Yum China Holdings Inc (YUMC) 2024 Q3 法說會逐字稿

(Operator Instructions) I would now like to hand the conference over to Florence Lip, Senior IR Director. Please go ahead.

（操作員指示）我現在想將會議交給高級 IR 總監 Florence Lip。請繼續。

Thank you, operator. Hello, everyone. Thank you for joining Yum China's third quarter 2024 earnings conference call. On today's call are our CEO, Ms. Joey Wat; and our Acting CFO, Mr. Adrian Ding. I'd like to remind everyone that our earnings call and investor materials contain forward-looking statements, which are subject to future events and uncertainties. Actual results may differ materially from these forward-looking statements.

謝謝你，接線生。大家好。感謝您參加百勝中國 2024 年第三季財報電話會議。參加今天電話會議的是我們的執行長 Joey Wat 女士；以及我們的代理財務長 Adrian Ding 先生。我想提醒大家，我們的財報電話會議和投資者資料包含前瞻性陳述，這些陳述受到未來事件和不確定性的影響。實際結果可能與這些前瞻性陳述有重大差異。

All forward-looking statements should be considered in conjunction with the cautionary statement in our earnings release and the risk factors included in our filings with the SEC. This call also includes certain non-GAAP financial measures. You should carefully consider the comparable GAAP measures.

所有前瞻性陳述應與我們的收益發布中的警示性陳述以及我們向 SEC 提交的文件中包含的風險因素結合考慮。此電話會議還包括某些非公認會計準則財務指標。您應該仔細考慮可比較的 GAAP 衡量標準。

Reconciliation of non-GAAP and GAAP measures is included in our earnings release, which is available to the public through our Investor Relations website located at ir.yumchina.com. You can also find a webcast of this call and PowerPoint presentation on our IR website. Please note that during today's call, all year-over-year growth results exclude the impact of foreign currency, unless otherwise noted. Now I would like to turn the call over to Joey Wat, CEO of Yum China. Joey?

非 GAAP 和 GAAP 指標的調整包含在我們的收益報告中，公眾可以透過我們的投資者關係網站 ir.yumchina.com 取得該收益報告。您也可以在我們的 IR 網站上找到本次電話會議的網路廣播和 PowerPoint 簡報。請注意，除非另有說明，在今天的電話會議中，所有同比增長結果均排除了外匯的影響。現在我想把電話轉給百勝中國執行長屈翠容。喬伊？

Hello, everyone, and thank you for joining us. I'm proud to share that we achieved strong results again in Q3 2024. We delivered robust sales growth as well as accelerated profit growth compared to Q2. System sales grew 4% year-over-year. Same-store sales index improved sequentially and reached 97% of prior year's level. Delivery sales achieved double-digit growth as it has for 10 consecutive years.

大家好，感謝您加入我們。我很自豪地與大家分享，我們在 2024 年第三季再次取得了強勁成果。與第二季相比，我們實現了強勁的銷售成長以及加速的利潤成長。系統銷售額較去年同期成長 4%。同店銷售指數較上季改善，達到去年水準的97%。外送銷售額連續10年達到兩位數成長。

On a comparable basis, both restaurant margins and OP margin expanded year-over-year. Core operating profit grew 18% and diluted EPS increased by 32%. As we execute our RGM 2.0 strategy, we have a dual focus on operational efficiency and innovation. Savings generated from improved efficiency allow us to reinvest in food innovation and our value- for-money offers.

在可比較基礎上，餐廳利潤率和營業利潤率均較去年同期成長。核心營業利潤成長 18%，稀釋後每股收益成長 32%。在執行 RGM 2.0 策略時，我們雙重關注營運效率和創新。提高效率所產生的節省使我們能夠對食品創新和物有所值的產品進行再投資。

This broadens our addressable market. It also helps us capture more traffic, drive sales growth, and expand profit margins. Meanwhile, our innovative business models, KCOFFEE Cafe and Pizza Hut WOW, are gaining momentum and successfully capture new customer demand.

這拓寬了我們的潛在市場。它還幫助我們捕捉更多流量、推動銷售成長並擴大利潤率。同時，我們的創新商業模式KCOFFEE Cafe和必勝客WOW正在蓄勢待發，並成功捕捉新的客戶需求。

In the first nine months, we set several new records. $8.7 billion in revenue, over $1 billion in operating profit, 1,200 net new stores and over $1.2 billion returned to shareholders. We outperformed the industry in a challenging and fluid environment.

前九個月，我們創造了多項新紀錄。 87 億美元的收入、超過 10 億美元的營業利潤、1,200 家淨新店以及超過 12 億美元的股東回報。在充滿挑戰和變化的環境中，我們的表現優於產業。

Today, I will provide an update on our operations and store opening strategy. Adrian will then go through the financial performance and our latest capital return plan. I will start with operational efficiency. We are making great progress with Project Fresh Eye and Project Red Eye. We introduced these projects in quarter four of last year and quarter one of this year, respectively. These projects are to enhance operational efficiency through innovations across all aspects of our operations. Project Fresh Eye has reshaped our operations. We are evaluating processes through the fresh eyes of our restaurant managers, redesigning to support them more effectively. By simplifying, centralizing, and automating key processes, we are easing the burdens on restaurant managers so that they can focus on better serving customers. We are also using innovative technology and automation in our operations. This makes us more efficient. For example, intelligent energy management reduces utility costs. Project Red Eye has created a fresh mindset to innovate and deliver results by spending better and buying better. Our procurement teams are serving our marketing teams better and faster. Generated savings are passed on to our customers and fund innovations. We are also gearing our product design to optimize ingredient use and improve operational efficiency. These initiatives have enabled us to home in on product innovations and value for money, while expanding margins. On a comparable basis, Q3 restaurant margin improved 50 basis points year-over-year and core OP margin expanded 140 basis points. Importantly, these are sustainable improvements that strengthen our business capabilities while driving high levels of customer satisfaction.

今天，我將介紹我們的營運和開店策略的最新情況。然後阿德里安將了解財務業績和我們最新的資本回報計劃。我將從營運效率開始。我們在「鮮眼計畫」和「紅眼計畫」方面取得了巨大進展。我們分別在去年第四季和今年第一季推出了這些項目。這些項目旨在透過我們營運各個方面的創新來提高營運效率。Fresh Eye 計畫重塑了我們的營運。我們正在透過餐廳經理的新視角評估流程，並重新設計以更有效地支持他們。透過簡化、集中和自動化關鍵流程，我們減輕了餐廳經理的負擔，使他們能夠專注於更好地為顧客服務。我們還在營運中使用創新技術和自動化。這使我們更有效率。例如，智慧能源管理降低了公用事業成本。紅眼計畫創造了一種新的思維方式，透過更好地消費和購買更好的方式來創新和交付成果。我們的採購團隊正在更好、更快地為我們的行銷團隊提供服務。產生的節省將轉嫁給我們的客戶並資助創新。我們也調整產品設計，以優化成分使用並提高營運效率。這些措施使我們能夠專注於產品創新和物有所值，同時擴大利潤。在可比較基礎上，第三季餐廳利潤率年增 50 個基點，核心營業利潤率擴大 140 個基點。重要的是，這些都是可持續的改進，可以增強我們的業務能力，同時提高客戶滿意度。

Turning to sales. It's true that consumers are becoming more rational and sophisticated in their choices. But we know that the demand is there. Consumers seek value-for-money, good quality and emotional value (Foreign Language). That's exactly what we are offering them and it's working.

轉向銷售。確實，消費者的選擇變得更加理性和成熟。但我們知道需求是存在的。消費者追求物有所值、品質優良、情感價值（外語）。這正是我們為他們提供的，而且正在發揮作用。

We regard both system-sales and same-store sales growth as equally important. On one hand, we see ample opportunities across China to enter underserved markets and enhance customer access. On the other hand, we look to balance our unit growth with same-store sales growth. Seven consecutive quarters of same-store traffic growth and sequential improvement in same-store sales index for both KFC and Pizza Hut show the strength of our strategy.

我們認為系統銷售和同店銷售成長同樣重要。一方面，我們看到中國各地有大量機會進入服務不足的市場並擴大客戶接觸範圍。另一方面，我們希望平衡單位成長與同店銷售成長。肯德基和必勝客連續七季的同店客流量成長和同店銷售指數較上季改善顯示了我們策略的優勢。

Our delivery sales grew 18%, continuing the double-digit annual growth Yum China has maintained over the past decade. In quarter three, delivery sales reached around 40% of our sales mix. We have strategically adjusted delivery fees and introduced more entry price offerings to capture incremental consumer demand.

我們的外送銷售額成長了 18%，延續了百勝中國過去十年保持的兩位數年增長率。第三季度，送貨銷售額占我們銷售額的 40% 左右。我們策略性地調整了送貨費用，並推出了更多入門價格產品，以抓住增量的消費者需求。

We have enhanced our presence on aggregator platforms and expanded delivery coverage. Through these initiatives and more, we have captured incremental orders, especially from solo diners and value-conscious customers. As a result, both KFC and Pizza Hut have increased their market share on aggregator platforms.

