Yum China Reports First Quarter Results
PR Newswire
SHANGHAI, April 30, 2025
Same-Store Sales Advanced to 100% of Prior-Year Levels for the First Time Since the First Quarter of 2024
9th Consecutive Quarter of Same-Store Transaction Growth
OP Margin Increased 80 Basis Points to 13.4% and Restaurant Margin Expanded 100 Basis Points
Operating Profit Up 7%; Diluted EPS Up 8%, or 12% Excluding F/X and Mark-to-market Impact
SHANGHAI, April 30, 2025 /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) today reported unaudited results for the first quarter ended March 31, 2025.
First Quarter Highlights
-- Total system sales grew 2% year over year ("YoY"), excluding foreign
currency translation ("F/X"). The growth was primarily attributable to 4%
of net new unit contribution, partially offset by one fewer business day
in 2025, as 2024 was a leap year.
-- Same-store sales advanced to 100% of the prior year's level for the first
time since the first quarter of 2024.
-- Same-store transactions grew 6% YoY, the ninth consecutive quarter of
growth.
-- Total revenues increased 1% YoY to $3.0 billion (a 2% increase excluding
F/X).
-- The Company opened 247 net new stores in the quarter, with 62 net new
stores opened by franchisees, accounting for 25%.
-- Total store count reached 16,642 as of March 31, 2025, including 11,943
KFC stores and 3,769 Pizza Hut stores.
-- Delivery sales grew 13% YoY, maintaining the double-digit annual growth
Yum China has sustained over the past 11 years. Delivery contributed
approximately 42% of KFC and Pizza Hut's Company sales.
-- Operating profit grew 7% YoY to $399 million. Core operating profit grew
8% YoY.
-- OP margin was 13.4%, an increase of 80 basis points YoY, supported by
restaurant margin expansion and G&A savings.
-- Restaurant margin was 18.6%, an increase of 100 basis points YoY, driven
primarily by savings in Food and Paper cost and Occupancy and Other
Operating expenses.
-- Diluted EPS increased 8% YoY to $0.77, a record-high for the first
quarter, or up 10% YoY excluding F/X. Excluding the negative impact of
$0.02 from F/X and the mark-to-market equity investments in the first
quarters of 2025 and 2024, Diluted EPS increased 12% YoY.
-- Returned $262 million to shareholders through $172 million in share
repurchases and $90 million in cash dividends.
-- Digital sales reached $2.6 billion, with digital ordering accounting for
approximately 93% of total Company sales.
-- Total membership of KFC and Pizza Hut exceeded 540 million, up 12% versus
the prior year. Member sales accounted for approximately 66% of KFC and
Pizza Hut's system sales in aggregate.
CEO Comments
Joey Wat, CEO of Yum China, commented, "We achieved a solid first-quarter performance amid an uncertain market environment. These results underscore the resilience of our business and the success of our dual-focus strategy, emphasizing innovation and operational efficiency. KFC continued to show resilience, delivering solid growth and profitability through both good times and bad. Pizza Hut continued its positive momentum after reaching what we believe was an inflection point. Our innovations touch every aspect of the business. KFC launched the spicy flavor of Original Recipe Chicken for the first time since we entered China in 1987. Pizza Hut added fresh twists to its classic Super Supreme flavor, offering it on burgers and pasta in addition to pizzas."
Wat continued, "Our breakthrough model, KCOFFEE Cafe, reached the milestone of 1,000 locations. This business model leverages KFC's store space, resources and membership to attract additional traffic. For Pizza Hut, building on the success of WOW store conversions, we have opened brand new WOW stores in lower tier cities, where capex can be as low as half of a regular Pizza Hut store. Our teams are also continuously exploring ways to create more operational efficiency through innovative technologies, such as robotics and Generative AI. In the current evolving market environment, we remain steadfast in achieving our full year targets, including 1,600-1,800 net new stores, while creating sustainable, long-term value for our shareholders."
