Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Investor Day (2025)
24 slides from Yum China's investor day presentation, 2025
Slide 1: 2025 Yum China Investor Day: Innovation & Operational Efficiency
2025 YUM CHINA INVESTOR DAY Innovation & Operational Efficiency ADRIAN DING CHIEF FINANCIAL OFFICER
Slide 2: Cautionary Statements
Cautionary Statements Forward-Looking Statements. 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 covered by the safe harbor
Slide 3: Delivering Long-Term Value Through Strategic Execution of RGM 3.0
Delivering Long-Term Value Through Strategic Execution of RGM 3.0 Innovation & Operational Efficiency: The Engines of Our Value Creation Algorithm 3
Slide 4: Our Growth Algorithm: Dual Focus on System Sales and Same-Store Sales Growth
Our Growth Algorithm: R G M Dual Focus on System Sales and Same-Store Sales Growth Footprint Expansion to Grow System Sales Resilience Growth Moat Innovation & Operational Efficiency to Propel SSSG Targeting Mid- to High-single-digit System Sales CAGR1, 100-102 Same-Store Sales Index YoY over 2026-2
Slide 5: Seizing Tremendous Market Potential
R G M Seizing Tremendous Market Potential Targeting 30,000+ Stores by 2030 System Sales Growth Significant Underserved Market Robust Store Expansion Runway Cities & Towns1 in China Total Stores (#) with YUMC Presence 1.8x Double-digit CAGR 4,500+ 30,000+ 3,700+ 2,500+ 25,000+ ~1,000 20,000 17,514 20
Slide 6: Flexible & Innovative Store Formats Driving Scalable Footprint Expansion
R G M Flexible & Innovative Store Formats Driving Scalable Footprint System Sales Expansion with Meaningful Savings in Per-Store Investment Growth Enhancing Penetration Accelerating Expansion in Lower-Tier Cities in Higher-Tier Cities KFC Compact Model KFC Small Town Model Pizza Hut WOW Model ~1.3mn
Slide 7: Franchising as an Incremental Growth Lever
R G M Franchising as an Incremental Growth Lever System Sales to Accelerate Expansion Growth Incremental Franchising Impact 2025E 2028E (2026-2028) Franchise Business Unit Mix ~13% 3,000+ Net New Franchise Stores Twenties Franchise Mix of Net New Stores System Sales Mix 9-10% Mid-teens 40-50% 40-50%
Slide 8: Targeting 100-102 Same-Store Sales Index
R G M Targeting 100-102 Same-Store Sales Index SSSG with Multiple Levers Brand Engagement Food Innovation Driving Sustained SSSG 100-102 Same-Store Sales Index Digital & Delivery YoY Over 2026-2028 New Opportunities Reigniting Positive Momentum Era – YUMC: Aiming to Reach Same-Store Sales Index of ~
Slide 9: Disciplined Approach to Fostering Emerging Businesses
R G M Disciplined Approach to Fostering Emerging Businesses Emerging Brands Coffee Business Other Emerging Brands Coffee Shop: ~1,000 stores by 2029 ~1,000 stores by 2028 Retail: ~$60mn profitable sales by 2029 Continuously improving store economics 9
Slide 10: Resilience and Moat: Enhancing Profitability, ROIC and Free Cash Flow
R G M Resilience and Moat: Enhancing Profitability, ROIC and Free Cash Flow Supply Chain People Digital … Resilience Growth Moat Resilient and Improving Enhancing ROIC and Free Margins Cash Flow Targeting 11.5%+ OP Margin & ~20% ROIC in 2028, and Double-digit CAGR for Free Cash Flow per Share in 202
Slide 11: Strengthening Store-Level Economics
R G M Strengthening Store-Level Economics - Anchored by KFC, Elevated by Pizza Hut Margin Expansion YUMC Restaurant Margin 16.2-16.3% 16.7%+ 16.0% 15.7% Steady Expansion KFC Restaurant Margin 17.8% ~17.3% 17.3%+ 16.9% Sustaining Robust Margin Levels Pizza Hut Restaurant Margin 14.5%+ ~12.7% 12.0% Ac
Slide 12: Elevating OP Margin through Multiple Efficiency Levers
R G M Elevating OP Margin through Multiple Efficiency Levers Margin Expansion “COS+COL+O&O” Levers Driving Restaurant Margin G&A Leverage OP Margin1 Expansion 11.5%+ 10.8-10.9% 10.3% Sustaining COS Optimizing COL Lowering O&O Driving G&A Efficiency Gains Management Expense Ratio Leverage 2024 2025E