我們增強了在聚合平台上的影響力並擴大了交付範圍。透過這些舉措以及其他舉措，我們獲得了增量訂單，特別是來自獨食者和注重價值的客戶。因此，肯德基和必勝客都增加了聚合平台上的市佔率。

Even as we expand on aggregator platforms, we continue to maintain strong control over our business. Sales outside the delivery aggregators account for over 70% of our total sales, including dine-in, takeaway and delivery.

即使我們在聚合平台上進行擴張，我們仍然對我們的業務保持強有力的控制。外送聚合商以外的銷售額占我們總銷售額的70%以上，包括內用、外帶和外送。

Let me share a few highlights on KFC. We continue to breathe fresh energy into our flagship products. Take the new original recipe chicken burger as we introduced in quarter two, it's an exciting innovation, though not so obvious. Taking our cue from the classic way kids in China enjoy KFC's original recipe chicken with mashed potatoes - we combined them into a new burger product. It's been very successful. Building on that success, we introduced an original recipe chicken with curry gravy in August, (Tang Ga Li Yuan Wei Ji). This time, we add curry gravy to the original recipe chicken and mashed potatoes. Customers are loving it. As a bonus, it doesn't require new ingredients in the stores. We maximized the use of existing ones, while delivering exceptional value and taste to our loyal customers. In the first nine months, KFC sold nearly 200 million cups of KCOFFEE, surpassing all cups sold in 2023. During the period, both sales and cups sold increased by about 30%. As our membership data indicates that a significant majority of our members have yet to try KCOFFEE, we see huge potential for growth.

讓我分享一下肯德基的一些亮點。我們繼續為我們的旗艦產品注入新的活力。以我們在第二季推出的新的原創配方雞肉漢堡為例，這是一項令人興奮的創新，儘管不是那麼明顯。我們從中國孩子們享用肯德基原始配方雞肉馬鈴薯泥的經典方式中汲取靈感，將它們結合到了新的漢堡產品中。這是非常成功的。在這個成功的基礎上，我們在八月推出了原創配方的咖哩雞雞，（唐嘎梨園韋記）。這次，我們在原始配方的雞肉和馬鈴薯泥中添加了咖哩汁。客戶很喜歡它。作為獎勵，它不需要商店裡有新的原料。我們最大限度地利用現有產品，同時為我們的忠實客戶提供卓越的價值和品味。前9個月，肯德基售出了近2億杯KCOFFEE，超過了2023年售出的所有杯子。期內銷售額及杯子銷量均成長約30%。由於我們的會員資料顯示絕大多數會員尚未嘗試過 KCOFFEE，因此我們看到了巨大的成長潛力。

We have just opened 500th side-by-side KCOFFEE cafe (Ken Yue Ka Fei) this morning China Time, with a prime location in Shanghai, (Xu Jia Hui). We are also tapping into strategic locations like college campuses and transportation hubs. By the end of the year, we expect to exceed 600 cafes.

中國時間今天早上，我們剛在上海黃金地段開設了第 500 家 KCOFFEE 咖啡館（肯悅咖啡店），（徐嘉慧）。我們也利用大學校園和交通樞紐等戰略地點。到今年年底，我們預計咖啡館數量將超過 600 家。

Our distinctive menu of coffee, drinks and food, stunning value proposition, and cafe ambience are resonating well with their customers. Our disruptive limited time offer of Original Recipe Chicken Latte (Shun Zhi Yuan Wei Ji Feng Wei Na Tie), generated first disbelief, then curiosity, and finally, trial. Perhaps surprisingly, it's become one of our best sellers. KCOFFEE Cafes also effectively cross-sell to KFC's loyal customers, driving incremental sales and profit. KCOFFEE Cafe's potential is exciting.

我們獨特的咖啡、飲料和食品菜單、令人驚嘆的價值主張以及咖啡館氛圍與客戶產生了良好的共鳴。我們顛覆性的原味雞拿鐵限時優惠（順之源味雞風味拿鐵）首先引起了懷疑，然後是好奇，最後是嘗試。也許令人驚訝的是，它已成為我們最暢銷的產品之一。KCOFFEE 咖啡館也有效地向肯德基的忠實客戶進行交叉銷售，從而推動銷售額和利潤的增量。KCOFFEE Cafe 的潛力令人興奮。

Turning to Pizza Hut. The brand is making solid progress. Pizza Hut opened nearly 300 net new stores in the first nine months, exceeding 3,600 stores. Since 2017, Pizza Hut has been strategically lowering its ticket average to drive traffic and enhance its mass market appeal. We have launched more entry price products designed for value conscious customers and solo diners, capturing more smaller ticket orders.

轉向必勝客。該品牌正在穩步前進。必勝客前9個月淨新開近300家門市，門市數量超過3,600家。自 2017 年以來，必勝客一直在策略性地降低平均票價，以增加客流量並增強其大眾市場吸引力。我們推出了更多專為注重價值的顧客和獨食者設計的入門價格產品，吸引更多小額訂單。

Pizza Hut has also improved its profitability. Core OP increased 20% year-over-year in quarter three. Core OP margin was up by 140 basis points. We boost operational efficiency with simplified ingredients and redesigned kitchen processes. This also allowed us to further improve our high food quality and service level. We continue to fortify our reputation as pizza expert. We recently upgraded the hand-tossed Pizza dough for better taste, consistency, and easier preparation.

必勝客的獲利能力也有所提升。第三季核心營運成本年增 20%。核心OP利潤率上升了140個基點。我們透過簡化配料和重新設計廚房流程來提高營運效率。這也使我們能夠進一步提高我們的食品品質和服務水準。我們繼續鞏固我們作為披薩專家的聲譽。我們最近升級了手拋披薩麵團，以獲得更好的味道、一致性和更容易的準備。

In addition, we continue to build on our signature product, Durian pizza, now our number one best-selling pizza. One in every four pizzas sold in Pizza Hut China is now a durian pizza. We sold nearly 30 million durian pizzas year-to-date.

此外，我們繼續開發我們的招牌產品榴槤披薩，它現在是我們最暢銷的披薩。現在，必勝客中國銷售的披薩中四分之一是榴槤披薩。今年迄今為止，我們已售出近 3,000 萬個榴槤披薩。

We have extended our success with durian to burgers, launching the Pizza Dough Beef Burger with durian and pineapple (Zhi Shi Jin Zhen Liu Lian Bo Luo Niu Bao). It sounds unusual, but it's perfect for our durian lovers and sold out quickly. Our breakthrough Pizza Hut WOW store is looking like a promising vehicle for expanding our addressable market. It's been only five months since we converted our first store. Initial results are encouraging. For dine-in, we have seen significant same-store sales growth, driven by incremental transactions despite lower ticket averages. So far, we have converted around 150 stores, expanding from Guangdong to over 10 provinces, covering Tier 1 cities to lower tier towns. We will continue to refine the model across different locations for both dine-in and delivery.

我們將榴槤的成功延伸到漢堡，推出了榴槤和鳳梨披薩麵團牛肉漢堡（至時金珍六聯波羅牛寶）。這聽起來很不尋常，但它非常適合我們的榴蓮愛好者，很快就賣完了。我們突破性的必勝客 WOW 商店看起來像是一個有前途的工具，可以擴展我們的目標市場。距離我們改造第一家商店才過了五個月。初步結果令人鼓舞。對於堂食而言，儘管平均票價較低，但在交易增量的推動下，我們看到同店銷售顯著增長。到目前為止，我們已經改造了約150家門市，從廣東擴展到10多個省份，涵蓋第一線城市到二、三線城鎮。我們將持續完善不同地點的堂食和送餐模式。

With our dual focus on system sales and same-store sales growth in mind, let's talk about our store expansion plan. In Q3, we opened 438 net new stores. With over 1,200 net new stores year-to-date, we are on track to meet our target of 1,500 to 1,700 net new stores this year. This growth is underpinned by strong new store performance. At KFC, the payback period held steady at two years, and at Pizza Hut, payback improved to two to three years. Around 80% of new stores opened in the past two years, turned profitable within three months of opening.

考慮到我們對系統銷售和同店銷售成長的雙重關注，我們來談談我們的商店擴張計劃。第三季度，我們淨開設 438 家新店。今年迄今為止，我們淨新開門店超過 1,200 家，預計今年將實現 1,500 至 1,700 家淨新店的目標。這一成長得益於強勁的新店業績。在肯德基，投資回收期穩定在兩年，而在必勝客，投資回收期提高到兩到三年。過去兩年開設的新店中，約有80%在開業後三個月內獲利。

Alongside our successful equity store model, we are accelerating franchise development to unlock additional opportunities. Our franchise strategy focuses on assessing strategic and remote locations as well as the lower tier cities that were previously beyond our reach. We have built the infrastructure to support our franchisees, from food safety to store management.

