Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Q1 2023 Earnings Presentation
21 slides from Yum China's earnings presentation, May 3, 2023
Slide 1: First Quarter 2023 Results
First Quarter 2023 Results 3 May 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: Record First Quarter Performance
Record First Quarter Performance RMB to USD rate vs prior year Q1 Q1: ~8% depreciation 2021 2022 2023 YoY Proven RGM Strategy Total stores 10,725 12,117 13,180 +9% Resilience-Growth-Moat Net new stores 219 329 233 Revenue ($bn) 2.56 2.67 2.92 • Delivered strong growth Revenue growth1 +46% +4% +9% an
Slide 4: Dine-in, Takeaway and Delivery All Grew
Dine-in, Takeaway and Delivery All Grew KFC Delivery Delivery Off-premise ¥ 9 off on purchases over ¥ 49 % of Company sales1 Delivery sales growth2 % of Company sales1 ~70% ~36% ~65% ~36% 55%+ ~30% +18% vs Q1 22 Q1 Q1 2021 2022 2023 ~37% ~37% ~44% ~46% ~35% ~41% +10% vs Q1 22 Q1 Q1 1 Includes KFC (H
Slide 5: Continued to Expand Membership Program and Improve Member Engagement
Continued to Expand Membership Program and Improve Member Engagement K Friends Top one million members Digital Orders Members2 Member sales3 by invitation only % of Company sales1 Million % of System sales ~87% ~88% ~89% 395+ ~64% ~62% ~63% 345+ 290+ Q1 2021 Q1 2022 Q1 2023 ~88% ~91% ~82% ~67% 135+
Slide 6: Maintained New Unit Payback – 2 Years for KFC; 3 Years for Pizza Hut
Maintained New Unit Payback – 2 Years for KFC; 3 Years for Pizza Hut Expanding Store Portfolio Penetrating into Lower-tier Cities Maintained New Unit Payback1 Gross New Stores Q1 23 Net New Stores Total Stores By Year of Opening 522 ~2 yrs ~2 yrs ~2 yrs 356 315 46 43 54 % 57 % % % Q1 21 Q1 22 Q1 23
Slide 7: KFC: Operating Profit Almost Doubled
KFC: Operating Profit Almost Doubled Q1 2021 2022 2023 YoY Total stores 7,373 8,441 9,239 +9% Net new stores 207 273 145 System sales +24% (4)% +17% growth1 Same-store sales +5% (9)% +8% growth1 Restaurant margin 19.9% 15.2% 22.2% +700bp Operating profit 327 220 420 +91% ($ mn)2 Delivery sales3 ~30%
Slide 8: Creating Excitement with New Flavor and Great Fun
Creating Excitement with New Flavor and Great Fun Beef Burger with CNY Golden Bucket Pokémon Campaign Spicy Beef Wrap Golden Cheese Sauce 19-item combo at ¥139 Toys come with one-person set Beef Wrap with spicy duck blood 120g Wagyu / Angus beef patty and family bucket 8
Slide 9: Established Value Platforms for Both Weekday and Weekend
Established Value Platforms for Both Weekday and Weekend Buy More Save More Weekday Value Combos Crazy Thursday ￥5 Daily Deals on Sunday 3-item combos starting at ¥19.9, ¥9.9/ ¥19.9/ ¥29.9 offers 34%-50% discount Signature items at ¥5, weekdays only (Mix-n-match from 15 items) weekdays only 9
Slide 10: Pizza Hut: Sales and Profit Rebounding
Pizza Hut: Sales and Profit Rebounding Q1 2021 2022 2023 YoY Total stores 2,382 2,679 2,983 +11% Net new stores 27 89 80 System sales +57% (1)% +17% growth1 Same-store sales +38% (5)% +7% growth1 Restaurant margin 15.3% 10.7% 14.2% +350bp Operating profit 60 30 55 +85% ($ mn)2 Delivery sales3 ~35% ~
Slide 11: Building upon Signature Categories and Campaigns with Innovative Ideas
Building upon Signature Categories and Campaigns with Innovative Ideas Enriching Signature Super Supreme Pizza Offerings Chinese Style Pasta Genshin Impact Campaign Wagyu Beef and Seafood Double Durian Super Supreme Sichuan style beef or chicken / Pre-sale in February & March Super Supreme Sesame ch
Slide 12: Screaming Value Throughout the Quarter
Screaming Value Throughout the Quarter Buy One Get One Free Buy More Save More Combo Signature Buffet Chinese New Year Combo ¥24.5+ per pizza or steak 20-32% discount (4-8 items), All-you-can eat at ¥168 9-item combo at ¥219 2nd pizza or steak redeemable 50+ choices, weekend only 5 days only within
Slide 13: Capital Allocation Balances Operations Needs, Long-term Growth and Return to Shareholders
Capital Allocation Balances Operations Needs, Long-term Growth and Return to Shareholders Q1 $ million 2021 2022 2023 Disciplined Capital Allocation Cash and short-term investments 4,110 3,669 2,9811 • Maintain sufficient cash for operations and contingencies Cash flow from operating activities 331
Slide 14: Maintaining Net New Units and Capex Targets for 2023
Maintaining Net New Units and Capex Targets for 2023 • Expects to open • Expects capital expenditure approximately 1,100 to in the range of $700mn to 1,300 net new stores $900mn • Continue with disciplined • Make significant capex approach in opening high- investments in store network quality new st
Slide 15: Appendix
YumChina Appendix
Slide 16: Key Factors of Year-over-year Change
Key Factors of Year-over-year Change 2.92 416 Total 2.67 Operating 342 2.56 Profit Revenue 191 ($bn) ($mn) Q1 Q1 Key factors for Q1 year-over-year increase Key factors for Q1 year-over-year increase + Same-store sales growth + Sales leveraging + New unit contribution + Higher labor productivity and
Slide 17: KFC Key Financials
KFC Key Financials Sales Growth (%) Restaurant Margin (%) Operating Profit 2 ($ mn) System sales growth 1 22.2% 19.9% 24% 17% 15.2% 420 327 -4% Q1 Q1 220 Same-store sales growth 1 8% 2023 vs 2022 Q1 5% Same-store sales +8% - Transactions +6% - Average ticket +2% Q1 -9% Q1 1 Stated on a constant curr
Slide 18: Pizza Hut Key Financials
Pizza Hut Key Financials Sales Growth (%) Restaurant Margin (%) Operating Profit 2 ($ mn) System sales growth 1 57% 15.3% 14.2% 10.7% 60 17% 55 -1% Q1 Q1 30 Same-store sales growth 1 2023 vs 2022 Q1 38% Same-store sales +7% 7% - Transactions +13% - Average ticket (5)% Q1 -5% Q1 1 Stated on a constan
Slide 19: Reconciliation of Reported Results to Non-GAAP Adjusted Measures
Reconciliation of Reported Results to Non-GAAP Adjusted Measures Quarter Ended 3/31/2023 3/31/2022 Non-GAAP Reconciliations Reconciliation of Operating Profit to Adjusted Operating Profit Operating Profit $ 416 $ 191 Special Items, Operating Profit (3) (2) Adjusted Operating Profit $ 419 $ 193 Detai
Slide 20: ESG Key Initiatives
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** Provide
Slide 21: 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 1,800 cities in China. KFC and Pizza Hut are the leading brands in the quick-ser