Xiaopo Wei

Xiaopo Wei from CITIC Securities questioned the plan for the Mainland China store network, asking if the annual guidance for 200-300 net openings would change given the net closure of 111 stores in Q1, and sought to clarify if achieving the overall revenue target was the main priority.

Answer

An executive responded that the company is prioritizing 'channel upgrading' over sheer store count growth. While net openings are expected in the second half of the year, the 200-300 guidance is dynamic and not a fixed target. The executive confirmed that achieving high-quality revenue growth is the primary goal, but added that for 2025, the company hopes for more growth to be driven by same-store performance improvement. He also clarified that closing stores does not artificially boost the same-store sales metric.

Xiaopo Wei of Citi inquired about the 2025 margin outlook, questioning if its dependency on directly-operated stores made profit growth less certain, and asked for business indicators or progress updates on the YH retail reform.

Answer

Executive Eason Zhang reaffirmed confidence in accelerated 2025 revenue growth, driven by China's online business and 35-40% overseas growth, noting existing directly-operated stores will see profit improvement. Executive Guofu Ye detailed the YH reform plan, which centers on increasing efficiencies and reducing costs, with a goal to retrofit all stores and achieve strong performance by the end of 2026.

Xiaopo Wei of Citigroup inquired about Yum China's long-term strategy, questioning the balance between system sales and same-store sales growth and whether the focus should shift towards transaction volume over value to drive margin resilience.

Answer

CEO Joey Wat responded that the company's strategy is not 'either/or' but to pursue 'both' system sales and same-store sales growth. She emphasized that transaction growth is a primary driver, highlighting seven consecutive quarters of same-store transaction growth. Wat also pointed to the dual focus on operational efficiency (Project Fresh Eye, Project Red Eye) and innovation as the key to expanding margins and funding growth initiatives.