除了我們成功的股權商店模式外，我們還在加速特許經營發展，以釋放更多機會。我們的特許經營策略專注於評估策略和偏遠地區以及以前我們無法覆蓋的低線城市。我們建立了從食品安全到商店管理的基礎設施來支持我們的特許經營商。

We have also innovated new store models suitable for franchisees, such as KFC's small town mini, so we are now prepared to pick up the speed. Currently, franchisees represent 12% of KFC's store portfolio. The franchise mix for net new stores increased from 15% in 2023 to 27% year-to-date, exceeding the guidance we gave at last year's Investor Day of 15% to 20%. We now expect this ratio will gradually increase to 40% to 50% over the next few years.

我們也創新了適合加盟商的新店模式，像是肯德基的小鎮mini，所以我們現在準備加快速度。目前，特許經營商佔肯德基門市組合的 12%。淨新店的特許經營組合從 2023 年的 15% 增加到年初至今的 27%，超過了我們在去年投資者日給出的 15% 到 20% 的指導。我們現在預計這一比例將在未來幾年逐漸增加至40%至50%。

Pizza Hut will be on a similar path but will take more time to get there. For Pizza Hut's net new stores, the franchise mix was 7% year-to-date. We anticipate this ratio will gradually increase to 20% to 30% over the next few years.

必勝客也將走類似的道路，但需要更多時間才能到達那裡。今年迄今為止，必勝客淨新開店的特許經營比例為 7%。我們預計未來幾年這一比例將逐漸增加至20%至30%。

With that, I will hand the call over to Adrian Ding, our acting CFO. By way of background, Adrian has been with Yum China since in 2019. Leveraging his investment banking background, Adrian has led multiple successful strategic investments and capital market projects in his role as our Chief Investment Officer.

接下來，我會將電話轉交給我們的代理財務長 Adrian Ding。背景介紹：Adrian 自 2019 年起就加入百勝中國。Adrian 憑藉其投資銀行背景，作為我們的首席投資長領導了多個成功的策略投資和資本市場項目。

He was also instrumental in establishing our Lavazza joint venture and building the business in China as our General Manager of Lavazza JV. Adrian's combination of financial background with operational experience makes him well-suited for this position. I'm thrilled to welcome Adrian to his new role. Adrian?

作為 Lavazza 合資公司的總經理，他也為我們建立 Lavazza 合資公司以及在中國開展業務發揮了重要作用。阿德里安的財務背景與營運經驗相結合，使他非常適合這個職位。我很高興歡迎阿德里安擔任他的新職位。阿德里安？

Thank you, Joey, and great to be with everyone today for my first earnings call. In the third quarter, we achieved strong results with major KPIs trending positively. System sales grew 4%, and same-store sales index sequentially improved to 97% of prior year level. Restaurant margin expanded 50 basis points year-over-year on a comparable basis. Core OP margin also saw a significant rise of 140 basis points.

謝謝你，喬伊，很高興今天能和大家一起參加我的第一次財報電話會議。第三季度，我們取得了良好的業績，主要 KPI 呈現正面趨勢。系統銷售額成長4%，同店銷售指數較上季提高至去年水準的97%。餐廳利潤率年增 50 個基點。核心OP利潤率也大幅上升140個基點。

As we grew our top line, core operating profit surged by 18% and diluted EPS grew 19%, excluding the mark-to-market gain from our equity investments. As a reminder, restaurant margin on a comparable basis excludes VAT deductions as well as temporary relief from landlords and government agencies received in the prior year.

隨著我們收入的成長，核心營業利潤飆升 18%，稀釋後每股收益成長 19%（不包括股權投資的按市值計算的收益）。需要提醒的是，餐廳的可比利潤不包括增值稅扣除額以及去年從房東和政府機構獲得的臨時減免。

Core operating profit further excludes foreign exchange impact and special items. We are immensely satisfied with this meaningful sequential improvement in our quarter three results. They demonstrate our ability to outperform the industry in both good times and bad. With our confidence on our cash-generating capabilities, we plan to step up our capital return to shareholders.

核心營業利潤進一步排除了外匯影響和特殊項目。我們對第三季業績的這種有意義的連續改善感到非常滿意。它們證明了我們無論在順境或逆境中都有能力超越產業。憑藉對現金產生能力的信心，我們計劃加大對股東的資本回報。

First, let's take a closer look at our third quarter performance. By brand, KFC system sales increased 6% year-over-year. Same-store sales were at 98% of prior year levels with 1% same-store transaction growth. Our strategies to widen the price range and capture lower ticket average delivery orders are yielding results. Entry-price combos have driven incremental traffic, and delivery sales continue to grow double digits. Our quarter three ticket average was RMB38, 3% lower than prior year levels, an increase from RMB37 in quarter two.

首先，讓我們仔細看看我們第三季的業績。按品牌分，肯德基系統銷量較去年同期成長6%。同店銷售額為上年水準的 98%，同店交易成長 1%。我們擴大價格範圍和獲取較低平均交貨訂單的策略正在取得成果。入門價格組合推動了流量的增加，送貨銷售額繼續以兩位數成長。第三季的平均票價為 38 元人民幣，比去年同期下降 3%，較第二季的 37 元增加。

More ticket items like coffee and breakfast continue to outperform. Pizza Hut system sales increased 2% year-over-year. Same-store sales were at 94% of prior year levels with same-store transaction growth of 4%. Ticket average was 9% lower year-over-year. It is in line with our strategy to transform the brand to increase mass market appeal. Our entry-priced pizzas, burgers and single person meals attracted incremental traffic from value-conscious consumers and solo diners, which, of course, lowered per-person spending.

咖啡和早餐等更多門票項目繼續跑贏大盤。必勝客系統銷售額較去年同期成長 2%。同店銷售額為上年水準的 94%，同店交易成長 4%。平均票價較去年同期下降 9%。這符合我們轉型品牌以增加大眾市場吸引力的策略。我們的入門級披薩、漢堡和單人餐吸引了注重價值的消費者和獨食者的客流量，這當然降低了人均消費。

The WOW store model is positioned with even more accessible pricing. Pizza Hut's traffic has grown in response to our strategy and profit margins have improved year-over-year. Thanks to our team's relentless drive for operational efficiency and innovation.

WOW商店模式的定位是更平易近人的價格。必勝客的客流量隨著我們的策略而成長，利潤率也逐年提高。感謝我們團隊對營運效率和創新的不懈追求。

Now let's go through our margin and key cost lines. Our OP margin as a percentage of revenue was 12.1%. 100 basis points higher year-over-year or 140 basis points higher on a comparable basis. Resilient restaurant margin and savings in G&A expenses helped us achieve that. Our restaurant margin was 17%, steady year-over-year.

現在讓我們來看看我們的利潤和關鍵成本線。我們的營業利益率佔收入的百分比為 12.1%。年比高出 100 個基點，可比基礎上高出 140 個基點。餐廳利潤率的彈性和一般管理費用的節省幫助我們實現了這一目標。我們的餐廳利潤率為 17%，較去年同期穩定。

On a comparable basis, restaurant margin was 50 basis points higher. Savings in the cost of labor and occupancy and other costs offset the increase in COS. Cost of sales was 31.7%, 60 basis points higher year-over-year or 30 basis points higher on a comparable basis.

在可比較基礎上，餐廳利潤率高出 50 個基點。勞力和占用成本以及其他成本的節省抵消了 COS 的增加。銷售成本為31.7%，較去年同期高出60個基點，可比基礎上高出30個基點。

We kept cost of sales rather stable compared to 31.5% in quarter two, while continuing to offer excellent value for money. Key factors include favorable commodity prices and savings from spending better and buying better initiatives under Project Red Eye. Cost of labor was 25.1%. 20 basis points lower year-over-year. Improved operational efficiency more than offset wage increases for our frontline staff and the impact of sales deleveraging.

與第二季的 31.5% 相比，我們保持銷售成本相當穩定，同時繼續提供卓越的性價比。關鍵因素包括有利的商品價格以及紅眼計劃下更好的支出和購買更好的措施帶來的節省。勞動成本為25.1%。年減20個基點。營運效率的提高遠遠抵消了一線員工薪資上漲和銷售去槓桿化的影響。

Occupancy and other was 26.2%, 40 basis points lower year-over-year or 60 basis points lower on a comparable basis. This came from more efficient marketing and advertising initiatives as well as other cost optimization. Our G&A expenses decreased 19% year-over-year. This was due to operational efficiency gains and lower performance-based compensation this year, among other factors.

入住率及其他為 26.2%，較去年同期下降 40 個基點，可比下降 60 個基點。這來自於更有效的行銷和廣告措施以及其他成本優化。我們的一般管理費用較去年同期下降 19%。這是由於今年營運效率提高和基於績效的薪酬降低等因素所造成的。

G&A expenses as a percentage of revenue were 4.5% in the quarter down by 130 basis points from 5.8% a year ago. For the full year, we aim to keep the G&A ratio around 5%. Operating profit was $371 million, growing 14% year-over-year. Core OP increased 18% year-over-year.

