百胜中国控股有限公司 (YUMC.US) 2025年第三季度业绩电话会
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会议摘要
Yamchi achieved a 4% year-over-year increase in system sales, 1% same-store sales growth, and a 17.3% restaurant margin in Q3 2025, driving an 8% rise in operating profit to $400 million. The company opened 536 net new stores, expanding its total store count to over 17,500, on track to reach 20,000 by 2026. KFC saw 2% same-store sales growth, and Pizza Hut surpassed the 4,000 store milestone. Yamchi emphasized innovation, operational efficiency, and leveraging synergies across its multi-brand portfolio to drive growth while protecting margins. Plans for an upcoming Investor Day were also shared, outlining strategies for future growth and market penetration.
会议速览
YamChina's Q3 2025 Earnings Call Highlights and Q&A SessionThe earnings call for YamChina's third quarter 2025 begins with a welcome note, followed by reminders about forward-looking statements, GAAP measures, and webcast availability. The call is set to include a Q&A session after the speakers' presentations.
Strong Q3 Performance: Growth in Sales, Margins, and Store ExpansionThe company reported robust Q3 results, with 4% year-over-year growth in system sales, expanding margins to 17.3%, and a record $400 million in adjusted operating profit. Accelerated store openings, reaching 17,500 total stores, and innovative product launches, like the crispy golden chicken wing at KFC and the handcraft thin crust pizza at Pizza Hut, drove success. The focus on operational efficiency, pricing strategy, and limited-time offers has enhanced customer traffic and repeat purchases, setting the stage for continued growth.
Expanding Growth Drivers and Enhancing Customer Appeal Through Innovative Products and PartnershipsThe company is exploring new growth opportunities by introducing innovative products like KFC's whole chicken and Pizza Hut's burgers, which are driving strong sales growth. They are also targeting lower-tier cities with budget-friendly options and leveraging IP collaborations in animation, gaming, and sports to attract younger customers. Delivery sales have significantly increased, accounting for 51% of total sales, up from 40% the previous year, while maintaining a balanced approach to growth and margins.
Record Store Openings and Sales Growth for KFC, K Coffee, and Pi HutKFC opened 402 new stores, expanding to 12,640 with 5% system sales growth. K Coffee Cafe reached 100 locations, increasing daily cups sold by 30%. Pi Hut surpassed 4,000 stores, achieving 4% system sales growth and a 17% same-store transaction increase. KFC's K Pro and Pi Hut's Pizza Hu Wow also showed promising expansion.
Q3 PnL Highlights: System Sales Growth, Optimized Margins, and Labor Cost ChallengesSystem sales and same-store sales growth aligned with targets. Restaurant margin improved due to cost of sales and occupancy savings, partially offsetting labor cost increases. Efforts in supply chain optimization and commodity price benefits enabled customer value offerings. Wage inflation and higher delivery mix impacts were mitigated through operational optimization. Op margin rose driven by enhanced restaurant margin.
Financial Performance and Shareholder Returns: Growth, Investments, and Cash ManagementOperating profit and Core Op grew 8% year over year, with a 27.6% effective tax rate. Net income was $282 million, down 5% YoY, excluding the May plan investment, it grew 7%. Diluted EPS was 76 cents, up 1% excluding Madeline investment. $950 million returned to shareholders YTD, with plans to return $1.5 billion in 2025 and annually $1.5 billion from 2024 to 2026. Cash position remains healthy at $2.7 billion.
2025 Growth Outlook: Accelerated Store Openings, Cost Efficiency, and Positive Sales TrendsDiscussed progress on store openings, with 1119 stores opened, aiming for 100-109 new stores by 2025. Highlighted cost reductions in CapEx for KFC and Pizza Hut, predicting mid-single digit system sales growth. Emphasized strategies to maintain positive same-store transaction growth and improve margins despite headwinds, reaffirming commitment to annual targets.
Synergizing Growth: Leveraging Innovation and Operational Efficiency for Business ExpansionThe dialogue highlights the company's strategy of combining front-end innovation with back-end synergy to drive sales and market penetration. Key points include multi-brand portfolio diversification, resource centralization, and operational efficiency, resulting in store expansion, same-store sales growth, and margin expansion. The company is on track to meet its 2025 targets, leveraging synergies across KFC, K Coffee Cafe, and Pizza Hut, while maintaining a focus on growth and resilience.
