Yum China Q4 2025 Yum China Holdings Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Yum China Holdings Inc Earnings Call
Speaker #1: After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone.
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Speaker #1: And I'd like to hand the conference over to your first speaker today, Ms. Florence Lip, Senior Director, Investor Relations, of Yum China. Please go ahead.
Speaker #1: ahead. Thank
Florence Lip: Thank you, Operator. Hello everyone, and welcome to Yum China's Q4 2025 Earnings Conference Call. With me on the call are our CEO, Ms. Joey Wat, and our CFO, Mr. Adrian Ding. Before we begin, I'll remind everyone that our remarks and investor materials contain forward-looking statements. These are subject to future events and uncertainties, and actual results may differ materially. Please refer to these forward-looking statements together with the cautionary statement in our earnings release and the risk factors included in our SEC filings. We'll also be talking about non-GAAP financial measures. We encourage you to review the comparable GAAP measures along with the reconciliation of non-GAAP and GAAP measures provided in our earnings release, which is available on our investor relations website at ir.yumchina.com. You can also find both a webcast replay, and a PowerPoint presentation on our IR website.
Speaker #2: Operator: Hello everyone, and welcome to Yum China's Q4 2025 earnings conference call. With me on the call are our CEO, Ms. Joey Wat, and our CFO, Mr. Adrian Ding.
Speaker #2: Before we begin, I'll remind everyone that our remarks and investor materials contained forward-looking statements. These are subject to future events and uncertainties, and actual results may differ materially.
Speaker #2: Please refer to these forward-looking statements together with the cautionary statement in our earnings release and the risk factors included in our SEC filings. We'll also be talking about non-GAAP financial measures.
Speaker #2: We encourage you to review the comparable GAAP measures along with the reconciliation of non-GAAP and GAAP measures provided in our earnings release, which is available on our investor relations website at ir.yumchina.com.
Speaker #2: You can also find both the webcast replay and a PowerPoint presentation on our IR website. Please note that all year-over-year growth rates discussed today exclude the impact of foreign currency, unless we mention otherwise.
Florence Lip: Please note that all year-over-year growth rates discussed today exclude the impact of foreign currency unless we mention otherwise. With that, I'll now turn the call over to Joey Wat, CEO of Yum China. Joey.
Speaker #2: With that, I'll now turn the call over to Joey Wat, CEO of Yum China. Joey, thank you. Hello, everyone, and thank you for joining us.
Joey Wat: Thank you. Hello everyone, and thank you for joining us. I would like to start by saying thank you to our team for delivering strong results this year, especially in such a dynamic market. In 2025, we opened more than 1,700 net new stores, taking our total to over 18,000 stores across more than 2,500 cities. Our focus on both system sales growth and same-store sales growth is paying off. Same-store sales growth has been positive for three consecutive quarters. System sales growth improved sequentially in Q4, reaching 7%. Our dual focus on innovation and operational efficiency also boosted our healthy margins. OP margins expanded year-over-year in every quarter of 2025, reaching 10.9% for the full year. It is the highest level since our US listing, excluding special items.
Speaker #2: I would like to start by saying thank you to our team for delivering strong results this year. Especially in a such dynamic market. In 2025, we opened more than 1,700 net new stores.
Speaker #2: Taking our total to over 18,000 stores, across 2,500 cities. Our more than focus on both system sales growth and same-store sales growth is paying off.
Speaker #2: Same-store sales growth has been positive for three consecutive quarters. System sales growth improved sequentially in Q4, reaching 7%. Our dual focus on innovation and operational efficiency also boosts our healthy margins.
Speaker #2: OP margin expanded year-over-year in every quarter of 2025, reaching 10.9% for the full year. It is the highest level since our U.S. listing, excluding special items.
Speaker #2: Operating profit grew 11% to $1.3 billion for the full year and was up 23% year-over-year in Q4. By brand, both KFC and Pizza Hut exceeded our expectations in 2025.
Joey Wat: Operating profit grew 11% to $1.3 billion for the full year and was up 23% year-over-year in Q4. By brand, both KFC and Pizza Hut exceeded our expectations in 2025. KFC's solid momentum continued, with system sales growth reaching 8% in Q4 and 5% for the full year. Pizza Hut transformed its menu and operations, resulting in 16% same-store transaction growth and 20% operating profit growth in 2025. While we accelerated growth, we also returned $1.5 billion to shareholders in 2025 through dividends and share repurchases, which is around 8% to 9% of our current market cap. Let me share a few key highlights from our core initiatives, and then I'll hand it over to Adrian to go through our results in more detail. First, we continue to delight our customers with year-round innovation, launching about 600 new or upgraded items annually.
Speaker #2: KFC's solid momentum continued, with system sales growth reaching 8% in Q4 and 5% for the full year. Pizza Hut transformed its menu and operations, resulting in 16% same-store transaction growth and 20% operating profit growth. In growth, we also look to 2025.
Speaker #2: We also accelerated, returning $1.5 billion to shareholders in 2025 through dividends and share repurchases, which is around 8 to 9% of our current market cap.
Speaker #2: Let me share a few key highlights from our core initiatives, and then I'll hand it over to Adrian to go through our results in more detail.
Speaker #2: First, we continued to delight our customers with year-round innovation, launching about 600 new or upgraded items annually. At the same time, we stayed laser-focused on our hero products, which are significant drivers of sales and repeat purchases.
Joey Wat: At the same time, we stay laser-focused on our hero products, which are significant drivers of sales and repeat purchases. These items have a loyal fan base that is also highly receptive to the new innovations they inspire. At KFC, our hero-inspired innovations include spicy original recipe chicken, 辣味原味鸡, and crackling golden chicken wings, 薄脆金沙鸡翅. In 2025, hero products accounted for 1/3 of KFC sales, and together with their inspired innovations, they delivered high single-digit sales growth. At Pizza Hut, we sold over 200 million pizzas in 2025. The pizza category continued to grow strongly. Our newest handcrafted thin crust pizza, 手作薄饼, perfectly crispy with plenty of toppings, has earned top reviews and become our best-selling crust. It now accounts for 1 out of every 3 pizzas sold and is bringing more customers, especially younger ones, into our stores.
