022 Single bone chicken, popcorn chicken, Sirloin steak, beef patty, baked rice with chicken breast, egg tart, fried rice cheese, tomato & beef 6
Slide 7: ~$8 billion Digital Sales in 2022
~$8 billion Digital Sales in 2022 Digital Orders Members2 Member sales3 Power of Membership % of Company sales1 Million % of System sales Programs ~89% 380+ ~62% ~63% ~62% ~84% ~87% 330+ 275+ Drive member frequency, spending and strengthen their loyalty Understand customer preferences and engage FY
Slide 8: Record Number of New Stores in Q4 2022
Record Number of New Stores in Q4 2022 Opening Profitable New Stores for Long-Term Growth Expanding Store Portfolio Penetrating into Lower-tier Cities Maintained New Unit Payback1 Gross New Stores FY22 Net New Stores Total Stores By Year of Opening 1,806 1,824 ~2 yrs ~2 yrs ~2 yrs 1,165 38 43 % % 62
Slide 9: KFC: Maintaining Solid Profits and Market Leadership
KFC: Maintaining Solid Profits and Market Leadership 2022 Q4 Full Year Total stores 9,094 Net new stores 419 926 System sales growth1 (1)% (4)% Same-store sales growth1 (3)% (7)% Restaurant margin 12.7% 15.7% Operating profit ($ mn)2 117 787 Delivery sales3 ~44% ~38% Off-premise sales3 70%+ ~70% Dig
Slide 10: Driving Traffic with Strong Value Propositions
Driving Traffic with Strong Value Propositions Buy More Save More Crazy Thursday Wing Bucket Christmas Buckets on Sunday Selected items at ¥9.9/19.9/29.9 34%-50% off (4-8 items) Bucket with 10 wings at ¥39.9. Fried chicken / Whole chicken / Available for dine-in and delivery Beef burger buckets at ¥
Slide 11: Delighting Customers with Good Fun and Tasty Variety
Delighting Customers with Good Fun and Tasty Variety Chicken & Duck Crispy Chicken with Bouncy Chicken Fluffy Chicken Popcorn Burger and Roll Mini Cheese Fondue Chicken & duck burger/roll at ¥21/19 Combo with fondue pot from ¥85.9 Cat’s toy, comes with the New retail combo at ¥33.9 ¥86 two-person se
Slide 12: Pizza Hut: Growing Off-Premise Sales and Accelerating Store Openings
Pizza Hut: Growing Off-Premise Sales and Accelerating Store Openings 2022 Q4 Full Year Total stores 2,903 Net new stores 97 313 System sales growth1 (6)% (3)% Same-store sales growth1 (8)% (6)% Restaurant margin 1.9% 9.2% Operating profit ($ mn)2 (20) 70 Delivery sales3 ~52% ~43% Off-premise sales3
Slide 13: Great Variety in All Categories
Great Variety in All Categories Steak 100 Million+ Pizzas Sold in 2022 Crispy Chicken Use picture without Meituan Peking duck / Cumin lamb / Chicken breasts with traditional Chinese Sizzling grilled steak at ¥59 Stuffed crust pizza seasonings Spicy & hot supreme 13
Slide 14: Bountiful Choices Across Price Ranges
Bountiful Choices Across Price Ranges ¥29.9 Scream Wednesday ¥69 Steak & Pizza Combo ¥99 Steak & Pizza Combo Buy More Save More Combo Potato wedges & bacon / Limited offer, 7 days only: 5 days only: 20-30% discount (6-9 items), Bolognese pizza at ¥29.9 2 pizzas or pieces of steak at ¥69 2 pieces of
Slide 15: Lavazza: Making Progress Along its Four-Pillar Strategy
Lavazza: Making Progress Along its Four-Pillar Strategy Digital & Delivery Authentic Italian Experience Coffee Expertise Optimize Store Models Capabilities Cube Cornetto Orange buffalo milk latte / Welcome gift worth ¥50 for new Expanded to 85 stores in 11 cities Double choco mocha members Photos: L
Slide 16: Taco Bell: Localizing Menu and Innovating Store Models
Taco Bell: Localizing Menu and Innovating Store Models Crispy Wonton Taco Chicken Taco Quesadilla 91 Stores in 12 Cities Crispy taco made with wonton wrapper/ Chicken taco with green papaya Quesadilla with chicken / beef / Taco Bell store in Soft taco with duck at ¥13.9 combo at ¥39.9 Sultan durian