Investor Day Preview: Updates on RGM Strategy, Growth Algorithm, and Market InsightsThe upcoming Investor Day in Shenzhen on November 17 will feature updates on the RGM strategy and three-year growth algorithm. A live webcast will be available, and in-person attendees will have the opportunity to visit various store formats, gain insights into local operations, and sample menu items. The event aims to provide a comprehensive understanding of market dynamics and company growth plans.
Analysis of Subsidy Impact and Strategic Responses in the Delivery Platform and Competitive LandscapeDiscusses the observed decrease in subsidies on delivery platforms, emphasizing a balanced sales growth strategy while protecting margins and brand positioning. Highlights long-term normalization of subsidies, focusing on innovation and quality service. Addresses concerns about deflation and competitive landscape, maintaining confidence in Pizza Hu's brand strength in China and ongoing growth potential. Comments on potential strategic reviews by independent entities, maintaining a policy of non-comment on specific transactions and a prudent approach to investment opportunities.
China's Restaurant Industry Shows Steady Growth Amid Value-Cautious Consumer SpendingThe restaurant industry in China, particularly KFC, experienced consistent growth in the third quarter, with traffic boosted by domestic travel during holidays. However, consumers remain cautious about spending. The focus is on delivering quality food, emotional value, and operational efficiency to maintain growth, with similar sales growth expected in the fourth quarter.
Analysis of Expansion Strategy and Franchise EconomicsDiscussed the impact of smaller format stores on sales growth, noting a 40% ratio may not persist due to strategic portfolio optimization and timing of openings. Highlighted progress in improving franchise economics, aiming for mid to long-term alignment with equity business margins, ensuring no margin dilution and potential ROIC improvement.
Adjusting Delivery Strategies Amidst Aggregator Impact and Cost ManagementThe dialogue discusses the impact of aggregator orders on membership sales, emphasizing the stability of adjusted member sales contribution. It addresses initiatives to optimize delivery efficiency and manage rising rider costs, aiming to mitigate headwinds and improve margins for the company's brands.
Balancing Short-Term Measures with Long-Term Innovations for Enhanced Operational EfficiencyEmphasizes the importance of combining immediate actions to improve Pnl with long-term strategies for innovation and operational efficiency to safeguard Tml, illustrating through examples of front-end cementation and back-end cost consolidation in a holistic cost management approach.
Strategic Planning for Diversifying Business Models and Categories in Retail ExpansionDiscussed strategic planning for expanding business through diverse models like K coffee and K healthy, focusing on promising categories, competitor analysis, and synergy with existing businesses, emphasizing growth initiatives and selective expansion.
Strategies for Business Growth: Front-End Segmentation and Back-End EfficiencyA business strategy emphasizing customer and location segmentation for growth, coupled with operational efficiency through optimized resource use. Focuses on delivering choices for customers, particularly in niche categories, while continuously exploring and refining new models for better outcomes.
Exploring KFC's Profitability Growth and Operational LeverageThe dialogue discusses KFC's impressive sales growth and restaurant profit margin, highlighting the company's philosophy of maintaining stable cash leverage and sharing margin upside with partners. It also addresses the impact of increased delivery mix and cost pressures on profitability, emphasizing the long-term strategy to keep margins healthy while supporting various stakeholders.
Sustainability of KFC's Same-Store Sales Growth and Impact of Delivery Subsidies and New FormatsDiscusses KFC's 2% same-store sales growth sustainability, impact of delivery subsidies, new formats' contribution, and K Pro's economic benefits.
Sustainability of SSG Growth and Economic Impact of K Pro ModulesDiscussion focused on slightly exceeding SSG targets, challenges in predicting sustainability, and the early-stage economic impact of K Pro modules, with promising initial results.
Strategies for Accelerating Sales Growth and Innovation in BusinessThe dialogue focuses on the company's strategies to accelerate sales growth, emphasizing innovation across various business segments. It highlights the importance of new initiatives, emotional value, and product innovations as key drivers for future opportunities, aiming to surpass mid-single-digit growth targets.
Conference Call Concludes with Appreciation and Disconnection InstructionsA call ends with thanks to participants, concluding the session, and instructions for disconnection are given.
要点回答
Q：What are the key financial results for the third quarter of 2025?
A：The key financial results for the third quarter of 2025 include a 4% year-over-year growth in system sales, a same store sales growth for the second consecutive quarter, a restaurant margin expansion to 17.3%, and an 8% year-over-year increase in operating profit to $400 million. These results are a quarterly record for adjusted operating profit and reflect the success of the company's strategy and team execution in a dynamic market.
