Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Q4 2021 Earnings Presentation
26 slides from Yum China's earnings presentation, Feb 8, 2022
Slide 1: Fourth Quarter and Fiscal Year 2021 Results
Fourth Quarter and Fiscal Year 2021 Results February 2022
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: Grew Revenue and Delivered Profits Amid Challenging 2021
Grew Revenue and Delivered Profits Amid Challenging 2021 Q4 2021 FY 2021 Total stores 11,788 Gross new stores +563 +1,806 Resilience Solid operations and execution at scale Net new stores +373 +1,282 Revenue $2.29bn $9.85bn Growth Revenue growth1 1% +19% Record pace of store openings System sales gr
Slide 4: Delivery and Off-Premise Continued to Grow
Delivery and Off-Premise Continued to Grow Delivery Off-premise % of Company sales1 Delivery sales growth % of Company sales1 3 (Full Year)2 ~60% ~60% 34% ~55% ~55% 31% ~50% 27% 28% ~45% 21% +70% vs 19 19% +20% vs 20 Q4 Full Year Q4 Full Year 38% 36% 36% ~44% ~45% ~43% 33% ~41% 28% 25% ~33% ~30% +37
Slide 5: Leverage Membership Programs and Super Apps to Drive Engagement and Spending
Leverage Membership Programs and Super Apps to Drive Engagement and Spending Digital Order1 Members2 Member sales1 Power of Membership % of Company sales3 mn % of System sales Programs ~84% ~87% 330+ • Drive member 275+ ~62% ~62% ~63% frequency, spending 215+ ~54% and strengthen their loyalty • Unde
Slide 6: New Unit Payback Period: Maintained for KFC & Improved for Pizza Hut
New Unit Payback Period: Maintained for KFC & Improved for Pizza Hut Accelerating Store Growth Penetrated into Lower Tiers Maintained New Unit Payback1 Gross New Stores 21FY New Stores Total Stores By Year of Opening Q1 Q2 Q3 Q4 ~2 yrs ~2 yrs ~2 yrs 1,806 44 44 56 % 56 % 563 % % 1,165 1,006 Oct'17-
Slide 7: Good Food and Innovative Products
Good Food and Innovative Products 500+ New or Upgraded Products Launched in 2021 7
Slide 8: KFC: Resilience Enabled Solid Profits
KFC: Resilience Enabled Solid Profits Q4 FY 2021 2021 Total stores 8,168 Gross new stores 337 1,232 System sales growth1 (3)% +8% Same-store sales growth1 (12)% (3)% Restaurant margin 8.6% 14.9% Operating profit ($ mn)2 64 827 Delivery sales3 ~34% ~31% Off-premise sales3 ~60% ~60% Digital order3 ~88
Slide 9: Innovating and Diversifying Menu Items
Innovating and Diversifying Menu Items Chicken & Duck Sandwich Crayfish Wrap & Burger Beef Burgers Juicy Whole Chicken with Zhou Hei Ya with Wen He You To replace by Wenheyou campaign 9
Slide 10: Enhancing Value for Money to Drive Traffic
Enhancing Value for Money to Drive Traffic Member Exclusive Super App Pre-order Crazy Thursday Super Privilege Half Price Campaign Discount Selected items at half price ¥5 discount upon spending ¥49 or Selected items at ¥9.9 or ¥19.9 ¥98 for 365 days every day for 30 days more and using Alipay 10
Slide 11: Driving Delivery, Takeaway and New Retail
Driving Delivery, Takeaway and New Retail Delivery Only: New Retail: New Retail: K COFFEE Drip Bag Single Bone Chicken Fried Rice Sirloin Steak 11
Slide 12: Pizza Hut Came Back Stronger
Pizza Hut Came Back Stronger Q4 FY 2021 2021 Total stores 2,590 Gross new stores 124 335 System sales growth1 (2)% +14% Same-store sales growth1 (8)% +7% Restaurant margin 5.9% 10.7% Operating profit ($ mn)2 (6) 111 Delivery sales3 ~38% ~36% Off-premise sales3 ~44% ~43% Digital order3 ~88% ~85% 1 St
Slide 13: Launched New Products and Added Flexibility
Launched New Products and Added Flexibility Mix and Match New Pizza for the Holiday Meat Platter Pizza Toppings Trade-up Pizza Toppings 13
Slide 14: Making Scream Wednesday a Signature Promotion
Making Scream Wednesday a Signature Promotion October Campaign November Campaign December Campaign Breakfast Offer Hawaiian Pizza at ¥29 / Meat Pizza & 2-item combo x2 at ¥19 Soup x2 at ¥29 / Cheese Pizza at ¥39 Pizza 30% off Ribeye Steak at ¥39 Save up to ¥55 14
