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    Chen Luo • Bank of America

    Chen Luo's questions to Yum China Holdings Inc (YUMC) leadership

    Chen Luo's questions to Yum China Holdings Inc (YUMC) leadership • Q2 2025

    Question

    Chen Luo of Bank of America sought clarification on the delivery platform subsidy war, asking if Yum China bears a significant portion of the subsidies and if this impacted Q2 margins.

    Answer

    CFO Adrian Ding described the subsidy sharing as dynamic, stating that as a large partner, Yum China enjoys more favorable terms than smaller merchants. While declining to provide specific splits, he confirmed that the company's margin guidance for the second half of the year already incorporates the expected impact of these delivery dynamics.

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    Chen Luo's questions to Yum China Holdings Inc (YUMC) leadership • Q2 2025

    Question

    Chen Luo from Bank of America sought clarification on the online delivery platform subsidy war, asking if Yum China bears a significant portion of these subsidies and whether they had a major impact on Q2 margins.

    Answer

    CFO Adrian Ding explained that the subsidy arrangements are dynamic, but as a large merchant, Yum China generally receives more favorable terms and subsidy splits. He confirmed that the company's second-half margin guidance—stable for KFC and slightly increasing for Pizza Hut—already incorporates the current delivery dynamics and platform subsidies.

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    Chen Luo's questions to Yum China Holdings Inc (YUMC) leadership • Q1 2025

    Question

    Chen Luo questioned the new store contribution to growth, noting that an 11% increase in store count only yielded 4% revenue growth, and asked if this lower contribution ratio is the new norm due to smaller store formats.

    Answer

    CFO Adrian Ding clarified that the 4% contribution was influenced by several factors: the timing of openings within the quarter, a higher mix of smaller stores (70-80% of new openings) with lower initial sales, a multi-year ramp-up period for new stores, and a strategic increase in store closures in Q1. He stated this would normalize as the year progresses and reaffirmed the full-year mid-single-digit system sales growth target.

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    Chen Luo's questions to Yum China Holdings Inc (YUMC) leadership • Q4 2024

    Question

    Chen Luo from Bank of America inquired about the implications of the new store expansion strategy—which involves smaller stores, a focus on lower-tier cities, and more franchise locations—on the near-term revenue contribution from new store openings.

    Answer

    CEO Joey Wat explained the aggressive store opening strategy is driven by significant opportunities and better trading in lower-tier cities, with a strict focus on maintaining payback periods of 2 years for KFC and 2-3 years for Pizza Hut. She clarified that while franchise stores are growing and incremental, company-owned stores still constitute 85% of the portfolio. Acting CFO Adrian Ding added that new stores generate 50-60% of a mature store's revenue in their first year. He concluded that these factors, combined with same-store sales, support the expectation for mid-single-digit system sales growth in 2025.

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