Revenue: Reached USD 3 billion, marking an all-time high.
System Sales Growth: Increased by 6% year-over-year on top of 17% growth the previous year.
Core Operating Profit: Improved to USD 396 million from USD 392 million last year.
Adjusted Operating Profit: Noted as the second highest in the 30 quarters since Yum China’s spin-off.
New Stores: Opened 378 net new stores, surpassing the milestone of 15,000 stores.
Shareholder Returns: Returned a record amount through share repurchases and cash dividends totaling USD 745 million.
Future Guidance
Store Openings: Aims to open another 5,000 stores by 2026, with about 30% of new stores this year expected in new cities or strategic locations.
Franchising: Estimated 15% to 20% of net new stores in the next 3 years will come from franchising, with the mix reaching 19% at KFC in Q1.
Financial Projections: Committed to returning $1.5 billion to shareholders in 2024; intends to keep G&A ratio around 5% for the full year.
Operational Efficiency: Continues to push for lower CapEx in new store formats, aiming for a payback period of 2 years for KFC and 2 to 3 years for Pizza Hut.
Store Expansion: Anticipates opening 1,500 to 1,700 net new stores in the current year.
Trends, Market Conditions, Sentiment
Overall Sentiment: Positive, demonstrated by solid performance in a challenging environment and commitment to growth and shareholder return.
Market Conditions: Rapid development in China with significant white space for expansion, particularly in Tier 2 cities and below.
Trends:
Increased focus on affordability with simultaneous investment in high-ticket items.
Strategic approach to widening price points to capture market shares across different consumer cohorts.
Continued emphasis on delivery services with a notable growth in sales, especially from smaller orders.
Incremental traffic growth strategies through flexible store models and franchise partnerships.
Sentiment on China: Optimistic about long-term consumption upgrades and urbanization, with a bullish outlook on the China market despite some “select rhythm” reports suggesting otherwise.
Notable Quotes
”We see the China market as offering us white space for years to come.” - Reflects on the abundant growth opportunities in China.
”It took us 25 years to build the first 5,000 stores in China, 8 years for the next 5,000, and just 4 years for the last 5,000 stores.” - Highlights the accelerating rate of expansion.
”We are committed to returning $1.5 billion to shareholders in 2024 and continue to drive our long-term sustainable growth.” - Shows dedication to shareholder returns.
”Our delivery business remains strong. Delivery sales have grown double digits every year for the past decade.” - Underscores the sustained success and growth potential of the delivery segment.