Slide 17: Huang Ji Huang and Little Sheep: Refining Business Models and Strengthening Fundamentals
Huang Ji Huang and Little Sheep: Refining Business Models and Strengthening Fundamentals Huang Ji Huang 591 stores Little Sheep 183 stores Photos: Huang Ji Huang store in Shandong province Qingdao Jiaozhou Power Long Plaza; Little Sheep store in Gansu province Tianshui ancient town 17
Slide 18: Capital Allocation Balances Operations Needs, Long-term Growth and Return to Shareholders
Capital Allocation Balances Operations Needs, Long-term Growth and Return to Shareholders Full Year $ million Disciplined Capital Allocation 2020 2021 2022 Cash and short-term investment 4,263 3,996 3,1522 • Maintain sufficient cash for operations and contingencies • Make significant capex investmen
Slide 19: 2023: Continue to Invest for Growth
2023: Continue to Invest for Growth • Expects to open • Expects capital expenditure approximately 1,100 to in the range of $700mn to 1,300 net new stores $900mn • Continue with disciplined • Make significant capex approach in opening high- investments in store network quality new stores expansion, s
Slide 20: Appendix
YumChina Appendix
Slide 21: Yum China Key Financials
Yum China Key Financials Q4’20 Q4’21 Q4’22 Q4 YoY FY’20 FY’21 FY’22 FY YoY Same-store sales growth1 (4)% (11)% (4)% / (9)% (1)% (7)% / System sales growth1 +5% (3)% (4)% / (5)% +10% (5)% / Total revenue ($bn) 2.26 2.29 2.09 (9)% 8.26 9.85 9.57 (3)% Restaurant margin 15.1% 7.5% 10.4% +2.9ppts 14.9% 1
Slide 22: Key Factors of Year-over-year Change
Key Factors of Year-over-year Change 2021 includes $618mm re- measurement gain from the consolidation of Hangzhou KFC 1,386 9.85 9.57 961 Total 8.26 Operating Profit 633 629 Revenue ($bn) 2.26 2.29 2.09 ($mn) 180 41 Q4 Full Year Q4 Full Year Key factors for Q4 year-over-year decline Key factors for
Slide 23: KFC Key Financials
KFC Key Financials Sales Growth (%) Restaurant Margin (%) Operating Profit 2 ($ mn) System sales growth 1 16.8% 16.3% 14.9%15.7% 12.7% 827 8% 801 787 8.6% 3% -3% -1% -5% -4% Q4 Full Year Q4 Full Year Same-store sales growth 1 203 2022 vs 2021 Q4 117 Same-store sales (3)% 64 -4% -3% -3% - Transaction
Slide 24: Pizza Hut Key Financials
Pizza Hut Key Financials Sales Growth (%) Restaurant Margin (%) Operating Profit 2 ($ mn) System sales growth 1 14% 10.4% 10.5%10.7% 111 9.2% 5.9% -3% -2% -3% 1.9% 70 -6% 62 -15% Q4 Full Year Q4 Full Year Same-store sales growth 1 14 2022 vs 2021 Q4 7% (6) Same-store sales (8)% (20) - Transactions (
Slide 25: Reconciliation of Reported Results to Non-GAAP Adjusted Measures
Reconciliation of Reported Results to Non-GAAP Adjusted Measures Quarter Ended Year Ended 12/31/2022 12/31/2021 12/31/2022 12/31/2021 Non-GAAP Reconciliations Reconciliation of Operating Profit to Adjusted Operating Profit Operating Profit $ 41 $ 633 $ 629 $ 1,386 Special Items, Operating Profit 1 6
Slide 26: 2022 ESG Key Initiatives
2022 ESG Key Initiatives Climate Action Circular Economy Nutrition & Food Safety People SBTi approved near-term Phasing out plastic Pizza Hut launched Protecting jobs of our greenhouse gas (GHG) packaging energy bowl (with low GI employees reduction targets* certification) 100% FSC paper napkin** Pr
Slide 27: Serving Meals to our Customers and Communities
Serving Meals to our Customers and Communities 27
Slide 28: 2023 Chinese New Year Campaigns
2023 Chinese New Year Campaigns Photos: KFC store in Shanghai Metro City; Pizza Hut store in Zhenzhou Zhongyuan area Wanda Plaza and Beijing South Luogu Lane 28
Slide 29: 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 nearly 13,000 restaurants under six brands across 1,800 cities in China. KFC and Pizza Hut are the leading brands in the quick-s