Q：What are the details regarding same store sales and restaurant margins for the major brands?
A：For the major brands, KFC showed resilience with 2% same store sales growth, strong and steady restaurant margins, and a year-to-date record pace of new store openings. Pizza Hut accelerated store openings, surpassing the 4,000 store milestone and expanding restaurant margins year over year for the sixth consecutive quarter.
Q：What factors contributed to the company's same store transaction growth?
A：The company's same store transaction growth was attributed to its pricing strategy, which kept KFC price points relatively steady and lowered them at Pizza Hut, improving restaurant margins and making food more accessible to more consumers. This strategy attracted more traffic and, coupled with operational efficiency, led to the positive same store transaction growth.
Q：What new products were launched under the Hero Products category and how successful were they?
A：New products launched under the Hero Products category include the 'Crackling Golden Chicken Wing Jin Ji' at KFC, which is noted for its extra crispy outside and juicy inside, paired with a sweet and spicy garlic punch. Sales of the new wing surged during promotion and showed great potential as a future growth engine. At Pizza Hut, the handcraft thin-crust pizza, named 'SoBA Pizza,' became the best-selling crust within just 200 days of launch, contributing to the overall success of the pizza category.
Q：How does the limited time offers (LTO) strategy contribute to the company's sales and customer visits?
A：The LTO strategy contributes to the company's sales and customer visits by keeping the core menu focused while introducing highly selective products for limited time periods to drive repeat visits. The strategy also includes periodic offerings with lasting appeal, which are designed to be not one-time wonders but products that customers look forward to repeatedly.
Q：What are the new growth drivers mentioned for the company, and how are they performing?
A：New growth drivers for the company include new products such as KFC's whole chicken and Pizza Hut's burgers, which are showing strong sales growth. Additionally, entry-level combos at KFC and Pizza Hut have achieved double-digit sales growth year to date. The company is exploring further growth opportunities with satisfying meals priced below RMB 10 to reach customers with tighter budgets, particularly in lower-tier cities.
Q：How is the delivery business performing, and what initiatives are being taken to enhance it?
A：Delivery sales account for 51% of total sales, marking a significant increase from 40% in the same quarter last year. The core brand maintains a balanced approach to driving top-line growth while protecting margins. The cafe is increasing exposure and driving additional traffic, Labasa achieved double-digit same store sales growth, and initiatives such as promotions on delivery platforms are being employed to enhance the delivery business.
Q：What are the recent achievements of Kpro and Pizza Hut in terms of store expansion and overall growth?
A：Kpro has expanded to 100 locations with initial encouraging results, and plans for further scaling across higher tier cities. Meanwhile, Pizza Hut has surpassed the 4,000 store milestone and is on track for double-digit percentage growth in total store count for 2025, having added 298 new stores year-to-date.
Q：How has system sales growth and same store sales performed for the company?
A：System sales growth has sequentially improved from 2% in Q1 to 4% in Q3, with same store sales increasing by 1% for the third consecutive quarter. These results align with the company's targets.
Q：What has been the impact of cost management measures on restaurant margins?
A：Restaurant margins have been improved by 60 basis points due to streamlined operations and enhanced supply chain efficiency. Cost of sales have decreased by 14 basis points year over year, and restaurant margins improved by 15 basis points.
Q：How does the company plan to return value to shareholders and what are the expectations for 2025?
A：The company plans to return approximately $1.5 billion to shareholders in 2025, including share repurchases and dividends, which is around 8 to 9% of the current market cap. As of the end of the quarter, the company had a healthy cash position of $2.7 billion.
Q：What are the expectations for store openings and capital expenditures (CapEx) in 2025?
A：The company expects to open 100 to 109 new stores in 2025, with a franchise mix of 40% for KFC and 20% for Pizza Hut, in line with target ranges. The 2025 CapEx target remains at $600 to $700 million, with per-store CapEx for KFC decreasing from 1.5 million to 1.3 to 1.4 million yuan, and for Pizza Hut from 1.2 to 1.0 to 1.1 million yuan.
Q：What is the anticipated growth trajectory for the company in terms of system sales and same store sales?
A：The company remains on track for mid-single-digit system sales growth. While predicting same store sales growth is challenging, the goal is to maintain quarter-four same store sales growth at levels similar to Q3. The company is also working towards achieving 12 consecutive quarters of positive same store transaction growth on margins. Core Op margin for the second half is expected to be slightly higher year over year, with Q4 performance broadly in line with the prior year.