本季一般及行政費用佔收入的百分比為 4.5%，比一年前的 5.8% 下降了 130 個基點。全年，我們的目標是將 G&A 比率保持在 5% 左右。營業利潤為 3.71 億美元，年增 14%。核心OP年增18%。

Our effective tax rate was 27.3% in quarter three, on par with the same period last year. We expect a full year ETR in the high 20s. Net income was $297 million, growing 21% year-over-year. Our mark-to-market equity investment had a $26 million positive impact in quarter three this year compared to a negative impact of $3 million in the same period last year. Excluding this impact, our net profit grew 9%. As a reminder, we received lower interest income this year from a lower cash balance. Diluted EPS was $0.77, growing 32% year-over-year or 19%, excluding the mark-to-market equity investment impact.

第三季我們的有效稅率為27.3%，與去年同期持平。我們預計全年 ETR 將在 20 左右。淨利潤為 2.97 億美元，年增 21%。我們以市值計價的股權投資在今年第三季產生了 2,600 萬美元的正面影響，而去年同期則產生了 300 萬美元的負面影響。剔除這項影響，我們的淨利潤成長了 9%。提醒一下，今年我們因現金餘額減少而獲得了較低的利息收入。稀釋後每股收益為 0.77 美元，較去年同期成長 32%，即成長 19%（不含市值計價的股權投資影響）。

Now let's turn to capital return to shareholders. Since our spinoff, we've returned over $4 billion to shareholders. In the first nine months this year, we already returned more than $1.2 billion, including over $1 billion in share repurchases and $187 million in quarterly dividends.

現在讓我們轉向股東的資本回報。自分拆以來，我們已向股東返還超過 40 億美元。今年前九個月，我們已返還超過 12 億美元，其中包括超過 10 億美元的股票回購和 1.87 億美元的季度股息。

We bought back more than 27 million shares around 7% of our total shares outstanding, partially contributing to our EPS growth. Our cash position remains healthy with net cash of $3.1 billion as of the end of the quarter. We're committed to returning excess capital to our shareholders.

我們回購了超過 2,700 萬股股票，約佔已發行股票總數的 7%，這在一定程度上促進了每股盈餘的成長。截至本季末，我們的現金狀況保持健康，淨現金為 31 億美元。我們致力於將多餘的資本回饋給股東。

A year ago, we set our 3-year plan to return $3 billion to shareholders through dividends and share repurchases from 2024 to 2026. With our cash generation capabilities proven in good times and bad, we now plan to step up our capital returns by 50% to $4.5 billion over the same period. This includes $1.5 billion in 2024.

一年前，我們制定了三年計劃，從 2024 年到 2026 年，透過股利和股票回購向股東返還 30 億美元。無論順境或逆境，我們的現金產生能力都得到了證明，我們現在計劃將同期資本回報率提高 50%，達到 45 億美元。其中包括 2024 年的 15 億美元。

Finally, moving on to our outlook. We are encouraged by the recent stimulus policies. These measures are a positive step forward, but as you all know, such things can take quite a while to trickle down to consumers and thereby move the needle in businesses like ours.

最後，繼續我們的展望。最近的刺激政策令我們感到鼓舞。這些措施是向前邁出的積極一步，但眾所周知，這些措施可能需要相當長的時間才能惠及消費者，從而為像我們這樣的企業帶來推動。

Entering the fourth quarter, we've not observed significant changes in market conditions and consumer sentiment. Despite this, we remain confident in China's midterm and long-term growth opportunities. Quarter four is traditionally a low season for us with smaller sales and profits.

進入第四季度，我們尚未觀察到市場狀況和消費者情緒發生重大變化。儘管如此，我們對中國中長期成長機會仍充滿信心。第四季對我們來說傳統上是淡季，銷售額和利潤較小。

We maintain our focus on operational efficiency and innovation to pass on savings to our consumers. We expect these efforts to continue driving overall sales and profit growth. I am confident in our strategy and our ability to navigate this complex and evolving environment and achieve sustainable long-term growth.

我們始終專注於營運效率和創新，以便將節省的成本惠及消費者。我們預計這些努力將繼續推動整體銷售額和利潤的成長。我對我們的策略以及我們駕馭這個複雜且不斷變化的環境並實現可持續長期成長的能力充滿信心。

As a reminder, in quarter four last year, we benefited from $6 million in temporary relief, equivalent to around 30 basis points in OP margin, which we do not expect to repeat this year. Let me pass it back to Joey for closing remarks.

提醒一下，去年第四季度，我們受益於 600 萬美元的臨時救濟，相當於 OP 利潤率約 30 個基點，我們預計今年不會重複這種情況。讓我將其轉回給喬伊以供結束語。

Thank you, Adrian. Before we turn to Q&A, I would like just to recap the three key messages I want you to take away today. First, our quarter three results highlight our resiliency and growth strategy. With our dual focus on operational efficiency and innovation, we are well-positioned to capture opportunities in this market. Both system-sales growth and same-store sales growth are key focus for us.

謝謝你，阿德里安。在我們進行問答之前，我想回顧一下我今天希望您了解的三個關鍵資訊。首先，我們第三季的業績凸顯了我們的彈性和成長策略。憑藉對營運效率和創新的雙重關注，我們處於有利地位，可以抓住這個市場的機會。系統銷售成長和同店銷售成長都是我們關注的重點。

Second, we remain bullish on China's long-term growth opportunities. Our widened price ranges, optimized delivery strategy, and breakthrough business models, help us broaden our addressable market. We continue to capture underserved customer segments with both equity and franchise new stores. Lastly, we maintain our dual focus on sustainable growth and capital returns to shareholders. We plan to step up our 3-year capital returns to $4.5 billion for 2024 to 2026.

其次，我們仍看好中國的長期成長機會。我們擴大的價格範圍、優化的交付策略和突破性的商業模式幫助我們擴大了我們的目標市場。我們繼續透過股權和特許經營新店來吸引服務不足的客戶群。最後，我們保持對永續成長和股東資本回報的雙重關注。我們計劃在 2024 年至 2026 年將 3 年資本回報率提高至 45 億美元。

With that, I will pass it back to Florence.

有了這個，我會把它傳回佛羅倫薩。

Thanks, Joey. Now we will open the call for questions. (Operator Instructions)

謝謝，喬伊。現在我們將開始提問。（操作員說明）

(Operator Instructions)

（操作員說明）

Xiaopo Wei, Citigroup.

魏曉波，花旗集團。

Hi. Can you hear me, Joey, or Adrian?

你好。喬伊或阿德里安，你聽得到我說話嗎？

Yes.

是的。

Okay. Thank you. Thank you for taking quick question. Congratulations on the strong third quarter. I probably want to ask a long-term question. It is the first quarter we are seeing both your core OP margin expanding and same store sales was down. As you know, the market has been focusing on same-store sales for long, but it seemed to me that it's actually as Joey said, the system sales is equally important as same-store sales.

好的。謝謝。感謝您提出快速問題。恭喜第三季的強勁表現。我可能想問一個長期的問題。這是第一季度，我們看到你們的核心營運利潤率不斷擴大，但同店銷售額卻下降了。大家知道，市場長期以來一直關注同店銷售，但在我看來，其實正如Joey所說，系統銷售與同店銷售同樣重要。

Shall we say looking forward, shall we look more into the same-store sales base of transaction volume rather than the same-store sales value because, as Joey readily pointed out, you guys have innovative formats, so menu actually widens your pricing range. So the mix of your products, or the ASP, actually distorts the traditional understanding of same-store sales. If that's the case, are there any other areas you will build your economies of scale in terms of enlarged volume to drive your margin resilience looking forward?

我們是否可以說展望未來，我們是否應該更多地關注交易量的同店銷售基礎，而不是同店銷售價值，因為正如Joey 指出的那樣，你們有創新的格式，所以菜單實際上擴大了你們的定價範圍。因此，你的產品組合，或者說 ASP，實際上扭曲了對同店銷售的傳統理解。如果是這樣的話，您是否還會在其他領域透過擴大銷售來建立規模經濟，以提高未來的利潤彈性？

Xiaopo, thank you for your long-term question. If I'm allowed to indulge -- to give a comprehensive view of our long-term strategy. Quarter three actually is a good result and illustration of how Yum China execute our RGM 2.0 strategy in the long-term. We dual focuses on multiple areas. As a CEO, I often get questions posed, or decisions presented on either/or, such as either same store sales or system sales, the fact is the only acceptable answer is, it's both. We want both.

小坡，謝謝你長久以來的提問。如果允許的話，我可以全面地了解我們的長期策略。第三季其實是一個很好的結果，也說明了百勝中國如何長期執行我們的 RGM 2.0 策略。我們雙重關注多個領域。作為首席執行官，我經常收到關於非此即彼的問題或決策，例如同店銷售或系統銷售，事實是唯一可接受的答案是，兩者兼而有之。我們兩個都想要。

And then the same-store sales, obviously, is composed of the transactions. So, the way that we deal with it is we really are pursuing dual focus because we cannot just focus on one or the other. So, I referred to it in several of my earlier remarks, but just to recap: first, we have dual focus on system sales growth and same-store sales growth.

