Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Q3 2021 Earnings Presentation
22 slides from Yum China's earnings presentation, Oct 27, 2021
Slide 1: Third Quarter 2021 Results
Third Quarter 2021 Results October 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 – Shanghai Pudong Xiaolujiazui; Pizza Hut – Nantong Phoenix Plaza 3
Slide 4: Third Quarter Results Impacted by Regional Outbreaks; New Store Openings Acceleration Continued
Third Quarter Results Impacted by Regional Outbreaks; New Store Openings Acceleration Continued +1% +9% $ 178mn 524 +1,265 System Total Operating New stores Increase in sales revenues profit2 total stores growth1 growth2 in last 12 months 1 Stated on a constant currency basis 2 Stated in reported cu
Slide 5: Delivery Sales Grew Rapidly
Delivery Sales Grew Rapidly Delivery Off-premise % of Company sales Delivery sales growth1 % of Company sales 32% ~60% 27% ~55% ~45% 18% +73% vs 19 +22% vs 20 19 Q3 20 Q3 21 Q3 19 Q3 20 Q3 21 Q3 38% 32% ~45% 26% ~40% ~30% +39% vs 19 +18% vs 20 19 Q3 20 Q3 21 Q3 19 Q3 20 Q3 21 Q3 1 Stated on a consta
Slide 6: Membership Programs and Super Apps Driving Engagement and Spending
Membership Programs and Super Apps Driving Engagement and Spending 320+ mn ~171 mn 105+ mn ~36 mn KFC Members1 App Downloads Pizza Hut App Downloads from iOS and Members1 from iOS and Android1 Android1 ~62% ~18mn ~56% ~1mn KFC Privilege Pizza Hut Privilege Member Sales2 subscriptions sold2 Member Sa
Slide 7: New Store Growth with Attractive Paybacks
New Store Growth with Attractive Paybacks Accelerated Store Growth Lower Tier Penetration New Unit Payback1 2021 YTD New Stores Total Stores Q1 Q2 Q3 1,243 Gross 646 660 524 New 43% 231 44% ~2 years Stores 312 404 57% 56% 178 169 237 179 315 19 YTD 20 YTD 21 YTD Tier 1-2 Tier 3-6 Tier 1-2 Tier 3-6 1
Slide 8: KFC: System Sales Grew 1%; ~4 New Stores a Day
KFC: System Sales Grew 1%; ~4 New Stores a Day Third Quarter 2021 Highlights System sales +1%1 362 Gross new stores Restaurant margin Same-store sales -8%1 13.6% Or approx. -13%2 vs 19’Q3 Transactions -18%2 vs 19’Q3 +983 stores y/y -5.8 ppts y/y Average ticket +6%2 vs 19’Q3 ~88% Digital orders +5 pp
Slide 9: Product Innovation Across Categories
Product Innovation Across Categories Meat Sauce Wagyu/Angus Chicken Taco Juicy Whole Chicken New Retail: Fried Rice Beef Burger 9
Slide 10: Stepping Up Localization for Consumers
Stepping Up Localization for Consumers National Launch: National Launch: Shanghai & Zhejiang Only: Henan Exclusive: Wuhan Hot Dry Noodles Lotus Pastry Steamed Dumplings Hot Pepper Soup 10
Slide 11: Attractive Value Campaigns to Drive Traffic
Attractive Value Campaigns to Drive Traffic Half-price Burger Combos Crazy Thursday Extension New Retail Promotion Super Privilege Extended signature Crazy Thursday Ready-to-eat/heat/cook products RMB 8.8 for 14 days 3 days only, from RMB 20.5 to 32 promotion to Wednesday through e.g., fried rice, s
Slide 12: Pizza Hut: Highest New Store Openings in 5 Years
Pizza Hut: Highest New Store Openings in 5 Years Third Quarter 2021 Highlights System sales +1%1 103 Gross new stores Restaurant margin Same-store sales -5%1 8.2% Or approx. -11%2 vs 19’Q3 Transactions -1%2 vs 19’Q3 +226 stores y/y -8.5 ppts y/y Average ticket -10%2 vs 19’Q3 ~85% Digital orders Oper