Speaker #2: These items have a loyal fan base that is also highly receptive to the new innovations they inspire. At KFC, our hero-inspired innovations include Spicy Original Recipe Chicken (辣味原味鸡) and Crackling Golden Chicken Wings (薄脆金沙鸡翅).
Speaker #2: In 2025, hero products accounted for one-third of KFC's Inspired sales, and together with innovations, they delivered high single-digit sales growth. At Pizza Hut, we sold over 200 million pizzas in 2025.
Speaker #2: The pizza category continued to grow strongly. Our newest thin crust pizza, 手作薄底, is perfectly crispy with plenty of toppings, has earned top reviews, and has become our best-selling crust.
Speaker #2: It now accounts for one out of every three pizzas sold, and it's bringing more customers—especially younger ones—into our stores. Second, we focus on delivering great value for money and emotional value on top of serving good food.
Joey Wat: Second, we focus on delivering great value for money and emotional value on top of serving good food. As we shared at our investor day, our pricing strategy has been crucial to our success and has helped us deliver 12 consecutive quarters of same-store transaction growth. Total transactions grew 8%, exceeding 2 billion transactions in 2025. Emotional value matters too. Last year, we partnered with 70 leading IPs in gaming, animation, and sports. Whether tied to the latest hits or tapping into childhood memories, these collaborations help us engage customers and capture additional traffic. Beyond themed toys and special packaging, we decorated select stores and pop-up stores to make the experience more fun for our customers. Third, we capture new opportunities through front-end segmentation and back-end consolidation. Our multi-brand portfolio, diverse modules, and food offerings help us reach more customer segments and serve a wide range of occasions.
Speaker #2: As we shared at our Investor Day, our pricing strategy has been crucial to our success and has helped us deliver 12 consecutive quarters of same-store transaction growth.
Speaker #2: Total transactions grew 8%, exceeding 2 billion transactions in 2025. Emotional value matters, too. Last year, we partnered with 70 leading IPs in gaming, animation, and sports. Whether tied to the latest hits or tapping into childhood memories, these collaborations help us engage customers and capture additional traffic.
Speaker #2: Beyond thin toys and special packaging, we decorated select stores and pop-up stores to make the experience more fun for our customers. Third, we capture new opportunities through front-end segmentation and back-end multi-brand portfolio, diverse consolidation.
Speaker #2: Our modules and food offerings help us reach more customer segments and serve a wide range of occasions. On the back end, we force the synergies by sharing and centralizing resources in and across stores, regions, and even brands.
Joey Wat: On the back end, we foster synergies by sharing and centralizing resources in and across stores, regions, and even brands. Side-by-side modules, K-Coffee Café, and KPRO are scaling quickly, reaching 2,200 and 200 KFC locations, respectively. They drive incremental sales and profit with light investments. Last year, we also piloted the Gemini model, which places KFC and Pizza Hut stores side by side to support entry into lower-tier cities. With a CapEx of CNY 0.7 to 0.8 million for a pair of stores, it's a very attractive model for franchisees. We opened around 40 pairs of Gemini stores last year and expect to ramp up openings in 2026. Fourth, we are adopting an equity and franchise hybrid model to drive faster and more efficient store openings. We see great potential for growth in China. Recently, I visited Chongqing, China's largest city by population, with over 30 million people.
Speaker #2: Side-by-side modules K-Coffee Café and K-Pro are scaling quickly, reaching 2,200 and 200 KFC locations, respectively. They drive incremental sales and profit with light investment.
Speaker #2: Last year, we also piloted the Gemini model, which places KFC and Pizza Hut stores side by side to support entry into lower-tier cities. With a capex of RMB 0.7 to 0.8 million per pair of stores, it's a very attractive model for franchisees.
Speaker #2: We opened around 40 pairs of Gemini stores last year and expect to ramp up openings in 2026. Fourth, we are adopting an equity and franchise hybrid model to drive faster and more efficient store openings.
Speaker #2: We see great potential for growth in China. Recently, I visited Chongqing, China's largest city by population, with over 30 million people. In this wide-brand market, I saw a strong appetite for affordable, good food.
Joey Wat: In this wide-brand market, I saw a strong appetite for affordable good food. KFC's density there is only four stores per million people, well below the average of 17 in Tier 1 and 2 cities, or Shanghai's 28. With menu innovation and multiple store formats, we are confident we can continue to expand our market share in China. To capture incremental opportunities in lower-tier cities, remote areas, and strategic locations, we began accelerating franchise expansion in 2024. The franchise mix of net new openings for KFC and Pizza Hut increased from 25% in 2024 to 36% in 2025. Equity stores remain the core of our business, representing over 80% of our store portfolio. The payback period of our new stores remains healthy at around two years for KFC and two to three years for Pizza Hut.
Speaker #2: KFC's density there is only four stores per million people, well below the average of 17 in Tier 1 and 2 cities, or Shanghai's 28.
Speaker #2: With menu innovation and multiple store formats, we are confident we can continue to expand our market share in China. To capture incremental opportunities in lower-tier cities, remote areas, and strategic locations, we began accelerating franchise expansion in 2024.
Speaker #2: The franchise mix of net new openings for KFC and Pizza Hut increased from 25% in 2024 to 36% in 2025. Equity stores remain the core of our business, representing over 80% of our store portfolio.
Speaker #2: The payback period of our new stores remains healthy at around two years for KFC and two to three years for Pizza Hut. Last but not least, we are embracing Gen AI across our business to drive growth and efficiency.
Joey Wat: Last but not least, we are embracing GenAI across our business to drive growth and efficiency. In our restaurants, we are piloting Q-Smart, an agentic AI assistant that integrates operation data such as labor and inventory. It identifies potential issues, recommends actions, and implements. For example, Q-Smart can detect staffing shortage, propose replacement staff, and initiate calls to them. This helps our LGM save time, make informed decisions, and run restaurants more smoothly. And in January, we rolled out SmartK, our AI ordering agent to all KFC Super App users. SmartK helps customers place orders. This feature has already been used by 2 million members, especially those who order breakfast and coffee. Customers respond positively to the added convenience and customized suggestions. At our investor day in November last year, we introduced our LGM 3.0 strategy, which takes a balanced approach across all three aspects of resilience, growth, and moat.