那麼同店銷售額顯然是由交易組成的。所以，我們處理這個問題的方式是我們真正追求雙重焦點，因為我們不能只專注於其中一個。因此，我在之前的幾次演講中提到了這一點，但只是回顧一下：首先，我們雙重關注系統銷售成長和同店銷售成長。

And in quarter three, obviously, we had 4% system sales growth for the quarter and also seven consecutive quarters of same-store transaction growth going forward because between the TA and TC, I think you can see over the long term, we focus on transaction growth, which really is the most important -- one of the most important drivers for a business like ours. Not to mention the growth is also supported by 10 years of delivery growth.

顯然，在第三季度，我們該季度的系統銷售額增長了 4%，並且未來連續七個季度的同店交易增長，因為在 TA 和 TC 之間，我認為從長遠來看，我們專注於交易增長，這確實是最重要的——對於我們這樣的企業來說，這是最重要的驅動因素之一。更不用說這一增長還得到了10年交付成長的支撐。

Second, and this is related to your margin question, we have dual focus on operational efficiency and innovation. I certainly believe that any good company who wants to survive, needs to do both. So, for Q3 alone, this year, we delivered 18% core operating profit growth through multiple margin improvement projects like Project Fresh Eye and Project Red Eye. And then we reinvest our savings into multiple innovations, such as food innovation and then value for money and then some breakthrough model innovations such as KCOFFEE and Pizza Hut.

其次，這與你的利潤問題有關，我們雙重關注營運效率和創新。我當然相信任何想要生存的好公司都需要兩者兼具。因此，光是今年第三季度，我們就透過「鮮眼計畫」和「紅眼計畫」等多個利潤率改善項目實現了 18% 的核心營業利潤成長。然後我們把儲蓄再投資到多種創新上，例如食品創新，然後是物有所值，然後是一些突破性的模式創新，例如KCOFFEE和必勝客。

And with this kind of operational efficiency and innovation, both our KCOFFEE cafe model and 150 Pizza Hut WOW stores right now, they broaden our addressable market and capture new customer demand to grow the business.

憑藉這種營運效率和創新，我們的 KCOFFEE 咖啡館模式和目前的 150 家必勝客 WOW 商店，它們擴大了我們的潛在市場並捕捉新的客戶需求以發展業務。

Third, we have dual focus on opening equity stores and accelerating franchisee development, and that helps, obviously, manage our capital return. And so far this year, we opened 1,200-plus new stores in the first nine months, and we are on the track to reach our full year target.

第三，我們雙重關注開設權益店和加速加盟商發展，這顯然有助於管理我們的資本回報。今年到目前為止，我們在前 9 個月新開了 1,200 多家新店，我們預計將實現全年目標。

Payback is good and 80% of the new stores turned profitable within three months, as mentioned in the earlier remarks. So at the same time, we are accelerating the franchisee opening to unlock opportunities in strategic locations, remote or lower-tier cities.

回報良好，如前面所說，80%的新店在三個月內獲利。因此，同時，我們正在加速加盟商開業，以釋放戰略地點、偏遠或二、三線城市的機會。

Last but not least, the dual focus on investing in business growth and returning capital to shareholders are also happening at the same time. So with the sales with the product at the end, we are growing the business and returning capital at the same time.

最後但並非最不重要的一點是，對投資業務成長和向股東返還資本的雙重關注也在同時進行。因此，隨著產品的最終銷售，我們正在發展業務並同時返還資本。

So to summarize, in each of the above four areas, we do our best to avoid unnecessary compromises. And we use all our energy, our capabilities and creativity to get both same-store sales and system sales. Thank you, Xiaopo.

綜上所述，在上述四個方面，我們都盡力避免不必要的妥協。我們用我們所有的精力、我們的能力和創造力來獲得同店銷售和系統銷售。謝謝你，小坡。

Lillian Lou, Morgan Stanley.

莉蓮·樓，摩根士丹利。

Hey, thank you. Good evening, Joey, and congrats again, Adrian, for your new position. And also congrats for the very good results. My question is more on the near term because I think, Joey, you have been very clear on the long-term strategy. I think in the third quarter, I noticed that for KFC, our pricing actually recovered pretty nicely compared to the previous quarter's trend.

嘿，謝謝你。晚上好，喬伊，再次恭喜阿德里安獲得新職位。也祝賀取得了非常好的成績。我的問題更多是關於近期的，因為我認為，喬伊，你對長期戰略非常清楚。我認為在第三季度，我注意到對於肯德基來說，與上一季的趨勢相比，我們的定價實際上恢復得相當好。

And I just want to check the thinking behind, i.e., do we see some elevated competition that make us less pressed by on pricing? Or have we done anything to really kind of support the pricing? So related to that, any thinking about the pricing strategy in the next couple of quarters? Thank you.

我只是想檢查背後的想法，即我們是否看到一些激烈的競爭使我們減輕了定價的壓力？或者我們採取了任何措施來真正支持定價？與此相關的是，您對未來幾季的定價策略有什麼想法嗎？謝謝。

Thank you, Lillian. So in terms of competition, we certainly see the restaurant industry continue to grow. And then the global players are still trying to invest aggressively into the China market and the current players are going deeper to lower Tier cities. And we also see some players rationalized promotional intensity in recent quarters and some aggressive players slowed down their store openings this year.

謝謝你，莉蓮。因此，就競爭而言，我們當然會看到餐飲業持續成長。然後，全球參與者仍在嘗試積極投資中國市場，目前的參與者正在深入低線城市。我們也看到一些商家在最近幾季合理化了促銷力度，而一些激進的商家則放慢了今年開店的速度。

Our strategy for KFC pricing and pizza pricing, actually, in the short term, long term, it's relatively transparent. For KFC, we try to have stable pricing. Our quarter -- this quarter is 38, I think. So that short term, it's slightly higher than the previous quarter, and it's higher than 2019 (corrected by company after the call). So, it's relatively stable.

我們肯德基的定價和披薩的定價策略，其實從短期來看，長期來看，是比較透明的。對於肯德基，我們努力保持穩定的定價。我們的季度——我想這個季度是 38。所以短期來看，它比上一季略高，並且比 2019 年更高（公司在電話會議後修正）。所以說，還是比較穩定的。

For Pizza Hut's pricing strategy, we are very clear from 2017 onward. We try to be a bit more mass market driven. So we have continued to lower the pricing. So that is more accessible. So in the short term, long term, that's pretty much our strategy in terms of pricing.

對於必勝客的定價策略，我們從2017年開始就非常明確了。我們嘗試更加以大眾市場為導向。所以我們繼續降低定價。所以這更容易獲得。因此，從短期來看，從長期來看，這幾乎就是我們的定價策略。

Thank you, Joey.

謝謝你，喬伊。

Ethan Wang, CLSA.

王伊森，里昂證券。

Thank you. Hello, Joey. Hello, Adrian. So my question is on the franchising model. I think I remember back in the Investor Day, we mentioned in the future, KFC franchisee store will be 15% to 20% of new stores. But obviously, we are now having a higher hope for the franchising model. So what makes this change? And if we expect more franchising model in the future, does that also mean we should expect lower CapEx spending going forward as well? Thank you.

謝謝。你好，喬伊。你好，阿德里安。所以我的問題是關於特許經營模式。我記得早在投資人日我們就提到，未來肯德基加盟店將佔新店的15%到20%。但顯然，我們現在對特許經營模式抱持更高的希望。那麼是什麼導致了這種變化呢？如果我們預期未來會有更多的特許經營模式，這是否也意味著我們應該預期未來資本支出也會降低？謝謝。

Thank you, Ethan. I guess, firstly, on your question regarding what made the change, right? I think the key reason is we're ready. For instance, for KFC, we have the new store model, KFC small town Mini. As we communicated previously, the capital expenditure for that store model is lower than RMB0.5 million or roughly 1/3 of our regular KFC store.

謝謝你，伊森。我想，首先，關於你的問題是什麼造成了改變，對嗎？我認為關鍵原因是我們已經準備好了。例如肯德基，我們有新的店模式，肯德基小鎮Mini。正如我們之前所傳達的，該店模式的資本支出低於 50 萬元人民幣，約為我們普通肯德基店的 1/3。

And for instance, for the newly rolled out Pizza Hut WOW, that model could have good potential in lower-tier cities as well, and be good for franchising. Obviously, within recent years, the franchisee quality in China has improved meaningfully as well. So overall, the store model readiness , our QA readiness, digital capabilities, and the readiness of the franchisees, is enabling us to speed up the franchise openings here in China.