Key Financial Results
First Quarter
------------------------------
%/ppts Change
----------------
2025 2024 Reported Ex F/X
----- ----- -------- ------
System Sales Growth (1) (%) 2 6 NM NM
Same-Store Sales Growth (1) (%) Even (3) NM NM
Operating Profit ($mn) 399 374 +7 +8
Adjusted Operating Profit (2) ($mn) 399 374 +7 +8
Core Operating Profit (2) (3) ($mn) 405 374 NM +8
OP Margin (4) (%) 13.4 12.6 +0.8 +0.8
Core OP Margin (2) (5) (%) 13.4 12.6 NM +0.8
Net Income ($mn) 292 287 +2 +3
Adjusted Net Income (2) ($mn) 292 287 +2 +3
Diluted Earnings Per Common Share ($) 0.77 0.71 +8 +10
Adjusted Diluted Earnings Per Common
Share (2) ($) 0.77 0.71 +8 +10
---------------------------------------- ----- ----- -------- ------
([1]) System sales and same-store sales percentages exclude the impact
of F/X. Effective January 1, 2018, temporary store closures are
normalized in the same-store sales calculation by excluding the period
during which stores are temporarily closed. ([2]) See "Reconciliation of
Reported GAAP Results to Non-GAAP Measures" included in the accompanying
tables of this release for further details. ([3]) Core operating profit
is defined as operating profit adjusted for special items, further
excluding items affecting comparability and the impact of F/X. The
Company uses core operating profit for the purposes of evaluating the
performance of its core operations. Current period amounts are derived
by translating results at average exchange rates of the prior year
period. ([4]) OP margin refers to operating profit as a percentage of
total revenues. ([5]) Core OP margin refers to core operating profit as
a percentage of total revenues excluding F/X.
Note: All comparisons are versus the same period a year ago.
Percentages may not recompute due to rounding.
NM refers to not meaningful.
Capital Returns to Shareholders
-- The Company is on track to return a total of $3 billion to shareholders
in 2025 through 2026, in addition to the $1.5 billion delivered to
shareholders in 2024. The average annual amount of capital return over
the three years is around 9% of our market capitalization as of April 29,
2025.
-- In the first quarter, the Company returned $262 million in capital to
shareholders through $172 million in share repurchases and $90 million in
cash dividends. The Company repurchased 3.6 million shares of common
stock during the quarter.
-- As of March 31, 2025, approximately $1.1 billion remained available for
future share repurchases under the current authorization program.
-- The Board declared a cash dividend of $0.24 per share on Yum China's
common stock, payable on June 18, 2025 to shareholders of record as of
the close of business on May 28, 2025.
KFC
First Quarter
--------------------------------
%/ppts Change
----------------
2025 2024 Reported Ex F/X
------ ------ -------- ------
Restaurants 11,943 10,603 +13 NM
System Sales Growth (%) 3 7 NM NM
Same-Store Sales Growth
(%) Even (2) NM NM
Total Revenues ($mn) 2,246 2,230 +1 +2
Operating Profit ($mn) 386 372 +4 +5
Core Operating Profit ($mn) 391 372 NM +5
OP Margin (%) 17.2 16.7 +0.5 +0.5
Restaurant Margin (%) 19.8 19.3 +0.5 +0.5
---------------------------- ------ ------ -------- ------
-- System sales for KFC grew 3% YoY. Same-store sales reached 100% of the
prior year's level. Same-store transactions grew 4% YoY, the ninth
consecutive quarter of growth. Ticket average was 4% lower YoY, driven
mainly by wider price ranges to expand the addressable market.
-- Delivery sales grew 13% YoY, contributing approximately 43% of KFC's
Company sales.
-- KFC opened 295 net new stores during the quarter, with 122 net new stores
opened by franchisees, accounting for 41%. Total store count reached
11,943 as of March 31, 2025.
-- Operating profit grew 4% YoY to $386 million. Core operating profit
increased 5% YoY.
-- OP margin was 17.2%, an increase of 50 basis points YoY.
-- Restaurant margin was 19.8%, expanding 50 basis points YoY, primarily due
to favorable commodity prices and simplified operations, partially offset
by the impact of increased value-for-money offerings, wage inflation and
higher rider cost due to the increased delivery mix.