Speaker #2: In our restaurants, we are piloting Q Smart, an agent AI assistant that integrates operation data such as labor and inventory. It identifies potential issues, recommends actions, and implements.
Speaker #2: For example, Q Smart can detect staffing shortages, propose replacement staff, and initiate calls to them. This helps our RGM save time, make informed decisions, and run restaurants more smoothly.
Speaker #2: And in January, we rolled out Smart K, our AI ordering agent, to all KFC super app users. Smart K helps customers place orders. This feature has already been used by 2 million members.
Speaker #2: Especially those who order. Customers respond positively to the ad, breakfast, and coffee—convenience and customized suggestions. At our investor day in November last year, we introduced our RGM 3.0 strategy, which takes a balanced approach across all three aspects of resilience, growth, and moat.
Speaker #2: We also outlined our plans for our next phase of growth, including expanding to over 30,000 stores by 2030. We are confident that we can continue our rapid growth while improving profitability and returning capital to shareholders.
Joey Wat: We also outlined our plans for our next phase of growth, including expanding to over 30,000 stores by 2030. We are confident that we can continue our rapid growth while improving profitability and returning capital to shareholders. Let me now turn the call over to Adrian.
Speaker #2: Let me now turn the call over to Adrian. Thank you, Joey. Let me now update key highlights by brand. Starting with KFC, in 2025, KFC opened 1,349 net new stores, bringing its total to nearly 13,000 locations.
Adrian Ding: Thank you, Joey. Let me now update key highlights by brand. Starting with KFC, in 2025, KFC opened 1,349 net new stores, bringing its total to nearly 13,000 locations. System sales grew 5%, and restaurant margins expanded 50 basis points to 17.4%. Same-store sales growth turned positive for three consecutive quarters. In Q4, system sales growth sequentially improved to 8% year-over-year. Same-store sales grew 3%, and same-store transactions increased by 3% year-over-year. Ticket average was flat, as growth in smaller orders was offset by the increase in delivery sales mix, which carries a relatively higher ticket average. KFC's side-by-side modules are rolling out rapidly. K-Coffee Café tripled its footprint from 700 locations in 2024 to 2,200 locations in 2025. While expanding to more locations, we also increased per-store daily cup sold by 25% year-over-year. Menu innovation has been key in driving repeat purchases.
Speaker #2: System sales grew 5%, and restaurant margins expanded 50 basis points to 17.4%. Same-store sales growth turned positive for three consecutive quarters. In Q4, system sales growth sequentially improved to 8% year over year.
Speaker #2: Same-store sales grew 3%, and same-store transactions increased by 3% year over year. Ticket average was flat, as growth in smaller orders was offset by the increase in delivery sales mix.
Speaker #2: Which carries a relatively higher ticket average. KFC's side-by-side modules are rolling out rapidly. K-Coffee Café tripled its footprint from 700 locations in 2024 to 2,200 locations in 2025.
Speaker #2: While expanding to more locations, we also increased per-store daily cups sold by 25% year over year. Menu innovation has been key in driving repeat purchases.
Speaker #2: Last year, we launched a new product every week on average. K-Coffee Cafés generated a mid-single-digit sales uplift for their parent KFC stores. And we're confident in its future expansion.
Adrian Ding: Last year, we launched a new product every week on average. K-Coffee Cafés generated a mid-single-digit sales uplift for their parent KFC stores and were confident in its future expansion. K-Pro added more than 200 locations in just one year. The light meal concept offers grain and pasta bowls and superfood smoothies. Backed by KFC's trusted quality and strong value for money, K-Pro has resonated well with consumers and generated a double-digit sales uplift in its parent KFC stores. We aim to double K-Pro's footprint to more than 400 locations in 2026, focusing on higher-tier cities. Now, moving on to Pizza Hut. In 2025, Pizza Hut opened a record 444 net new stores, raising its total to 4,168 stores. Restaurant margins improved by 80 basis points to 12.8%, bringing its OP margin to 7.9%, the highest level since our 2016 listing.
Speaker #2: K-Pro added more than 200 locations in just one year. This slight new concept offers grain and pasta bowls and superfood smoothies. Backed by KFC's trusted quality and strong value for money, K-Pro has resonated well with consumers and generated a double-digit sales uplift in its parent KFC stores.
Speaker #2: We aim to double K-Pro's footprint to more than 400 locations in higher-tier cities by 2026. Now, moving on to Pizza Hut. In 2025, Pizza Hut opened a record 444 net new stores, raising its total to 4,168 stores.
Speaker #2: Restaurant margins improved by 80 basis points to 12.8%, bringing its OP margin to 7.9%—the highest level since our 2016 listing. In Q4, system sales grew 6% year over year.
Adrian Ding: In Q4, system sales grew 6% year-over-year, up from 4% in Q3. Same-store sales grew 1%, positive for the third consecutive quarter. Same-store transactions increased 13%, growing double-digit for the fourth consecutive quarter. Ticket average was CNY 69, down 11% year-over-year, reflecting our mass market strategy. Last year, Pizza Hut entered more than 200 new cities. About half of these, around 100 new cities, adopted the WOW format. We continue to refine the store format and test different service models. The CapEx for a standalone new WOW store is around CNY 0.65 to 0.85 million. With lower CapEx, streamlined operations, and a simplified menu, WOW enables us to penetrate previously untapped locations, especially in lower-tier cities.
Speaker #2: Up from 4% in quarter three. Same-store sales grew 1%, positive for the third consecutive quarter. Same-store transactions increased 13%, growing double-digit for the fourth consecutive quarter.
Speaker #2: Ticket average was 69 yuan, down 11% year over year, reflecting our mass market strategy. Last year, Pizza Hut entered more than 200 new cities.
Speaker #2: About half of these—around 100 new cities—adopted the WOW format. We continue to refine the store format and test different service models. The CapEx for a standalone new WOW store is around 0.65 to 0.85 million yuan.
Speaker #2: With lower CapEx, streamlined operations, and a simplified menu, WOW enables us to penetrate previously untapped locations, especially in lower-tier cities. We saw improving restaurant margins and a solid estimated payback period of two to three years for the new WOW stores, in line with the average new stores for Pizza Hut.
