Linda Huang

Linda Huang inquired about Yum China's potential to accelerate system sales growth to high single digits, and whether this acceleration would stem from macro factors or company-specific strategies.

Answer

CFO Adrian Ding indicated that the exact growth algorithm for the next three years would be shared at the upcoming Investor Day, but affirmed that Yum China is well-positioned with fundamental improvements, new modules, and innovation. CEO Joey Wat emphasized that the biggest growth drivers remain the core brands, KFC and Pizza Hut, through various modules and hero products, which will also be detailed at the Investor Day.

Linda Huang from Macquarie asked about Yum China's potential to accelerate system sales growth to high single digits, beyond the current 4% rate, and whether such acceleration would be driven by macro factors or company-specific strategies.

Answer

CFO Adrian Ding indicated that Yum China is well-positioned with fundamental improvements, new modules, and initiatives across menu, store models, and emotional value to capture future opportunities. He stated that the company is not content with mid-single-digit top-line growth and will share the exact growth algorithm for the next three years at the upcoming investor day. CEO Joey Wat emphasized that core brands like KFC (mini modules) and Pizza Hut (Wow stores for new cities), along with hero product innovation, will be the biggest growth drivers, with details to be discussed at the investor day.

Linda Huang from Macquarie questioned the sustainability of the increased $4.5 billion capital return plan, noting it exceeds historical free cash flow. She asked if this implies a focus on organic growth and rules out large M&A, or if the company would consider taking on debt for a major opportunity.

Answer

CFO Adrian Ding clarified that while the company is confident in its cash generation, the current pace of returns is not indefinite. He affirmed that Yum China remains prudent and proactive regarding M&A. If a compelling, value-accretive opportunity arose, the company might adjust its capital return plan and would consider taking on debt, but only if the deal created significant shareholder value.