Slide 13: Driving Operating Profit
R G M Driving Operating Profit with Solid Top-Line Growth and Margin Expansion Profit Growth SOLID OP Margin1 (%) and Operating Profit ($mn) TOP-LINE GROWTH 10.3% 10.8-10.9% 11.5%+ Coupled with High-Single-Digit Operating Profit CAGR2 SUSTAINED OP MARGIN EXPANSION $1,162 2024 2025E 2028E 1OP margin
Slide 14: Optimizing Capex
R G M Optimizing Capex Targeting Average Annual Level of $600-700mn Capital Allocation Average Annual Capex of Lower per-store investment and higher ~$600-700mn2 in 2026-2028 Store franchise mix Development1 New Stores 40-45% Store Remodeling (incl. new modules) 35-40% Invest smartly to unlock digit
Slide 15: Expecting ROIC to Reach ~20% in 2028
R G M Expecting ROIC to Reach ~20% in 2028 ROIC ROIC Expansion ~20% Strong Operating Profit Growth 17.3-17.4% Efficient 16.9% Capex Utilization More Franchising Asset-Light 2024 2025E 2028E Note: ROIC is calculated as net operating profit after tax (NOPAT) divided by average invested capital. NOPAT
Slide 16: Leveraging Strategic RGM 3.0 Execution to Deliver Strong Free Cash Flow Growth
R G M Leveraging Strategic RGM 3.0 Execution to Deliver Strong Free Cash Flow Growth Key Drivers Free Cash Flow Per Share1 ($) Double-Digit CAGR2 Solid Operating Cash Flow Growth $2.2-2.3 $1.8 Continuously Optimized Capex Value-Enhancing Share Buyback 2024 2025E 2028E 1Free cash flow per share refer
Slide 17: Capital Returns to Shareholders
R G M Capital Returns to Shareholders ~100% of Free Cash Flow to ParentCo from 2027 Onward 1 Accelerated Capital Returns (US$) 2027 & Beyond Outlook3 Return ~100% of Free Cash Flow to ParentCo 1 $4.5bn 2026 Net Cash2 Average Annual Return of ~$900-1,000mn+ in 2027-2028 ~$1.2-1.4bn, $1.9bn A Sustaina
Slide 18: Our Pathway to Value Creation: 2026-2028 Outlook
Our Pathway to Value Creation: 2026-2028 Outlook 2026-2028 Growth Targets on 2025 Base: Operating EPS3 Free Cash Flow Same-Store System Sales1 Profit2 CAGR Per Share Sales Index YoY CAGR CAGR CAGR Mid- to High- High-single- 100-102 Double-digit% Double-digit% single-digit% digit% 1System sales exclu
Slide 19: From Strategy to Results… And Results to Long-term Value
2025 YUM CHINA INVESTOR DAY From Strategy to Results… … And Results to Long-term Value
Slide 20: Appendix
2025 YUM CHINA INVESTOR DAY Appendix
Slide 21: Yum China: Reconciliation of Operating Profit to Restaurant Profit
Yum China: Reconciliation of Operating Profit to Restaurant Profit ($ mn) 2019 2024 GAAP Operating Profit 901 1,162 Less: Franchise fees and income 148 94 Revenues from transactions with franchisees and unconsolidated affiliates 654 420 Other revenues 49 138 Add: General and administrative expenses
Slide 22: KFC: Reconciliation of Operating Profit to Restaurant Profit
KFC: Reconciliation of Operating Profit to Restaurant Profit ($ mn) 2019 2024 GAAP Operating Profit 949 1,192 Less: Franchise fees and income 136 69 Revenues from transactions with franchisees and unconsolidated affiliates 64 55 Other revenues 1 10 Add: General and administrative expenses 207 248 Fr
Slide 23: Pizza Hut: Reconciliation of Operating Profit to Restaurant Profit
Pizza Hut: Reconciliation of Operating Profit to Restaurant Profit ($ mn) 2019 2024 GAAP Operating Profit 114 153 Less: Franchise fees and income 4 8 Revenues from transactions with franchisees 4 5 Other revenues 1 24 Add: General and administrative expenses 101 110 Franchise expenses 2 4 Expenses f
Slide 24: Reconciliation of Return on Invested Capital (ROIC)
Reconciliation of Return on Invested Capital (ROIC) ($ mn) 2023 2024 Calculation of adjusted net operating profit after taxes Operating Profit 1,162 Special Items Income - Operating Profit - Adjusted Operating Profit 1,162 Adjustments to remove: Interest on operating lease liabilities 108 Computed I