Slide 13: Excite Customers with New Menu Items
Excite Customers with New Menu Items Seabass Pizza with Wagyu Beef Pizza Slow Cook Beef Afternoon Tea Set Pickled Vegetables 13
Slide 14: Great Value Across Categories, Dayparts and Channels
Great Value Across Categories, Dayparts and Channels Pizza Desserts Scream Wednesday New Retail Combo Buy One Get One Free Buy One Get One Free More choices and flexibility for Spinach Pizza at ¥29 / Durian 11 items at ¥199 when, where and what pizza for the Available from 2-5pm Pizza & Steak at ¥39
Slide 15: Lavazza Offering Authentic Italian Experience
Lavazza Offering Authentic Italian Experience Summer Drinks Freshly Made Food 26 Stores in 4 Cities Mini croissant / Focaccia / New stores in Shanghai and Hangzhou Passion Fruit / Coconut Frulatto Emiliano (toasted sandwich) (Shanghai Wujiang Road; Hangzhou 501 Plaza) 15
Slide 16: Increase 2021 New Store Target to 1,700
Increase 2021 New Store Target to 1,700 • Third quarter performance significantly impacted by regional outbreaks • Dine-in traffic sharply declined while delivery sales grew 62% vs 2019 • KFC was more impacted than Pizza Hut due to higher mix of stores in Q3 2021 transportation and tourist locations
Slide 17: Appendix – Financial Results
Business Highlights Appendix – Financial Results Stores in Photos: KFC – Shanghai Pudong Xiaolujiazui; Pizza Hut – Nantong Phoenix Plaza 17
Slide 18: Yum China Key Financials
Yum China Key Financials Sales Growth1 Profit Margin Net Income & EPS System sales growth (%) Restaurant Margin (%) Net Income ($ mn) 623 633 17.7%18.6% 17.0% 515 15% 14.7%15.6% 439 8% 9% 12.2% 1% 1% 223 104 -8% Q3 YTD Q3 YTD Q3 YTD Same-store sales growth (%) Operating Profit ($ mn) Diluted EPS ($)
Slide 19: Key Factors of Year-over-year Change
Key Factors of Year-over-year Change +26% 7.56 -4% 6.75 807 781 753 6.00 Operating 556 -68% Total Revenue +9% Profit 2.32 2.35 2.55 300 ($bn) ($mn) 178 Q3 YTD Q3 YTD Key factors for Q3 year-over-year growth Key factors for Q3 year-over-year decline + New unit contribution − Sales deleverage + Consol
Slide 20: KFC Key Financials
KFC Key Financials Sales Growth1 (%) Restaurant Margin (%) Operating Profit2 ($ mn) System sales growth 11% 12% 10% 788 763 1% 20.1% 19.4% 18.8% -1% 598 16.2%16.8% -7% Q3 YTD 13.6% Same-store sales growth 295 286 196 3% 4% 0% -6% Q3 YTD Q3 YTD -8% -9% Q3 YTD 1 Stated on a constant currency basis. 2
Slide 21: Pizza Hut Key Financials
Pizza Hut Key Financials Sales Growth1 (%) Restaurant Margin (%) Operating Profit2 ($ mn) System sales growth 20% 16.7% 3% 1% 3% 117 117 -6% 12.4% 12.2% -19% 11.4% 10.6% Q3 YTD 8.2% 61 Same-store sales growth 48 38 11% 18 1% 1% -7% -5% Q3 YTD Q3 YTD -16% Q3 YTD 1 Stated on a constant currency basis.
Slide 22: Capital Allocation
Capital Allocation Cash Capital Expenditure Shareholder Returns M&A and Investment • $4.4 bn cash and short term • To accelerate store expansion and • ~$1.4bn (since spin-off) • To remain disciplined and explore investment remodeling opportunities in: • Resumed cash dividends in • Strong operating c