Adrian Ding: We saw improving restaurant margins and a solid estimated payback period of two to three years for the new WOW stores, in line with the average new stores for Pizza Hut. Our emerging brands are also making steady progress. Lavazza opened 34 net new stores, including its first store in Hong Kong, taking its total store count to 146. Same-store sales growth turned positive in 2025, and overall store economics improved meaningfully. Its latest light model requires only CNY 0.5 million in Capex, roughly half the cost of the previous formats. Its retail business of packaged coffee products, the other growth engine, delivered over 40% sales growth and more than doubled operating profit year over year in 2025. Let me now go through our Q4 P&L. System sales grew 7% year-over-year, and same-store sales grew 3%.
Speaker #2: Our emerging brands are also making steady progress. Lavazza opened 34 net new stores, including its first store in Hong Kong, taking its total store count to 146.
Speaker #2: Same-store sales growth turned positive in 2025, and overall store economics improved meaningfully. Its latest light model requires only RMB 0.5 million in CapEx—roughly half the cost of the previous formats.
Speaker #2: Its retail business of packaged coffee products, the other growth engine, delivered over 40% sales growth and more than doubled operating profit year over year in 2025.
Speaker #2: Let me now go through our quarter four P&L. System sales grew 7% year over year, and same-store sales grew 3%. Our restaurant margin was 13.0%, 70 basis points higher year over year.
Adrian Ding: Our restaurant margin was 13.0%, 70 basis points higher year-over-year, mainly due to improvements in cost of sales, occupancy, and other cost ratios. Cost of sales was 31.6%, 30 basis points lower year-over-year, mainly due to the favorable commodity prices and supply chain efficiency gains. We share some of these savings with our consumers in the form of great value for money. Cost of labor was 29.4%, 120 basis points higher year-over-year. While overall rider costs were higher due to a higher delivery mix, we maintained non-rider costs as a percent of sales at relatively stable levels through operational efficiency gains despite wage inflation. Occupancy and other was 26.0%, 160 basis points lower year-over-year, mainly due to sales leverage, store CapEx optimizations, and better rent. Our OP margin was 6.6%, 80 basis points higher year-over-year.
Speaker #2: Mainly due to improvements in cost of sales and occupancy and other cost ratios. Cost of sales was 31.6%, 30 basis points lower year over year.
Speaker #2: Mainly due to the favorable commodity prices and supply chain efficiency gains. We share some of these savings with our consumers in the form of great value for money.
Speaker #2: Cost of labor was 29.4%, 120 basis points higher year over year. While overall rider costs were higher due to a higher delivery mix, we maintained non-rider costs as a percent of sales at relatively stable levels through operational efficiency gains, despite wage inflation.
Speaker #2: Occupancy and other was 26.0%, 160 basis points lower year over year, mainly due to sales leverage, store CapEx optimizations, and better rent. Our OP margin was 6.6%, 80 basis points higher year over year.
Speaker #2: Operating profit was $187 million, growing 23% year over year. Net income was $140 million, 22% higher year over year. Excluding our investment in Meituan, net income grew 14% year over year.
Adrian Ding: Operating profit was $187 million, growing 23% year-over-year. Net income was $140 million, 22% higher year-over-year. Excluding our investment in Meituan, net income grew 14% year-over-year. Our investment in Meituan had a negative impact of $0.5 million in Q4 compared to a negative impact of $9 million in Q4 last year. As a reminder, we recognize $11 million less in interest income in Q4 this year due to a lower cash balance, resulting from the cash we returned to shareholders and lower interest rates. Diluted EPS was $0.40, 29% higher year-over-year, or up 21% year-over-year excluding our investment in Meituan. For the full year, system sales grew 4%, and same-store sales grew 1%. Restaurant margin was 16.3%, 60 basis points higher year-over-year. Both KFC and Pizza Hut's restaurant margin improved year-over-year.
Speaker #2: Our investment in Meituan had a negative impact of $0.5 million in quarter four, compared to a negative impact of $9 million in quarter four last year.
Speaker #2: As a reminder, we recognize $11 million less in interest income in quarter four this year, due to a lower cash balance, resulting from the cash we returned to shareholders.
Speaker #2: And lower interest rates. Diluted EPS was $0.40, 29% higher year over year, or up 21% year over year excluding our investment in Meituan.
Speaker #2: For the full year, system sales grew 4%, and same-store sales grew 1%. Restaurant margin was 16.3%, 60 basis points higher year over year. Both KFC and Pizza Hut's restaurant margin improved year over year.
Speaker #2: G&A expenses were 4.9% of revenue, 10 basis points lower year over year. Operational efficiency gains more than offset higher performance-based compensation in the year.
Adrian Ding: G&A expenses were 4.9% of revenue, 10 basis points lower year over year. Operational efficiency gains more than offset higher performance-based compensation in the year. Operating profit grew 11% to $1.3 billion. Diluted EPS was $2.51, growing 8% year over year, or 14% excluding our investment in Meituan. Total Capex was $626 million. Capital efficiency improved. ROIC reached 17.3%, up from 16.9% in 2024. Let's now turn to capital returns to shareholders. We're on track to return a total of $4.5 billion to shareholders from 2024 through 2026. That is $1.5 billion each year. In 2025, we returned $353 million in cash dividends and $1.14 billion in share repurchases. In 2026, we remain committed to returning $1.5 billion to shareholders. We're raising our quarterly dividend by 21%, from $0.24 to $0.29.
Speaker #2: Operating profit grew 11% to $1.3 billion. Diluted EPS was $2.51, growing 8% year over year, or 14% excluding our investment in Meituan.
Speaker #2: Total CapEx was $626 million. Capital efficiency improved—ROIC reached 17.3%, up from 16.9% in 2024. It's now turned to capital returns to shareholders.
Speaker #2: We're on track to return a total of $4.5 billion to shareholders from 2024 through 2026. That is $1.5 billion each year. In 2025, we returned $353 million in cash dividends and $1.14 billion in share repurchases.
Speaker #2: In committed to returning 2026, we remain $1.5 billion to shareholders. We're raising our quarterly dividend by 21%, from $0.24 to $0.29.
Speaker #2: At $0.29 per quarter, the payout ratio will exceed 45% of our 2025 diluted EPS. With annual dividends totaling around $400 million, we have also initiated a $460 million share repurchase plan for the first half of 2026.
