In This Article:
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Revenue: Record high for Q1 2025.
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Net Income: Record high for Q1 2025, $292 million, up 3% year over year.
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Diluted EPS: Increased by 10% year over year to $0.77.
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Same-Store Sales Index: Reached 100% of prior year level for both KFC and Pizza Hut.
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Restaurant Margin: Improved by 100 basis points year over year to 18.6%.
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Operating Profit: Grew by 8% year over year to $399 million.
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KFC System Sales: Increased by 3% year over year.
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KFC Restaurant Margin: Expanded to 19.8%.
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KFC Store Count: Added 295 net new stores, totaling 11,943 stores.
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Pizza Hut System Sales: Increased by 2% year over year.
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Pizza Hut Same-Store Transactions: Grew by 17% year over year.
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Pizza Hut Store Count: Expanded to 3,769 stores with a net addition of 45 stores.
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Cash Position: Ended the quarter with $2.8 billion in cash.
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Shareholder Returns: Returned $262 million in Q1 through share repurchases and dividends.
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New Store Openings: Opened 247 new stores in Q1, with a full-year target of 1,600 to 1,800 net new stores.
Release Date: April 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Yum China Holdings Inc (NYSE:YUMC) achieved record highs in revenue, net income, and diluted EPS for the first quarter of 2025.
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Same-store sales index reached 100% of the prior year level for both KFC and Pizza Hut, marking nine consecutive quarters of same-store transaction growth.
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Restaurant margins improved by 100 basis points year over year, with operating profit growing by 8% and diluted EPS increasing by 10%.
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KFC system sales grew by 3%, and the restaurant margin expanded to 19.8%, with 300 new KCOFFEE cafes opened, reaching a total of 1,000 locations nationwide.
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Pizza Hut achieved a 29% year-over-year growth in operating profit, with significant improvements in same-store sales index and margins, driven by a new menu and value-for-money proposition.
Negative Points
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The average ticket for KFC in Q1 was RMB40, lower than the prior year period, indicating potential pricing pressure.
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Despite improvements, the cost of labor increased by 30 basis points year-over-year due to higher labor costs as a percentage of sales.
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The effective tax rate increased by 90 basis points year over year to 27.8%, impacting net income growth.
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There were more temporary store closures during the Chinese New Year, affecting sales growth in Q1.
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The company faces ongoing pressure from increased delivery costs due to rapid delivery growth, impacting overall rider costs.
Q & A Highlights
Q: Can you provide an update on the competition and demand trends post-Chinese New Year, especially with JD's push on delivery? A: Joey Wat, CEO: Our April performance aligns with expectations, and we haven't seen significant negative impacts. We remain vigilant and monitor trends closely. Despite a challenging macro environment, we've consistently thrived in various market conditions. We continue to work with all platforms, balancing short-term and long-term considerations. Over 70% of our sales occur outside delivery aggregators, maintaining strong control over our business.