Pizza Hut
First Quarter
------------------------------
%/ppts Change
----------------
2025 2024 Reported Ex F/X
----- ----- -------- ------
Restaurants 3,769 3,425 +10 NM
System Sales Growth (%) 2 4 NM NM
Same-Store Sales Growth (%) Even (5) NM NM
Total Revenues ($mn) 595 595 Even +1
Operating Profit ($mn) 60 47 +27 +29
Core Operating Profit ($mn) 61 47 NM +29
OP Margin (%) 10.1 7.9 +2.2 +2.2
Restaurant Margin (%) 14.4 12.5 +1.9 +1.9
---------------------------- ----- ----- -------- ------
-- System sales for Pizza Hut grew 2% YoY. Same-store sales reached 100% of
the prior year's level. Same-store transactions grew 17% YoY, the ninth
consecutive quarter of growth. Ticket average was 14% lower YoY,
consistent with our strategy and driven mainly by better value-for-money.
-- Pizza Hut opened 45 net new stores during the quarter, with 15 net new
stores opened by franchisees, accounting for 33%. Total store count
reached 3,769 as of March 31, 2025.
-- Delivery sales grew 13% YoY, contributing approximately 42% of Pizza
Hut's Company sales.
-- Operating profit grew 27% to $60 million. Core operating profit increased
29% YoY.
-- OP margin was 10.1%, an increase of 220 basis points YoY.
-- Restaurant margin was 14.4%, expanding 190 basis points YoY, primarily
due to favorable commodity prices, simplified operations and automation,
partially offset by wage inflation and higher rider cost due to the
increased delivery mix.
Outlook
-- The Company targets approximately 1,600 to 1,800 net new stores and
capital expenditures in the range of approximately $700 million to $800
million for the 2025 fiscal year.
-- The Company plans to return $3 billion to shareholders in 2025 through
2026, adding to the $1.5 billion it delivered to shareholders in 2024.
-- The Company anticipates the franchise mix of net new stores will
gradually increase to 40-50% for KFC and 20-30% for Pizza Hut over the
next few years.
Note on Non-GAAP Measures
Reported GAAP results include items that are excluded from non-GAAP measures. See "Reconciliation of Reported GAAP Results to Non-GAAP Measures" and "Segment Results" within this release for non-GAAP reconciliation details.
Conference Call
Yum China's management will hold an earnings conference call at 7:00 a.m. U.S. Eastern Time on Wednesday, April 30, 2025 (7:00 p.m. Beijing/Hong Kong Time on Wednesday, April 30, 2025).
A live webcast of the call may be accessed at https://edge.media-server.com/mmc/p/jnrqo5nh.
To join by phone, please register in advance of the conference through the link provided below. Upon registering, you will be provided with participant dial-in numbers and a unique access PIN.
Pre-registration Link: https://register-conf.media-server.com/register/BId802dc952e3f40ed86f25771a575618c
A replay of the webcast will be available two hours after the event and will remain accessible until April 29, 2026. Additionally, earnings release accompanying slides will be available at the Company's Investor Relations website http://ir.yumchina.com.
For important news and information regarding Yum China, including our filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange, visit Yum China's Investor Relations website at http://ir.yumchina.com. Yum China uses this website as a primary channel for disclosing key information to its investors, some of which may contain material and previously non-public information.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including under "Outlook." We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "project," "likely," "will," "continue," "should," "forecast," "outlook," "commit" or similar terminology. These statements are based on current estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable under the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Forward-looking statements include, without limitation, statements regarding the future strategies, growth, business plans, investments, store openings, franchise mix of net new stores, capital expenditures, dividend and share repurchase plans, CAGR for system sales, operating profit and EPS, earnings, performance and returns of Yum China, anticipated effects of population and macroeconomic trends, pace of recovery of Yum China's business, the anticipated effects of our innovation, digital and delivery capabilities and investments on growth and beliefs regarding the long-term drivers of Yum China's business. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks and uncertainties that are difficult to predict and could cause our actual results or events to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or assumptions will be achieved. The forward-looking statements included in this press release are only made as of the date of this press release, and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. Numerous factors could cause our actual results or events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: whether we are able to achieve development goals at the times and in the amounts currently anticipated, if at all, the success of our marketing campaigns and product innovation, our ability to maintain food safety and quality control systems, changes in public health conditions, our ability to control costs and expenses, including tax costs, changes in political, economic and regulatory conditions in China, as well as changes in political, business, economic and trade relations between the U.S. and China, and those set forth under the caption "Risk Factors" in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Our plan of capital returns to shareholders is based on current expectations, which may change based on market conditions, capital needs or otherwise. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q) for additional detail about factors that could affect our financial and other results.