Adrian Ding: At $0.29 per quarter, the payout ratio will exceed 45% of our 2025 diluted EPS, with an annual dividend totaling around $400 million. We have also initiated a $460 million share repurchase plan for the first half of 2026. With these arrangements, we are well positioned to deliver on our commitment for the year. Starting in 2027, as outlined at our 2025 investor day, we plan to return approximately 100% of annual free cash flow after subsidiary dividend payments to non-controlling interests. This is expected to translate into an average annual return of $900 million to $1 billion plus dollars in 2027 and 2028, and exceed $1 billion in 2028 and onward. These commitments are supported by our healthy cash position and robust cash generation.
Speaker #2: With these arrangements, we're well positioned to deliver on our commitment for the year. Starting in 2027, as outlined at our 2025 Investor Day, we plan to return approximately 100% of annual free cash flow after subsidiary dividend payments to non-controlling interests.
Speaker #2: And this is expected to translate into an average annual return of $900 million to $1 billion plus in 2027 and 2028, and exceed $1 billion in 2028 and onward.
Speaker #2: These commitments are supported by our healthy cash position and robust cash generation. In 2025, we generated $840 million in free cash flow, an increase of 18% year over year.
Adrian Ding: In 2025, we generated $840 million in free cash flow, an increase of 18% year-over-year, and ended the year with $2.0 billion in net cash. Now, moving on to our 2026 outlook. We're confident we will reach more than 20,000 stores in 2026. This means opening over 1,900 net new stores, with 40 to 50% coming from franchisees for both KFC and Pizza Hut. We will continue to deepen our presence across China, especially in lower-tier cities, and strategic locations, using a variety of store formats. With lower CapEx per store, and a higher franchise mix, we expect the total CapEx to stay in the range of $600 million to $700 million this year. As for other financial metrics, we expect our growth in 2026 to be consistent with our three-year guidance shared at our investor day.
Speaker #2: And ended the year with $2.0 billion in net cash. Now, moving on to our 2026 outlook. We're confident we will reach more than 20,000 stores in 2026.
Speaker #2: This means opening over 1,900 net new stores, with 40% to 50% coming from franchisees for both KFC and Pizza Hut. We will continue to deepen our presence across China, especially in lower-tier cities and strategic locations, using a variety of store formats.
Speaker #2: With lower CapEx per store and a higher franchise mix, we expect the total CapEx to stay in the range of $600 million to $700 million this year.
Speaker #2: As for other financial metrics, we expect our growth in 2026 to be consistent with our three-year guidance shared at our investor day. That is, same-store sales index of 100 to 102, mid- to high-single-digit system sales growth, high-single-digit operating profit growth, double-digit EPS growth, and a slight improvement in restaurant margin and OP margin for Yum China.
Adrian Ding: That is, same-store sales index of 100 to 102, mid to high single-digit system sales growth, high single-digit operating profit growth, double-digit EPS growth, and a slight improvement in restaurant margin and OP margin for Yum China. As activity on delivery platforms remains dynamic, we have factored in different scenarios and are confident that the impact on our businesses will be limited due to our balanced and disciplined approach. Our full-year projections are based on our current plans and have not assumed any changes in macro. Any improvement would represent potential upside. We will continue to track the progress of our new store openings, module development and rollouts, and other core initiatives, and provide updates as we go. For Q1, we're working hard to deliver our fourth consecutive quarter of positive same-store sales growth and 13th consecutive quarter of positive same-store transaction growth.
Speaker #2: As activity on delivery platforms remains dynamic, we have factored in different scenarios and are confident that the impact on our businesses will be limited due to our balanced and disciplined approach.
Speaker #2: Our full-year projections are based on our current plans and have not assumed any changes in macro. Any improvement would represent potential upside. We will continue to track the progress of our new store openings module development and rollouts, and other core initiatives.
Speaker #2: And provide updates as we go. For Q1, we're working hard to deliver our fourth consecutive quarter of positive same-store sales growth, and 13 consecutive quarters of positive same-store transaction growth.
Speaker #2: Our margins—we face a tough comparison. First, year-over-year Ryder costs are the biggest headwind, driven by a higher delivery sales mix. Delivery mix increased from 42% in Q1 to 53% in Q4 last year, and is expected to grow further.
Adrian Ding: On margins, we face a tough year-over-year comparison. First, rider costs are the biggest headwind, driven by a higher delivery sales mix. Delivery mix increased from 42% in Q1 to 53% in Q4 last year, and is expected to grow further. Second, the benefit from lower commodity prices will be smaller than before. Additionally, last year's base already reflected significant benefits from Project Fresh Eye and Red Eye. KFC's restaurant margin was already 19.8%, and Pizza Hut's restaurant margin improved 190 basis points year-over-year in Q1 last year, setting a high base for Q1 this year. We'll focus on efficiency and sales leverage and strive to maintain Yum China restaurant margin and OP margin roughly in line with the prior year period in Q1. With that, let me pass it back to Joey for her remarks on the Chinese New Year.
Speaker #2: Second, the benefits from lower commodity prices will be smaller than before. Additionally, last year’s base already reflected significant benefits from Project Fresh Eye and Red Eye.
Speaker #2: KFC's restaurant margin was already 19.8%, and Pizza Hut's restaurant margin improved 190 basis points year-over-year in quarter one last year, setting a high base for quarter one this year.
Speaker #2: We'll focus on efficiency and sales leverage, and strive to maintain Yum China restaurant margin and OP margin roughly in line with the prior-year period in Q1.
Speaker #2: With that, let me pass it back to Joey for her remarks on the Chinese New Year. Thank you, Adrian. Let me share a few thoughts on the Chinese New Year.
Florence Lip: Thank you, Adrian. Let me share a few thoughts on the Chinese New Year, our key trading window of the year. Chinese New Year falls on 17 February, considerably later than in most years. Our teams have prepared comprehensive scenario plans by the week and even daily. People will soon be traveling and gathering for the holiday season. Our brands are focusing on their signature products to capture the heavy traffic during Chinese New Year while maintaining strong operational efficiency. At KFC, buckets have long been our Chinese New Year signature, offering exciting food and abundant value. This year, in addition to our classic golden bucket and Wish buckets, we are introducing for the first time peanut and sunflower seed mini buckets, Hua Sheng Gua Zi Tong. These packaged snacks honor Chinese traditions and help create a festive Chinese New Year atmosphere.