Q：What is the significance of the multi-brand portfolio and operational efficiencies for the company?
A：The multi-brand portfolio and operational efficiencies are significant as they cater to a wide range of customer segments and occasions, drive incremental sales through continuous innovation, and enable sharing, centralization, and consolidation of resources across stores, regions, and brands for deeper market penetration and faster, more efficient expansion.
Q：How should one think about the pricing trend and competitive landscape impact due to the subsidy changes?
A：The company suggests maintaining a focus on menu innovation, good quality customer service, and protecting prices to ensure competitiveness in the market. The competitive landscape is impacted by these factors, and the company aims to protect the pricing power of well-established brands.
Q：What are the expected impacts of delivery platform subsidies on the company and the home market in the near term and long term?
A：The company expects the impact of delivery platform subsidies to be limited due to their strategic focus and balanced approach with their core brand. They are maintaining efforts to drive sales growth while protecting margins and capturing sales for long-term brand positioning. In the longer term, they learn from previous experiences where subsidies were normalized, underscoring the importance of maintaining discipline in focusing on menu innovation, quality customer service, and protecting prices, particularly for well-established brands.
Q：What is the company's position on the strategic review initiated by Young Brands?
A：The company is aware of Young Brands' strategic review and acknowledges that they are two independent companies. While the company does not interfere in their strategic review process, they are confident in the strength of the Pizza Hut brand in China, its ongoing operations, and growth potential. The company also confirms that Young Brands and itself remain closed and long-time partners.
Q：Is the company participating in or forming a part of Young Brands' strategic review process?
A：The company's policy is not to comment on specific transactions. However, they have a prudent approach to evaluating potential investment opportunities and conduct M&A only when a transaction is strategically sound and expected to create value for shareholders. All M&A decisions are subjected to rigorous evaluation and discussions with the Board.
Q：How is the consumer spending behavior in China compared to the US?
A：The consumer spending behavior in China is characterized by value cautiousness, which contrasts with the US consumer behavior. In China, consumers are particularly cautious and not just focused on good prices but on value for money, good quality food, and emotional value.
Q：Can the same store sales growth in Q4 be expected to be similar to that in Q3?
A：Yes, the company confirms that they expect same store sales growth in Q4 to look similar to that in Q3.
Q：What are the detailed performance observations across regions in China?
A：The detailed performance observations across regions in China indicate a good performance in Q3 and on the October holiday, with particularly strong performance in lower-tier cities due to greater domestic travel. However, the consumer remains cautious, and the company is aware that it's not just about prices but about providing value for money, quality food, and emotional value.
Q：How will the company continue to focus on driving sales and operational efficiency?
A：The company will continue to focus on delivering innovative products and breakthrough business models to drive sales and operational efficiency. Although the sales growth may not match the previous growth, the focus remains on same transaction growth and operational efficiency, as evidenced by the 2% cell growth mentioned in comparison to KFC.
Q：What progress has been made in improving the economics of franchise stores?
A：The company aims to improve the economics of franchise stores, but as of the current time, there is no specific mention of the progress made. The company is working towards enhancing the economics of franchise stores in the future.
Q：Can the 40% ratio of system cell growth to store count growth be maintained in the coming quarters?
A：The 40% ratio of system cell growth to store count growth may not necessarily be maintained in the coming quarters due to various dynamics, including the strategic optimization of the portfolio which involves closing some large stores and opening smaller ones with lower sales. This, along with the initial year new store sales at a discount to material stores, affects the growth ratio and is expected to ramp up in the first three years.
Q：How is the system sales growth percentage related to the net new build percentage?
A：The system sales growth as a percentage compared to the net new build percentage is not expected to remain the same in the future. There are rounding differences that will affect this comparison over time.
Q：What progress has been made in improving the economics of the franchise business?
A：The economics of the franchise business have been improved, although it's still slightly lower than the equity business. The operating margin for the equity business is between 10% to 11%, and for the franchise business without Gna, it's around 10%. There has been a slight revision and progress in the quarter with a pricing mechanism that shares savings from project Fresh and Red Eye between franchisees and the company. This is expected to result in the franchise business having an operating margin in line with the equity business in the mid to long run.
Q：What measures are being taken to improve the operating margin for the franchise business?
A：Measures to improve the operating margin for the franchise business include a slight revision in the pricing mechanism for franchisees to share savings from efficiency projects. This is expected to lead to the operating margin for the franchise business being in line with the equity business in the mid to long run.
Q：What is the impact of the franchise initiative on short-term and long-term margins and ROIC?