例如，對於新推出的必勝客WOW來說，這種模式在低線城市也有很大的潛力，並且有利於特許經營。顯然，近年來，中國的加盟商品質也有了顯著的提升。總的來說，商店模式的準備情況、我們的品質保證準備情況、數位化能力以及加盟商的準備情況，使我們能夠加快在中國開設特許經營店的速度。

As we mentioned during the prepared remarks, for KFC, we aim to gradually increase our net new open percentage in franchise to 40% to 50% down the road over the next few years. For Pizza Hut, it takes a bit longer. But overall, we hope to achieve 20% to 30% of net new openings for Pizza Hut being franchise model over the next few years.

正如我們在準備好的演講中所提到的，對於肯德基來說，我們的目標是在未來幾年內逐步將特許經營淨新開比例提高到 40% 至 50%。對於必勝客來說，需要更長的時間。但總體而言，我們希望未來幾年必勝客的淨新開幕比例能夠達到 20% 至 30% 為特許經營模式。

And speaking of franchise unit economics, obviously, we want to remind everyone here that for each $100 of system sales generated by our franchisees, we recognized $40 to $45 as our revenue. That breakdown includes 6% to 7% of the 100 being our royalty fee collected and initial fee collected. Also the other $35 to $36 out of the $100 being the transaction with franchisees, the revenue from transaction with franchisees. That's mainly in the areas of COS and other services, including AMP and others.

說到特許經營單位經濟效益，顯然，我們想提醒大家，對於特許經營商每產生 100 美元的系統銷售額，我們確認 40 至 45 美元為我們的收入。該細目包括我們收取的特許權使用費和初始費用的 100 中的 6％ 至 7％。另外，這100美元中的另外35至36美元是與加盟商的交易，也就是與加盟商的交易收入。這主要是在 COS 和其他服務領域，包括 AMP 等。

And in terms of our cost, franchise expense, 3% of the license fee will need to be paid to Yum brands. And our expense for transaction with franchise fees is incurred around our costs. But in the future, there's a potential for us to retain certain margin in the services with franchisees because we have savings from Project Red Eye and Project Fresh Eye.

就我們的成本而言，特許經營費用，需要向百勝品牌支付3%的授權費。我們的特許經營費交易費用是圍繞著我們的成本產生的。但在未來，我們有可能在與特許經營商的服務中保留一定的利潤，因為我們從紅眼計畫和鮮眼計畫中節省了費用。

And lastly to your question whether that will lower our capital expenditure and in terms of our, I guess, ROIC, that's a real question. Over the long term, we do expect that will help enhance our ROIC, but in the near term, the impact will be immaterial because, as we mentioned, the overall pacing of step-up in franchising will be gradual over the next few years. Thank you, Ethan.

最後，關於你的問題，這是否會降低我們的資本支出，就我們的投資報酬率而言，我想，這是一個真正的問題。從長遠來看，我們確實預計這將有助於提高我們的投資回報率，但在短期內，影響並不重大，因為正如我們所提到的，特許經營的整體步伐將在未來幾年內逐步推進。謝謝你，伊森。

Thank you, Adrian. And congratulations on the results. Thank you.

謝謝你，阿德里安。祝賀結果。謝謝。

Thank you.

謝謝。

Michelle Cheng, Goldman Sachs.

米歇爾鄭，高盛。

Hi, Joey, Adrian. Thanks for having the time to ask question. So my question is still more on the short term. I think, Adrian, you earlier mentioned that quarter-to-date, we didn't see a significant changes yet, even we are positive on stimulus. But considering last fourth quarter, the base supposedly should be easier. So are we still seeing like incremental sequential improvement in fourth quarter trend?

嗨，喬伊，阿德里安。感謝您有時間提問。所以我的問題更多的是短期的。我認為，阿德里安，您之前提到過，截至目前，我們還沒有看到重大變化，即使我們對刺激措施持積極態度。但考慮到去年第四季度，基礎應該會更容易。那麼，我們是否仍看到第四季趨勢的逐步改善？

And also, looking ahead, when we consider both KFC and Pizza Hut, you look at KFC, the same-store sales is still much more resilient than compared with the pre-COVID levels still much closer. So when we look for same-store sales growth going forward, are we seeing that Pizza Hut's pricing trend will be gradually stabilized and KFC actually have room to see the pricing improvement next year? Thank you.

而且，展望未來，當我們考慮肯德基和必勝客時，你看看肯德基，同店銷售仍然比新冠疫情前的水平更有彈性，仍然更接近。那麼，當我們展望未來的同店銷售成長時，我們是否會看到必勝客的定價趨勢將逐漸穩定，而肯德基明年實際上還有定價改善的空間？謝謝。

Thank you, Michelle, for your question. As I mentioned in the prepared remarks, we are quite encouraged by the stimulus policies. Obviously, it will take time to influence consumer behavior and impact businesses like ours. I'd like to give some more color into the quarter four performance, especially in the top line. So entering quarter four, as I mentioned in the prepared remarks, we've not observed significant changes in consumer sentiment nor in the macro situation.

謝謝米歇爾的提問。正如我在準備好的發言中提到的，我們對刺激政策感到非常鼓舞。顯然，影響消費者行為並影響像我們這樣的企業需要時間。我想為第四季的表現提供更多的色彩，尤其是在營收方面。因此，進入第四季度，正如我在準備好的發言中提到的那樣，我們沒有觀察到消費者信心和宏觀情況發生重大變化。

In terms of the October Golden Week holiday, our SSSG slightly improved year-over-year during the Golden Week. However, consumer spending remained cautious post-holiday. I think that's a common phenomenon we observed for this year after a long holiday, that consumer spending returned to be cautious for some time after the long holiday.

就十月黃金周假期而言，我們的同店銷售成長在黃金週期間比去年同期略有改善。然而，節後消費者支出仍保持謹慎。我認為這是我們今年長假後觀察到的普遍現象，長假後一段時間內消費者支出恢復謹慎。

Overall, speaking to quarter four, we still face some top-line pressure, but we are confident in our ability to outperform peers in both the good times and bad. And we are also reasonably confident that our quarter four same-store transaction index will continue to be positive for another quarter.

整體而言，就第四季而言，我們仍然面臨一些營收壓力，但我們對無論順境或逆境都有能力超越同業充滿信心。我們也有理由相信，第四季的同店交易指數將在另一個季度繼續保持正值。

Lastly, but importantly, we really focus on things within our control. So, we continue to execute on our strategy, which has proven to be quite effective to capture incremental traffic and protect our margins. We believe we are well positioned to continue to capture consumer needs with our flagship products, stunning value, deliver strategy and breakthrough models.

最後但重要的是，我們真正專注於我們控制範圍內的事情。因此，我們繼續執行我們的策略，事實證明，該策略對於捕獲增量流量和保護我們的利潤非常有效。我們相信，我們有能力繼續透過我們的旗艦產品、驚人的價值、交付策略和突破性的模式來滿足消費者的需求。

I think to your second part of the question relates to the difference between KFC and Pizza Hut. Obviously, given the consumers are more rationalized in their spending, Pizza Hut, with their higher per-person spending, currently is facing a little bit of bigger headwinds compared to KFC, which really has a super robust resilient model. However, I think we're doing all the right things for Pizza Hut, lowering the TAs, lowering the per person spending and also developing new store models such as Pizza Hut WOW, which is even more accessible.

我認為你問題的第二部分涉及肯德基和必勝客之間的區別。顯然，鑑於消費者的消費更加理性，人均消費較高的必勝客目前面臨著比肯德基更大的阻力，而肯德基確實擁有超強的彈性模式。然而，我認為我們正在為必勝客做所有正確的事情，降低TA，降低人均支出，並開發新的商店模式，例如必勝客WOW，這是更容易接近的。

And as we mentioned in the prepared remarks, for both this quarter and the previous quarter, that we do see some initial encouraging results for WOW. But particularly on the dine-in side, we see a meaningful increase in SSSG there for WOW.

正如我們在準備好的評論中所提到的，對於本季度和上一季度，我們確實看到了 WOW 的一些初步令人鼓舞的結果。但特別是在堂食方面，我們看到 WOW 的同店銷售成長顯著增加。

Obviously, it's only been five months since we converted the first WOW store back in May. So, we're still kind of iterating a development store model. Hopefully, over a steady pace, the Pizza Hut WOW model will enable Pizza Hut to get to a different and much larger total addressable market.

顯然，距離我們五月改造第一家WOW商店才過了五個月。所以，我們仍然在迭代開發商店模型。希望必勝客 WOW 模式能夠穩定地推進，使必勝客進入一個不同的、更大的總目標市場。

And I think the final part of your question is more on the midterm for next year on the TA for Pizza Hut and KFC. As we mentioned, for KFC, we looked at the TA. We expect the TA to be steady over the mid-to-long run, although there might be some short-term fluctuations depending on macro and competitive dynamics.

我認為你問題的最後一部分更多的是關於明年必勝客和肯德基的技術援助中期選舉。正如我們所提到的，對於肯德基，我們關注的是 TA。我們預計技術援助在中長期內將保持穩定，儘管根據宏觀和競爭動態可能會出現一些短期波動。

For Pizza Hut, it's our strategy to lower the TA and we have been doing that reasonably effectively with positive transaction growth over the past quarters. And we look to continue that strategy down the road as well. Thank you, Michelle.