Speaker #2: Our key trading window of the year—Chinese New Year—falls on February 17, considerably later than in most years. Our teams have prepared comprehensive scenario plans by the week, and even daily.
Speaker #2: People will soon be traveling and gathering for the holiday season. Our brands are focusing on their signature products to capture the heavy traffic during Chinese New Year, while maintaining strong operational efficiency.
Speaker #2: At KFC, buckets have long been our Chinese New Year signature, offering exciting food and abundant value. This year, in addition to our classic golden buckets and wind buckets, we are introducing for the first time peanuts and sunflower seed mini buckets.
Speaker #2: These packaged snacks honor Chinese traditions and help create a festive Chinese New Year atmosphere. At Pizza Hut, we are focusing on one of our hero products, the Super Supreme Pizza.
Florence Lip: At Pizza Hut, we are focusing on one of our hero products, the Super Supreme Pizza. This time, we are adding new twists by pairing it with our classic bolognese and trendy salted egg yolk toppings. Customers can also top up the pizza with a mountain of crunchy potato chips and rich sauce, Jinyun Longyan San. These offerings are available in combos designed for family and friend gatherings, and to drive ticket average. Overall, for this Chinese New Year, we are executing according to our plans. Trading year to date has been in line with our expectations. With that, I would like to wish everyone a happy and prosperous Year of the Horse. Now, let me pass it back to Florence.
Speaker #2: This time, we are adding new twists by pairing it with our classic Bolognese and trendy salted egg yolk toppings. Customers can also top up the pizza with a mountain of crunchy potato chips and rich sauce.
Speaker #2: These offerings are available in combos designed for family and friend gatherings, and to drive ticket average. Overall, for this Chinese New Year, we are executing according to our plans.
Speaker #2: Trading year-to-date has been in line with our expectations. With that, I would like to wish everyone a happy and prosperous Year of the Horse.
Speaker #2: Now, let me pass it back to Florence.
Speaker #3: Thanks, Joey. Now, we will open the call for questions. In order to give more people the chance to ask questions, please limit your questions to one at a time.
Joey Wat: Thanks, Joey. Now we will open the call for questions. In order to give more people the chance to ask questions, please limit your questions to one at a time. Operator, please start the Q&A.
Speaker #3: Operator, please start the Q&A.
Speaker #4: Thank you. We will now begin the question-and-answer session. To ask a question, please press *11 on your telephone and wait for your name to be announced.
Adrian Ding: Thank you. We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. A moment for our first question. Our first question comes from the line of Michelle Cheng from Goldman Sachs. Please go ahead, Michelle.
Speaker #4: To withdraw your question, please press star one one again. A moment for our first question. Our first question comes from the line of Michelle Cheng from Goldman Sachs.
Speaker #4: Please go ahead, Michelle.
Speaker #5: Hi Joey, Adrian, Florence, and congrats on the very strong results. You ended 2025 with these impressive numbers. My question is about pricing. We noticed that you raised the delivery menu price recently, and earlier we also heard some other brands are raising the price.
Michelle Cheng: Hi, Joey, Adrian, and Florence. Congrats for the very strong results and ended 2025 with these impressive numbers. My question is about pricing. We noticed that you raised the delivery menu price recently, and earlier we also hear some other brands are raising the price. So can you comment on your expectation on the pricing trend, including any changes in your and market promotion activities, and how this will be reflected in the same-store sales growth? Especially, we should have a pretty easy base for the first quarter on both same-store sales growth and overall sales last year first quarter. And separately, if I may, regarding delivery mix, we noticed that delivery mix increased quite a lot, but the margin is still pretty good.
Speaker #5: So, can you comment on your expectation on the pricing trend, including any changes in your and the market's promotion activities? And how will this be reflected in the same-store sales growth, especially since we should have a pretty easy base for the first quarter on both same-store sales growth and overall sales compared to last year's first quarter?
Speaker #5: And separately, if I may, regarding delivery mix, we noticed that delivery mix increased quite a lot, but the margin is still pretty good. So unlike other kinds of catering business, which has been suffering from higher delivery mix and lower margin, for Pizza Hut, we even see payroll costs down in the fourth quarter.
Michelle Cheng: So unlike other kind of catering business, which has been suffering from higher delivery mix and the lower margin, and for Pizza Hut, we even see payroll costs are down in Q4. So can you still elaborate a little bit more on how we should think about 2026 delivery mix and impact on the margin? Thank you very much.
Speaker #5: So can you still elaborate a little bit more on how we should think about 2026 delivery mix and impact on the margin? Thank you very much.
Speaker #5: much. Thank you,
Florence Lip: Thank you, Michelle. Let me take the first part of pricing, and Adrian can answer the second one. The price increase for KFC; it was a mild adjustment. It only affects the delivery menu, and it has no change to dine-in and takeaway. We also did not make any change to the signature campaign such as the Crazy Thursday or the weekend buy more, save more. The price increase helped absorb some rider cost increase because of higher delivery mix. With that said, we remain committed to offering great value for money, something we have done consistently for a long time, and therefore we are very committed to it. That was thoroughly discussed at our investor day together with our good food and emotional value. The primary goal of our business, of our commitment, is still to drive traffic.
Speaker #3: Michelle, let me take the price of pricing, and Adrian can answer the second one. The price increase for KFC—it was a mild adjustment.
Speaker #3: It only affects the delivery menu, and it has no change to dine-in and takeaway. And we also did not make any change to the signature campaign, such as the Crazy Thursday or the weekend Buy More Save More.
Speaker #3: And the price increase helped absorb some rider costs, which increased because of a higher delivery mix. With that said, we remain committed to offering great value for money, something we have done consistently for a long time.
Speaker #3: And therefore, we are very committed to it. And that was a thoroughly discussed day, together with our good food and emotional value. The primary goal of the price of our business, of our commitment, is to still drive traffic.
Speaker #3: So, we are still targeting 13 consecutive quarters of same-store transaction growth, and a fourth quarter of same-store growth in Q1. So far, the trading has been in line with our expectation.