Slide 15: Coffee Business is Gaining Momentum
Coffee Business is Gaining Momentum 170 million cups sold 58 stores in Beijing, Shanghai, Guangzhou, Seasonal Food & Shenzhen, Hangzhou, Changsha and Wuhan Drinks Store in photo: Lavazza in Shenzhen The Mixc shopping mall 15
Slide 16: Taco Bell Tripled Store Count; Testing Smaller Formats
Taco Bell Tripled Store Count; Testing Smaller Formats Expanded to 37 Stores in Large and Small Formats Product Localization Stores in Beijing, Shanghai, Shenzhen, Chengdu, Ningbo and Hangzhou Store in photo: Taco Bell in Shanghai Raffles City The Bund 16
Slide 17: Huang Ji Huang and Little Sheep Adversely Affected by the COVID
Huang Ji Huang and Little Sheep Adversely Affected by the COVID; Focus on Driving Customers Back Huang Ji Huang 651 stores Little Sheep 243 stores Stores in photos: Huang Ji Huang in Gansu province Longnan Binfen City shopping mall and Hainan province Lingshui Dongrong Food Court; Little Sheep in Sh
Slide 18: Maintaining a Healthy Balance Sheet
Maintaining a Healthy Balance Sheet Disciplined Capital Allocation $ million FY 2019 FY 2020 FY 2021 • Maintain sufficient cash for operations Cash and short-term investment 1,657 4,263 3,996 • Invest in organic growth – accelerate store Free cash flow from operations1 750 695 442 expansion and stor
Slide 19: Setting Net New Unit and Capex Targets for 2022
Setting Net New Unit and Capex Targets for 2022 • Approximately 1,000 to • Capital expenditure in the 1,200 net new stores range of $800 million to 1 • Continue with our billion disciplined approach of • Includes stepped-up opening high quality new investments in supply chain, stores infrastructure
Slide 20: Committed to Sustainable Growth
Committed to Sustainable Growth Environmental Social Governance GHG / Energy Efficiency Employee Welfare Board Independence Recognition SBT goal on GHG Upgraded medical insurance • Independent Board Chairman reduction in line with coverage of eligible restaurant 1.5C Committing to managers and their
Slide 21: Appendix – Financial Results
Appendix – Financial Results 21
Slide 22: Yum China Key Financials
Yum China Key Financials Q4’19 Q4’20 Q4’21 Q4 YoY FY 2019 FY 2020 FY 2021 FY YoY Same-store sales growth1 +2% (4)% (11)% / +3% (9)% (1)% / System sales growth1 +8% +5% (3)% / +9% (5)% +10% / Total revenue ($bn) 2.03 2.26 2.29 +1% 8.78 8.26 9.85 +19% Restaurant margin 12.4% 15.1% 7.5% (7.6)ppts 16.0%
Slide 23: Key Factors of Year-over-year Change
Key Factors of Year-over-year Change 2020 2021 1,386 9.85 961 Total 8.26 Operating Profit 633 Revenue ($bn) 2.26 2.29 ($mn) 180 Q4 Full Year Q4 Full Year Key factors for Q4 year-over-year growth Key factors for Q4 year-over-year growth + New unit contribution + Non-cash gain from the re-measurement
Slide 24: KFC Key Financials
KFC Key Financials Sales Growth1 (%) Restaurant Margin (%) Operating Profit2 ($ mn) System sales growth 17.8% 16.8% 16.3% 14.5% 14.9% 11% 949 10% 8% 8.6% 827 3% 801 -3% -5% Q4 FY Q4 FY Same-store sales growth 3% 4% 203 Pro-forma measure Q4’21 FY’21 161 vs 20193 64 Same-store sales (15)% (10)% -4% -3
Slide 25: Pizza Hut Key Financials
Pizza Hut Key Financials Sales Growth1 (%) Restaurant Margin (%) Operating Profit2 ($ mn) System sales growth 14% 11.1%10.5%10.7% 114 10.4% 111 1% 3% 6.7% 5.9% -3% -2% 62 -15% Q4 FY Q4 FY Same-store sales growth 14 7% 1% Pro-forma measure vs Q4’21 FY’21 0% 20193 Same-store sales (12)% (8)% (3) (6) -
Slide 26: Reconciliation of Reported Results to Non-GAAP Measures
Reconciliation of Reported Results to Non-GAAP Measures Quarter Ended Year Ended 12/31/2021 12/31/2020 12/31/2021 12/31/2020 Non-GAAP Reconciliations Reconciliation of Operating Profit to Adjusted Operating Profit Operating Profit $ 633 $ 180 $ 1,386 $ 961 Special Items, Operating Profit 617 (2 ) 62