對於必勝客來說，降低TA是我們的策略，我們一直在相當有效地做到這一點，並且在過去幾個季度實現了積極的交易成長。我們也希望繼續這項戰略。謝謝你，米歇爾。

Thank you, Adrian. I'll just add some color about the Pizza Hut same-store sales. So, the Pizza Hut WOW model, its making good progress, but one step at a time. As Adrian mentioned, we see very nice improvement in the dine-in same-store sales.

謝謝你，阿德里安。我將添加一些有關必勝客同店銷售的資訊。所以，必勝客WOW模式正在取得良好進展，但一步一腳印。正如阿德里安所提到的，我們看到同店堂食銷售有了很大的改善。

And out of the 150 Pizza WOW stores, actually 1/3, so 50 stores, are in Guangdong in the South. And because of the scale of Pizza Hut WOW stores relative to Guangdong total store, we have seen some meaningful improvement of the Guangdong same-store sales, which is exciting.

而Pizza WOW的150家店裡，其實有1/3，也就是50家店，都在南方的廣東。而且由於必勝客WOW門市相對於廣東總門市的規模，我們看到廣東同店銷售出現了一些有意義的改善，這是令人興奮的。

But again, we have over 3,600 stores Pizza Hut stores around the country right now. So, it will take some time. But the progress is good. Last but not least, quarter four is a small quarter. So, a lot of the numbers could swing either way. Thank you so much.

但同樣，我們目前在全國擁有 3,600 多家必勝客店。所以，這需要一些時間。但進展還是不錯的。最後但並非最不重要的一點是，第四季是一個小季度。因此，許多數字可能會向任何方向波動。太感謝了。

Thank you, Joey, Adrian, for the details.

謝謝喬伊、阿德里安提供的詳細資料。

Thank you.

謝謝。

Sijie Lin, CICC.

林思傑，中金公司。

Thank you, Joey and Adrian. Congrats on another strong quarter and generous shareholder returns. I have one question. So, we have seen some food safety cases overseas. So how do we balance on one hand the cost control, and on the other hand, the quality of the product and service? Thank you.

謝謝你們，喬伊和阿德里安。祝賀又一個強勁的季度和豐厚的股東回報。我有一個問題。所以，我們在國外也看到了一些食品安全案例。那我們該如何平衡一方面成本控制和另一方面產品和服務的品質呢？謝謝。

Thank you, Sijie. Well, first of all, I presume you refer to food safety cases overseas that's caused by raw onions. First of all, we only use cooked onions, so that should not have any similar implications on our business. When it comes to the overall food safety versus cost control, it's always our strong philosophy and operation that we put food safety at the most important position. We are fully compliant with regulations. And also, if there's any issue, it's reported directly to myself, and then we also report it to our Board. We have a food safety committee on this one.

謝謝你，思傑。嗯，首先，我想你指的是國外因生洋蔥引起的食品安全案例。首先，我們只使用煮熟的洋蔥，因此這不會對我們的業務產生任何類似的影響。當談到整體食品安全與成本控制時，我們始終將食品安全放在最重要的位置，這是我們堅定的理念和運作。我們完全遵守法規。而且，如果有任何問題，會直接向自己報告，然後我們也會向董事會報告。我們為此設立了一個食品安全委員會。

So we absolutely treat it with the highest importance and priority. And it's reflected in a holistic quality assurance system and our comprehensive food safety process within our entire value chain from suppliers to logistics all the way to our stores.

因此，我們絕對以最高的重要性和優先順序對待它。這體現在我們從供應商到物流一直到我們商店的整個價值鏈中的整體品質保證系統和全面的食品安全流程。

And last, but not least, I just want to reassure you that our investment in our digital supply chain in the last many years have paid off. We have very good visibility, which means digital visibility of our food safety without inventory. And to the point that stock replenishment to the stores is automatic. So, it's absolutely important.

最後但並非最不重要的一點是，我只是想向您保證，過去多年來我們對數位供應鏈的投資已經得到回報。我們擁有非常好的可見性，這意味著我們的食品安全無需庫存即可實現數位可見性。且商店的庫存補充是自動的。所以，這絕對重要。

Last but not least, we have more than 300-plus QA employees spread across China, focusing on this important matter in addition to the technology that we have invested to monitor this particular important priority. Thank you so much.

最後但並非最不重要的一點是，我們在中國擁有 300 多名 QA 員工，除了我們投資用於監控這項特別重要優先事項的技術外，他們還專注於這一重要事項。太感謝了。

Thank you, Joey.

謝謝你，喬伊。

Anne Ling, Jefferies.

安妮林，杰弗里斯。

Hey, hi, thank you, management team. Just a question on KCOFFEE. Now with 500 stores, what we hear on the ground is that it's been doing amazingly good. So I just want to check whether you can share with us the incremental benefit because it's a side-by-side store with your existing KFC. So maybe would you share with us what is the incremental same-store benefit? And also, in terms of profitability, if there's anything that you can share with us?

嘿，嗨，謝謝管理團隊。只是一個關於 KCOFFEE 的問題。現在擁有 500 家商店，我們從實地了解到，它的業績非常好。所以我只是想看看您是否可以與我們分享增量收益，因為它是與您現有的肯德基並列的商店。那麼您能否與我們分享同店增量收益是什麼？另外，在獲利能力方面，您有什麼可以與我們分享的嗎？

Thank you, Anne. Well, long story short. We have observed the incremental sales uplift to the store is a single-digit sales uplift, and it does produce incremental profit because of our very unique operating model. So that is the short answer.

謝謝你，安妮。好吧，長話短說。我們觀察到商店的增量銷售成長是個位數的銷售成長，並且由於我們非常獨特的營運模式，它確實產生了增量利潤。這就是簡短的答案。

In terms of a longer answer, we are indeed very excited. And today actually, we opened our 500th stores in Shanghai, right next to our headquarters and in a very prime area in Xu Jia Hui ,Shanghai. The increase of the sales, or the number of cups, is 30% plus, roughly. And this is very exciting, especially when we take the background of the overall market same-store sales in coffee as the background. And the opportunity here is a significant majority of our Yum China members have yet to try a KCOFFEE.

就更長的答案而言，我們確實非常興奮。事實上，今天我們在上海開設了第 500 家門市，就在我們總部旁邊，位於上海徐家彙的黃金地段。銷量或杯子數量的增長約為 30% 以上。這是非常令人興奮的，尤其是當我們以咖啡整體市場同店銷售為背景時。這裡的機會是我們百勝中國的絕大多數會員還沒有嘗試過 KCOFFEE。

And in our side-by-side model, the cross-sales from KFC to KCOFFEE is amazing. So, we are excited about it. And, it took us 10 years from selling coffee to build the first KCOFFEE cafe, but we are seeing really good progress. We had 100 stores in March. And now we have 500 stores, and then by year-end we expect to exceed 600-plus stores.

在我們的平行模型中，從肯德基到 KCOFFEE 的交叉銷售是驚人的。所以，我們對此感到興奮。而且，從賣咖啡到建造第一家 KCOFFEE 咖啡館，我們花了 10 年時間，但我們看到了非常好的進展。3月份我們有100家商店。現在我們有500家門市，預計到年底我們的門市數量將超過600家。

And we are expanding to campuses and transportation locations as well. The food is good. We have very distinctive coffee -- sparkling coffee, the float and then the egg tart or the gigantic egg tart. So, things are looking very exciting and positive. Thank you, Anne.

我們也正在擴展到校園和交通地點。食物很好。我們有非常有特色的咖啡——起泡咖啡、漂浮咖啡，然後是蛋塔或巨型蛋塔。所以，事情看起來非常令人興奮和積極。謝謝你，安妮。

Thank you.

謝謝。

Walter Woo, CMBI.

沃爾特吳，CMBI。

Hello, Joey and Adrian, can you hear me?

你好，喬伊和阿德里安，你們聽得到我說話嗎？

Yes.

是的。

Okay. Thank you. Congratulations on your resilient results, and thanks again for all the efforts. So my question is about the Pizza WOW store format. So, can you comment on the sales and margin performance of the Pizza WOW stores and also the midterm room for potential growth? And are they suitable for all the regions in China?

好的。謝謝。恭喜您取得了堅韌的成果，並再次感謝您所做的一切努力。所以我的問題是關於 Pizza WOW 商店的格式。那麼，您能否評論一下Pizza WOW店的銷售和利潤表現以及中期潛在成長空間？是否適合中國所有地區？

And also, I remember the last time when I dined in the WOW stores, the menu looked really appealing and there were lots of choices and the prices are cheap. However, when I really ordered, many of the items were just not available. So this disappointed me a little bit.

而且，我記得上次在WOW店裡吃飯時，菜單看起來很吸引人，有很多選擇，而且價格很便宜。然而，當我真正訂購時，很多商品都沒有貨。所以這讓我有點失望。

Do you think this is a problem? And how do you see the WOW store format now and going forward? And also, we are also heard of your new store format called KPRO. Are there any infos that you are ready to share? Thank you.