Florence Lip: So we are still targeting 13th consecutive quarter of same-store transaction growth and fourth quarter of same-store growth in Q1. And so far, the trading has been in line with our expectation. So overall, in short, in the short term and long term, I hope this demonstrates our confidence in our business model. Adrian?
Speaker #3: So, overall, in short, in the short term and long term, I hope this demonstrates our confidence in our business model, Adrian.
Speaker #2: Yeah, sure. Michelle, on your second question regarding margin outlook and also the delivery mix—I guess, very briefly, on delivery mix outlook for 2026.
Chen Luo: Yeah, sure. Michelle, on your second question regarding margin outlook and also the delivery mix, I guess very briefly on delivery mix outlook for 2026. We do expect further increase in mix for delivery for full year 2026. I mean, our delivery growth has been pretty solid for the past more than 10 years. And for the past one year, given the dynamics in delivery aggregators, our growth has been particularly high, which has driven a pretty big surge in delivery mix. I think from 48%, sorry, 40%, 42% for last year to around 48% for the full year 2025. So it's a pretty significant increase. And for the full year 2026, we do believe regardless of the delivery aggregator subsidy dynamics, we do expect that the delivery mix will surge further.
Speaker #2: We do expect a further increase in mix for delivery for full year 2026. I mean, our delivery growth has been pretty solid for the past more than 10 years.
Speaker #2: And for the past one year, given the dynamics in delivery aggregators, our growth has been particularly high, which has driven a pretty big surge in delivery mix.
Speaker #2: I think from 40, 42% for last year, to around 48% for the full year 2025. So it's a pretty significant increase. And for the full year 2026, we do believe, regardless of the delivery aggregator subsidy dynamics, we do expect that the delivery mix will surge further.
Speaker #2: And in terms of the margin impact on Yum China and the two brands, as we mentioned in the prepared remarks, we expect the full-year restaurant margin and OK margin to slightly improve year-on-year.
Chen Luo: In terms of the margin impact on Yum China and the two brands, as we mentioned in the prepared remarks, we expect the full year restaurant margin and OP margin to slightly improve year-over-year. We are confident to achieve and deliver that. Specifically on two brands, for KFC, we expect the full year restaurant margin to remain relatively stable year-over-year. It's already at a very healthy level. As you may recall, during our investor day three months ago, we actually gave long-term guidance for KFC's restaurant margin, which is to be relatively stable over the long term as well at a healthy level. For Pizza Hut, we expect the full year restaurant margin to slightly improve from 2025's level with streamlined operation, offsetting higher delivery costs and a higher base year-over-year.
Speaker #2: And we are confident to achieve and deliver that. Specifically on two brands—for KFC, we expect the full-year restaurant margin to remain relatively stable year over year.
Speaker #2: It's already at a very healthy level. And as you may recall, during our Investor Day three months ago, we actually gave a long-term guidance for KFC's restaurant margin, which is to be relatively stable over the long term as well at a healthy level.
Speaker #2: For Pizza Hut, we expect the full-year restaurant margin to slightly improve from 2025's level, with streamlined operations offsetting higher delivery costs and a higher base year over year.
Speaker #2: I would like to reiterate that for quarter one specifically, we faced a tougher year-on-year comparison. As we mentioned in the prepared remarks, there are different factors that we mentioned in terms of meaningful delivery mix increase, and thereby the rider cost increased correspondingly.
Chen Luo: I would like to reiterate that for Q1 specifically, we face a tougher year-over-year comparison, as we mentioned in the prepared remarks. There are different factors that we mentioned in terms of meaningful delivery mix increase and thereby the rider cost increase correspondingly. The tailwind from favorable commodity prices gradually reduced. The Q1 last year is a really high base with KFC's restaurant margin being as high as 19.8%. Pizza Hut's restaurant margin improved by 190 basis points year-over-year in Q1 last year. Both brands have really high base. Obviously, our guidance for the Q1 margin being kind of stable has accounted for the price increase on delivery platforms for KFC. Lastly, I think you asked about how do we understand each line of the key cost line items for full year 2026.
Speaker #2: And also, the tailwind from favorable commodity prices gradually reduced, and also the quarter one last year is a really high base, with KFC's restaurant margin being as high as 19.8%, and Pizza Hut's restaurant margin improved by 190 basis points year over year in quarter one last year.
Speaker #2: So both brands have really high base. And obviously, our guidance for the stable has accounted for the price increase on delivery platforms for KFC.
Speaker #2: And lastly, I think you asked about how we understand each line of the key cost line items for full year 2026. For COS, cost of sales, we expect it to remain relatively stable.
Chen Luo: For COS, cost of sales, we expect it to remain relatively stable. There will be tailwind for commodity prices, but the tailwind will be smaller, and we will pass good value for money to our consumers. So COS will be relatively stable for Yum China and for KFC and Pizza Hut. For COL, cost of labor, obviously, we face continual headwind from the higher rider costs as a result of the higher delivery mix expected for this year as well. And we aim to maintain the non-rider cost stable, offsetting the low single-digit wage inflation through more streamlined operations. And lastly, on O&O, occupancy and other costs, we continue to explore optimization opportunities and expect O&O as percent of sales to keep improving year-over-year for the full year 2026, which is supported by store Capex optimization and better rent. So hopefully that addressed your question. Thank you, Michelle.
Speaker #2: There will be tailwind for commodity prices, but the tailwind will be smaller, and we will pass good value for money through to our consumers. For COS, it will be relatively stable.
Speaker #2: For Yum China, and for KFC and Pizza Hut, for COL—cost of labor—obviously, we face continual headwinds from the higher delivery mix expected for this year as well.
Speaker #2: And we aim to maintain the non-rider cost stable, offsetting the low single-digit wage inflation through more streamlined operations. And lastly, on O&O—occupancy and other costs—we continue to explore optimization opportunities and expect O&O as a percent of sales to keep improving year over year for the full year 2026, which is supported by store capex optimization and better rent.
Speaker #2: So hopefully that addressed your question. Thank you.
Speaker #2: Michelle: Thank you so much, Joey and Adrian.
Michelle Cheng: Thank you so much, Joey and Adrian, and wish you a great Chinese New Year.
Speaker #1: And wish you a great Chinese New Year.
Speaker #3: Thank you.