About Yum China Holdings, Inc.
Yum China is the largest restaurant company in China with a mission to make every life taste beautiful. The Company operates over 16,000 restaurants under six brands across over 2,300 cities in China. KFC and Pizza Hut are the leading brands in the quick-service and casual dining restaurant spaces in China, respectively. In addition, Yum China has partnered with Lavazza to develop the Lavazza coffee concept in China. Little Sheep and Huang Ji Huang specialize in Chinese cuisine. Taco Bell offers innovative Mexican-inspired food. Yum China has a world-class, digitalized supply chain, which includes an extensive network of logistics centers nationwide and an in-house supply chain management system. Its strong digital capabilities and loyalty program enable the Company to reach customers faster and serve them better. Yum China is a Fortune 500 company with the vision to be the world's most innovative pioneer in the restaurant industry. For more information, please visit http://ir.yumchina.com.
Contacts
Investor Relations Contact:
------------------------------------------
Tel: +86 21 2407 7556
IR@YumChina.com
Media Contact:
------------------------------------------
Tel: +86 21 2407 8288 / +852 2267 5807
Media@YumChina.com
Yum China Holdings, Inc.
Condensed Consolidated Statements of Income
(in US$ million, except per share data)
(unaudited)
Quarter Ended % Change
--------------------------
3/31/2025 3/31/2024 B/$(W)$
------------ ------------ -------------
Revenues
Company sales $ 2,801 $ 2,794 --
Franchise fees and income 27 25 7
Revenues from transactions
with franchisees 121 107 13
Other revenues 32 32 --
------------ ------------
Total revenues 2,981 2,958 1
------------ ------------
Costs and Expenses, Net
Company restaurants
Food and paper 874 896 2
Payroll and employee
benefits 719 708 (2)
Occupancy and other
operating expenses 688 697 1
------------ ------------
Company restaurant expenses 2,281 2,301 1
General and administrative
expenses 138 140 2
Franchise expenses 11 10 (12)
Expenses for transactions
with franchisees 117 104 (13)
Other operating costs and
expenses 29 29 2
Closures and impairment
expenses, net 6 1 NM
Other income, net -- (1) NM
------------ ------------
Total costs and expenses,
net 2,582 2,584 --
------------ ------------
Operating Profit 399 374 7
Interest income, net 26 38 (30)
Investment gain 3 8 (67)
------------ ------------
Income Before Income Taxes
and Equity in Net
Earnings (Losses) from
Equity Method
Investments 428 420 2
Income tax provision (119) (113) (5)
Equity in net earnings
(losses) from equity
method investments 4 -- NM
------------ ------------
Net income -- including
noncontrolling interests 313 307 2
Net income --
noncontrolling interests 21 20 (4)
Net Income -- Yum China
Holdings, Inc. $ 292 $ 287 2
============ ============
Effective tax rate 27.8 % 26.9 % (0.9) ppts.
============ ============
Basic Earnings Per Common
Share $ 0.78 $ 0.72
============ ============
Weighted-average shares
outstanding (in
millions) 376 401
============ ============
Diluted Earnings Per Common
Share $ 0.77 $ 0.71
============ ============
Weighted-average shares
outstanding (in
millions) 378 403
============ ============
OP margin 13.4 % 12.6 % 0.8 ppts.