你認為這是一個問題嗎？您如何看待WOW商店現在和未來的格局？此外，我們也聽說了你們的新店款 KPRO。您準備好分享任何資訊嗎？謝謝。

Thank you. For Pizza WOW, I mean, let's take a step back. It's really an innovation that happened only five months ago. So, I think our speed of going out is very fast already. We are at about 150 stores. And the breakthrough model is very exciting. As I mentioned in the prepared remarks, the impact on the dine-in same store sales is very exciting. There's more work to be done for the delivery side.

謝謝。對於 Pizza WOW，我的意思是，讓我們退後一步。這確實是五個月前發生的創新。所以，我覺得我們走出去的速度已經很快了。我們大約有 150 家商店。而且突破性的模型非常令人興奮。正如我在準備好的發言中提到的，對堂食同店銷售的影響非常令人興奮。交付方面還有更多工作要做。

And then in terms of the profit, we continue to work on it. Well, let me just bring back our dual focus. Innovations and operational efficiency. Operational efficiency and innovation. It goes both ways. So, for our core business, we achieve operational efficiency, and we take the savings and we invest in innovation.

然後在利潤方面，我們繼續努力。好吧，讓我帶回我們的雙重焦點。創新和營運效率。營運效率和創新。這是雙向的。因此，對於我們的核心業務，我們實現了營運效率，我們利用節省的資金並投資於創新。

For Pizza WOW, we have the innovation first, and that is reflected in exciting sales. But the operational efficiency will come later, which I hope addresses your disappointment of the product because it does not happen automatically.

對於 Pizza WOW，我們首先擁有創新，這體現在令人興奮的銷售上。但營運效率會在稍後出現，我希望這能解決您對產品的失望，因為它不會自動發生。

And that's another reason why whenever we turn around business, KFC or later on Pizza Hut, we always focus on sales first, profit later, one step at a time. So, for Pizza WOW, go back to our framework, we have the innovation first and then operational efficiency later. So, I believe that we are making good progress. And I'm very happy to see what we achieved so far for Pizza WOW, but there is a lot more work to be done. It's only been five months.

這就是為什麼每當我們扭轉業務時，無論是肯德基還是後來的必勝客，我們總是先專注於銷售，然後再專注於利潤，一步一腳印。所以，對於Pizza WOW，回到我們的框架，我們首先是創新，然後是營運效率。因此，我相信我們正在取得良好進展。我很高興看到我們迄今為止為 Pizza WOW 取得的成就，但還有很多工作要做。這才過去五個月。

Regarding KPRO, we have been opening a small number of KPROs in Hangzhou, Shanghai, Guangzhou. And it's still small right now, and obviously, targets health conscious consumers with products like panini, energy bowls and smoothies, very healthy choices.

關於KPRO，我們已經在杭州、上海、廣州開設了少量的KPRO。目前它的規模仍然很小，顯然，它的目標消費者是注重健康的消費者，其產品包括帕尼尼、能量碗和冰沙等非常健康的選擇。

And it's still in its pilot stage, by the way. So, there's still a lot to be learned. But that's one thing that we are already doing, which is sharing learning from KCOFFEE again it's a side by side. The new stores are side by side with KFC so that we can share staff. We can share some investment of CapEx, but it's still early days. Okay. Thank you.

順便說一句，它仍處於試驗階段。所以，還有很多東西要學習。但這是我們已經在做的一件事，就是再次並肩分享從 KCOFFEE 學到的知識。新店與肯德基毗鄰，這樣我們就可以共享員工。我們可以分享一些資本支出的投資，但現在還處於早期階段。好的。謝謝。

Thank you.

謝謝。

Linda Huang, Macquarie.

琳達·黃，麥格理。

Hi, Management, can you hear me? Yes. My question is regarding for our capital allocation. We appreciate that the company stepped up the total return to $4.5 billion. And please correct me if I wrong because based on your cash flow, right? I found that every single year, our free cash flow will be around $700 million to $800 million. But if we return back to $1.5 billion, that means that probably in three years, we can use up all our cash in our balance sheet.

嗨，管理階層，你聽得到我說話嗎？是的。我的問題是關於我們的資本配置。我們讚賞該公司將總回報率提高至 45 億美元。如果我錯了，請糾正我，因為基於你的現金流，對吧？我發現每年我們的自由現金流約為 7 億至 8 億美元。但如果我們回到 15 億美元，這意味著可能在三年內，我們可以用完資產負債表中的所有現金。

So I'm just wondering, based on this capital return, does that mean that for the next three years, we will just purely focus on the organic growth, and we never think about anything like a big M&A will happen in the next three years or we can strike the balance. If there is a big deal coming up, and we are willing to take some debt to take any M&A opportunity. So that's my question. Thank you.

所以我只是想知道，基於這個資本回報，這是否意味著在接下來的三年裡，我們將只專注於有機增長，而我們從不考慮未來三年內會發生大型併購之類的事情或者我們可以取得平衡。如果有大交易即將發生，我們願意承擔一些債務來抓住任何併購機會。這就是我的問題。謝謝。

Thank you, Linda. I guess there are two parts of the question. Firstly, regarding the sustainability of our capital return. Obviously, we're very confident in our ability to generate cash. And as we mentioned, we have a dual focus on our business growth and return to shareholders, a dual focus again. For 2024 to 2026, we plan to step up our return from $3 billion to $4.5 billion. That includes the $1.5 billion for this year 2024.

謝謝你，琳達。我想這個問題有兩個部分。首先，關於我們資本回報的可持續性。顯然，我們對自己產生現金的能力非常有信心。正如我們所提到的，我們雙重關注業務成長和股東回報，再次雙重關注。2024 年至 2026 年，我們計劃將回報率從 30 億美元提高到 45 億美元。其中包括 2024 年的 15 億美元。

And as the question regarding the longer term, right, obviously, as you correctly pointed out, we probably cannot do $1.5 billion every year forever, but I think in terms of our company's philosophy, we have always been shareholder value conscious.

至於關於長期的問題，顯然，正如您正確指出的那樣，我們可能無法永遠每年實現 15 億美元，但我認為就我們公司的理念而言，我們一直具有股東價值意識。

So we'll continue to evaluate how best to deliver long-term shareholder value. And obviously, I will not be surprised down the road, we will be able to return a meaningful portion of our free cash flow generated each year to our shareholders beyond 2026. Obviously, we have no concrete plans yet, but we'll provide some more concrete guidance down the road at the appropriate time.

因此，我們將繼續評估如何最好地實現長期股東價值。顯然，我不會感到驚訝，在 2026 年之後，我們將能夠將每年產生的自由現金流的很大一部分返還給股東。顯然，我們還沒有具體的計劃，但我們將在適當的時候提供一些更具體的指導。

On your second question regarding M&A and strategic opportunities, we have been very prudent in terms of our M&A approach. Obviously, we prudently and proactively evaluate potential M&A opportunities, both historically as well as in the future. And we'll only go ahead with M&A to the extent that makes sense and creates value for shareholders. So obviously, for each of the M&A, as you know, we actually have a robust discussion with our board as well.

關於你提到的第二個問題，關於併購和策略機遇，我們在併購方面一直非常謹慎。顯然，我們會謹慎、主動地評估歷史和未來的潛在併購機會。我們只會在有意義並為股東創造價值的情況下進行併購。顯然，正如您所知，對於每一次併購，我們實際上也與董事會進行了深入的討論。

To the extent that a very major M&A comes out and then to the extent, if it makes a lot of sense to Yum China, then we may or may not adjust our capital return plan. Obviously, we may or may not take on debt to fund M&A depending on the size of the M&A. Again, we are very prudent in terms of our M&A approach. We'll only do M&As to the extent that it's sensible to our shareholders. Hopefully, that will address your questions. Thank you, Linda.

如果出現非常重大的併購，如果這對百勝中國很有意義，那麼我們可能會也可能不會調整我們的資本回報計畫。顯然，我們可能會也可能不會承擔債務來為併購提供資金，這取決於併購的規模。再次強調，我們的併購方式非常謹慎。我們只會在對股東合理的範圍內進行併購。希望這能解決您的問題。謝謝你，琳達。

Okay. Thank you very much.

好的。非常感謝。

There are no further questions at this time. I'll now hand back to Ms. Lip for closing remarks.

目前沒有其他問題。現在我將請利普女士致閉幕詞。

Thank you. Thank you for joining the call today. For further questions, please reach us through the contact information in our earnings release and on our website. Thank you.

謝謝。感謝您今天加入通話。如有其他問題，請透過我們的財報和網站上的聯絡資訊與我們聯絡。謝謝。

Thank you.

謝謝。

Thank you.

謝謝。

That does conclude our conference for today. Thank you for participating. You may now disconnect.

我們今天的會議到此結束。感謝您的參與。您現在可以斷開連線。