Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
|---|
| After 36 years in China, it's amazing that we're still growing our store at double digits |
| Since 2027, with the turnaround strategy, which is to -- as Joel mentioned earlier, dry customer traffic first, then sales, and then finally, enhancing profitability |
| The thing about customer psyche, many customer will still go for the product above the entry price product and feel good |
| Their incredible effort help Yum China deliver exceptional growth in the fourth quarter and for the full year |
| By the way, it's a fantastic way to recruit young customers such as student as well, particular with amazing product like the Golden SPA, chicken burger, its breast meat |
| This transformation of our business fundamentals in the past few years has enabled us to seize opportunities emerging from China's reopening and evolving market conditions |
| In 2023, we hit record breaking revenue of $11 billion and grew system sales 21% year-over-year, outperforming the industry |
| Operating profits soared to $1.1 billion, an all-time high excluding special items |
| Core operating profits grew 79% |
| Huge milestone for us, for our team's ability to build new product, new skill to grow with a change of customer |
| And Pizza Hut are doing very well in lower tier cities and that prove that the pizza business model works for lower tier city |
| Do we see that Pizza Hut had a quite good performance on margin in Q4, driven partially by the labor productivity gain and lower right of cost |
| And then the rebound on [indiscernible] is very strong |
| In lower tier cities, urbanization and long-term consumption upgrades are presenting attractive opportunities for us |
| It was very meaningful for us and it also I hope give some confidence to our investor that Western QSR is solid and has nice growth |
| These stores have performed well benefiting from lower labor costs and rent, and the ticket average is as good as in higher tier cities |
| We are happy to report to our shareholders that these shopping mall location stores are better at trading better than the rest well, apart from the tourist and transportation location |
| Over the past years, we have been improving our fundamental capabilities to reach this target |
| And that's because we have a very excellent supply chain team, very disciplined with our pricing |
| But fundamentally, our industry is growing very nicely |
| Third, improved operating capabilities |
| So the recovery of the restaurant industry was very vibrant for 2023 and we are doing slightly better than the industry average |
| And then also, as we have mentioned many times, we make the best effort to using every part of a chicken or a cow, so that we can enhance the resource usage, minimize costs, and all these [indiscernible] have allowed us to provide great value for money for our consumer, while keeping our costs of self market disabled |
| And the first thing is, if you look at the financials, in 2023, actually a very good controlled G&A |
| It's the area where we will have opportunity and compared to pre-pandemic, as I mentioned earlier, we improved by almost 250 basis points Now, when our sales ratio is one, we have good long-term contracts |
| It was fueled by a 12% increase in transactions indicating healthy growth |
| Our innovative menus, excellent value for money and effective online channels captured over 1.7 billion transactions last year |
| We achieved again -- like [indiscernible] model in the quarter with record setting operating profit |
| Our juicy whole chicken, means [indiscernible] is another remarkable success story |
| K-COFFEE also grew rapidly in 2023, driven by product innovation and improving accessibility |
| Statement |
|---|
| So is it fair to say that on the reporting level, actually, the OP may possibly decline by around 10%-ish? Of course, I think this is -- this should be the worst case |
| The mainstream thinking is China is going through consumption [indiscernible] with many challenges |
| As a combination of all these, good food is always number one and you can see why we continue to roll out so many good food but at the same time, we are very cautious about the price point |
| Well, it's a very challenging goal, but unfortunately, when you have two brothers, and of course, two brothers compete with each other, it's just normal |
| One reason is sometimes the headlines could be misunderstood |
| But it's very, very tough quarter |
| And then the average ticket size was down to 11% |
| As it relates -- I understand the first quarter is a very difficult comparison versus last year |
| Quarter four start with a bit of soft -- softness |
| And then right now, the weather to a certain standard, the extreme weather is a bit of a wildcard |
| At that time it will be also experience some labor shortage because of the infection, right |
| However, as we mentioned, there's quite few uncertainty with Chinese New Year because millions, hundreds of millions of people are travelling in a very short period of time |
| However, the [indiscernible] remains popular |
| So for example, one challenge we give it to ourselves, which we got it already 2023 is we want each quarter to be profitable, because Pizza Hut is quite a seasonal business even more seasonal than KFC |
| Second, cost structure rebasing lower our rent ratio in 2023 to 8.7% of sales, the lowest level in the past 10 years |
| So, those factors we don't expect them to repeat again this year |
| If we look at the G&A to sales ratio, actually going down |
| And that explain why other than Yum China, there's so many competitors have been so aggressive to open those doors, because opportunities are there |
| And then, given the FX is another 5% impact |
| We continue to aim to continue to sustain that trend by ensuring that G&A growth remain significantly lower than sales |
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