Company sales 100.0 % 100.0 %
Food and paper 31.2 32.1 0.9 ppts.
Payroll and employee
benefits 25.7 25.4 (0.3) ppts.
Occupancy and other
operating expenses 24.5 24.9 0.4 ppts.
------------ ------------
Restaurant margin 18.6 % 17.6 % 1.0 ppts.
============ ============
Percentages may not recompute due to rounding. NM refers to not
meaningful.
Yum China Holdings, Inc.
KFC Operating Results
(in US$ million)
(unaudited)
Quarter Ended % Change
--------------------------
3/31/2025 3/31/2024 B/(W)
------------ ------------ ------------
Revenues
Company sales $ 2,208 $ 2,193 1
Franchise fees and income 21 18 11
Revenues from transactions
with franchisees 16 14 20
Other revenues 1 5 (78)
------------ ------------
Total revenues 2,246 2,230 1
------------ ------------
Costs and Expenses, Net
Company restaurants
Food and paper 685 694 1
Payroll and employee
benefits 554 542 (2)
Occupancy and other
operating expenses 532 535 1
------------ ------------
Company restaurant expenses 1,771 1,771 --
General and administrative
expenses 59 61 4
Franchise expenses 10 9 (9)
Expenses for transactions
with franchisees 14 12 (21)
Other operating costs and
expenses 1 4 74
Closures and impairment
expenses, net 5 1 NM
------------ ------------
Total costs and expenses,
net 1,860 1,858 --
------------ ------------
Operating Profit $ 386 $ 372 4
============ ============
OP margin 17.2 % 16.7 % 0.5 ppts.
Company sales 100.0 % 100.0 %
Food and paper 31.1 31.7 0.6 ppts.
Payroll and employee
benefits 25.1 24.7 (0.4) ppts.
Occupancy and other
operating expenses 24.0 24.3 0.3 ppts.
------------ ------------
Restaurant margin 19.8 % 19.3 % 0.5 ppts.
============ ============
Percentages may not recompute due to rounding. NM refers to not
meaningful.
Yum China Holdings, Inc.
Pizza Hut Operating Results
(in US$ million)
(unaudited)
Quarter Ended % Change
----------------------------
3/31/2025 3/31/2024 B/(W)
------------- ------------- ------------
Revenues
Company sales $ 584 $ 587 (1)
Franchise fees and income 2 2 23
Revenues from transactions
with franchisees 2 1 70
Other revenues 7 5 18
Total revenues 595 595 --
------------- -------------
Costs and Expenses, Net
Company restaurants
Food and paper 186 198 6
Payroll and employee
benefits 163 162 (1)
Occupancy and other
operating expenses 151 154 2
------------- -------------
Company restaurant
expenses 500 514 3
General and administrative
expenses 26 27 4
Franchise expenses 1 1 (16)
Expenses for transactions
with franchisees 2 1 (50)
Other operating costs and
expenses 6 5 (14)
Total costs and expenses,
net 535 548 3
------------- -------------
Operating Profit $ 60 $ 47 27
============= =============
OP margin 10.1 % 7.9 % 2.2 ppts.
Company sales 100.0 % 100.0 %
Food and paper 31.8 33.7 1.9 ppts.
Payroll and employee
benefits 27.9 27.6 (0.3) ppts.
Occupancy and other
operating expenses 25.9 26.2 0.3 ppts.
------------- -------------
Restaurant margin 14.4 % 12.5 % 1.9 ppts.
============= =============
Percentages may not recompute due to rounding.
Yum China Holdings, Inc.
Condensed Consolidated Balance Sheets
(in US$ million)
3/31/2025 12/31/2024
-------------- ---------------
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 825 $ 723
Short-term investments 1,167 1,121
Accounts receivable, net 81 79
Inventories, net 329 405
Prepaid expenses and other current assets 348 366
-------------- ---------------
Total Current Assets 2,750 2,694
Property, plant and equipment, net 2,383 2,407
Operating lease right-of-use assets 2,111 2,146
Goodwill 1,891 1,880
Intangible assets, net 144 144
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