A：In the short run, there will be no margin dilution from the franchise initiative due to the stable margin already and the expected alignment of franchise with equity business. In the mid to long run, there will not only be no margin dilution but also an improvement in Return on Invested Capital (ROIC) due to the efficiency gains for the franchise business.
Q：What is the contribution of membership sales to overall sales, and what is the impact of delivery aggregators on this contribution?
A：The contribution of membership sales to overall sales slightly decreased for the quarter, which is a mechanical or mathematical result according to the company. However, when members using aggregators are included, the adjusted member sales contribution remains very stable quarter over quarter. The increase in the derivative mix and rider cost impacts the contribution of membership sales.
Q：How are the company's efforts to offset the impact of the delivery mix increase and what is the impact on the carrier's margin?
A：The company is optimizing delivery efficiency, and in addition to that, it is enhancing screen mining, automating, and centralizing processes to improve operation efficiency. These efforts aim to offset the rise in delivery costs and partially offset the impact of the delivery mix increase. Despite facing headwinds, the company aims to achieve a modest improvement in margin for the year in China.
Q：What are the short-term measures being taken to prepare the P&L and what is the strategy for long-term operational efficiency?
A：Short-term technical measures are being taken to prepare the P&L while also pushing for innovations and operational efficiency in the slightly longer term to protect the T&L. One example is the continued and accelerated consolidation of K coffee, pursuing front-end cementation of cell, and back-end consolidation of operating costs for long-term management of the cost structure.
Q：What is the strategic planning approach for new store formats and categories, and what considerations are made when developing new models or categories?
A：The company is focused on growth initiatives for both the face-celled and system, such as K coffee and K healthy. It plans to identify promising categories, concentrate efforts, and create a more holistic and robust discussion on this topic. The strategic planning approach involves testing various options, including those that may work or not. Key considerations include identifying promising categories that can create synergy with other business or prove to be promising on their own.
Q：What is the business strategy for pursuing growth with front-end segmentation of the customer and location for Co outcome?
A：The business strategy for pursuing growth involves utilizing equipment, labor, and operational efficiency on the back end to deliver Co outcome, thereby using front-end segmentation of the customer and location to achieve this strategy.
Q：What is the 'pro and category' concept mentioned in the speech?
A：The 'pro and category' concept is focused on practices but aims to deliver alternatives for customers.
Q：What is the percentage of capable customers and what is the niche category that is being explored?
A：A very high percentage of customers are capable, but they require a choice regarding where to purchase once a place during the week and weekend.
Q：What was the restaurant profit growth and the o t growth for KFC in the third quarter?
A：The restaurant profit growth for KFC was at 5% and the o t growth was only at 6% in the third quarter.
Q：What is the expectation for the restaurant margin in the second half of the year?
A：It is expected that the restaurant margin in the second half of the year will not be as favorable over the year, which is consistent with the results seen in the quarter.
Q：What is KFC's philosophy regarding sales leverage and margin stability?
A：KFC's philosophy is to maintain a stable cost of sales and keep cash leverage broadly stable at a very healthy level. The company expects to share any margin upside with multiple partners and retain a portion within the group and with shareholders.
Q：What was the significant increase in the delivery mix for KFC in the third quarter?
A：The significant increase in the delivery mix for KFC in the third quarter was from 51% to around 40% of the prior year.
Q：What is the sustainability of the 2% same store sales growth for KFC?
A：Predicting same store sales growth is difficult due to a dynamic market and rational consumer behavior. While the company is working hard to keep quarterly same store sales growth at similar levels to the third quarter, it cannot provide an outlook on whether the 2% same store sales growth will be sustainable.
Q：Can management provide an outlook on the contribution from delivery subsidies and new format launches to the 2% same store sales growth?
A：Management did not provide specific details on the contribution from delivery subsidies and new format launches to the 2% same store sales growth, as the level of same store sales growth is not predictable.
Q：How does the new KPRO format contribute to sales and profit?
A：The new KPRO format contributes incremental sales and incremental profit to KFC, with the incremental sales for K expected to be larger than for K Coffee Cafe. However, no specific guidance has been given for the economics of KPRO as it is still in the early stage.
Q：What is the potential growth outlook for the company in the next three years?
A：The company is expected to discuss potential growth in the upcoming investor day, keeping some details secret. However, it is mentioned that the company is well-positioned to capture future opportunities and is not content with mid single-digit growth, with more to be shared in the investor day in two weeks.