Florence Lip: Thank you.
Speaker #4: Thank you. We will now take our next question from Chen Luo from Bank of America. Please go ahead, Chen.
Chen Luo: Thank you.
Adrian Ding: Thank you. We will now take our next question from Chen Luo from Bank of America. Please go ahead, Chen.
Lillian Lou: Hi, Joey, Adrian, and Florence. Congrats again on the strong result. In fact, today is Lichun in China. For those foreign investors, it actually stands for the first day of spring. China consumption has been in winter for too many years. Our strong result has fortunately brought us a touch of warmth. My question is more on the sales side. I noticed that our SSG has actually edged up higher in Q4 versus Q3, despite the fact that the online delivery subsidy intensity has eased a little bit Q on Q. What have we done differently to boost SSG in Q4? Also, as we are already into the pre-CNY peak season, can you actually share with us some color on the year-to-date trading environment? I understand that we have the calendar distortion, so any comparison based on the lunar calendar would be helpful.
Speaker #5: Joey, Adrian, and Florence, hi. Congrats again on the strong result. In fact, today it's Li Chun in China, and for those foreign investors, it actually stands for the first day of spring.
Speaker #5: China consumption has been in winter for so many years, and our strong result has fortunately brought us a touch of warmth. My question is more on the sales side.
Speaker #5: I noticed that our SSG has actually edged up higher in Q4 versus Q3, despite the fact that the online delivery subsidy intensity has eased a little bit quarter-on-quarter.
Speaker #5: What have we done differently to boost SSG in Q4? And also, as we are already into the pre-CNY, give us some color on the year-to-date trading environment?
Speaker #5: I understand that we have so many comparisons based on the lunar calendar, so that would be helpful. And lastly, I noticed that for the system sales and revenue growth, usually in previous quarters, revenue growth would be slower than the system sales growth.
Lillian Lou: And lastly, I noticed that for the system sales and revenue growth, usually in previous quarters, revenue growth would be slower than the system sales growth. But in Q4, on the constant currency basis, both numbers came in around 7%. How to reconcile the Q4 pattern versus the previous few quarters? That's all my questions. Thank you.
Speaker #5: But in Q4, on a constant currency basis, both numbers came in around 7%. How do we reconcile the Q4 pattern versus the previous few quarters?
Speaker #5: That's all my questions.
Speaker #5: Thank you. Thank you.
Florence Lip: Thank you. Let me make a few comments on the trading in Chinese New Year, and Adrian can tackle the numbers. So overall, the customer sentiment, as we mentioned at our investor day, we are seeing or we continue to see early signs of improving consumer sentiment, which is good news. With that said, Chinese New Year is a very key trading window. Heavy traffic concentrates into several days, and it creates a very significant challenge to operation. So we need to balance sales initiative with operational efficiency as wages are higher, much higher during the public holidays. Point two is the Chinese New Year this year, as you mentioned, Ruochen, is considerably later than most years. We actually have yet to reach the peak trading. We call it in Chinese Pa Po, so we are climbing up the mountain, but we have not reached the peak yet.
Speaker #3: Let me make a few comments on the trading during Chinese New Year, and also on how Asians can tackle the numbers. So overall, the customer sentiment—as we mentioned at our Investor Day—we are seeing, or we continue to see, early signs of improving consumer sentiment, which is good news.
Speaker #3: With that said, Chinese New Year is a very key trading window. Heavy traffic, concentrated into several days. And it creates a very significant challenge to operation.
Speaker #3: So we need to balance sales initiatives with operational efficiency, as wages are higher—much higher—during the public holidays. Point two is the Chinese New Year this year, as you mentioned, Luo Chen, is conceivably later than most years.
Speaker #3: And we actually have yet to reach the peak trading. We call it in Chinese 'Pa Po,' so we are climbing up the mountain. But we have not reached the peak yet.
Speaker #3: So it's slightly a bit early to make any big comment. So all we can see right now is, while sales are ramping up, year-to-date trading has been in line with our least. We will continue our strategy to expectation.
Florence Lip: So it's slightly a bit early to make any big comment. So all we can see right now, while sales are ramping up, year-to-date trading has been in line with our expectation. Last but not least, we will continue our strategy to drive traffic, sales, and profit growth for the quarter, all three at the same time. We target to deliver our fourth consecutive quarter of positive SSG and 13th consecutive quarter of positive transaction growth, as I mentioned earlier. Adrian?
Speaker #3: And last but not least, drive traffic, sales, and profit growth for the quarter—all three at the same time. We target to deliver our fourth consolidated quarter of positive SSG and thirteenth consolidated quarter of positive transaction growth, as I mentioned earlier.
Speaker #3: Adrian?
Speaker #2: Sure, sure. Luo Chen, on the second question regarding the comparison between revenue growth and system sales growth, yes, normally system sales growth should be slightly higher than revenue growth.
Chen Luo: Sure, sure. Ruochen, on the second question regarding the comparison between revenue growth and system sales growth, yes, normally system sales growth should be slightly higher than revenue growth. And that's mainly caused by the higher growth of the franchise business contributing fully to the system sales, but only roughly half to the revenue. And sometimes you do see similar figure or even same figure for the growth of the two metrics. That's partially also because of rounding as well. But going forward, I think generally speaking, we do expect a slightly higher system sales growth than revenue growth if we kind of disregard the rounding factor in it. So hopefully that addressed your question, Ruochen.
Speaker #2: And that’s mainly caused by the higher growth of the franchise business contributing fully to the system sales, but only roughly half to the revenue.
Speaker #2: And sometimes you do see a similar figure, or even the same figure, for the growth of the two metrics. That's partially also because of rounding as well.
Speaker #2: But going forward, I think, generally speaking, we do expect slightly higher system sales growth than revenue growth, if we kind of disregard the rounding factor in it.
Speaker #2: So, hopefully that will address your question, Luo Chen.
Speaker #3: And also, the system sales—sorry, one more line is system sales growth. When we open a lot of stores during the last quarter, it helps the number, particularly the quarter four is a slightly smaller one.
Florence Lip: Also the system sales, sorry, one more line is system sales growth. When we open a lot of stores during the last quarter, it helps the number, particularly Q4, a slightly smaller one. Yeah, thank you.
Speaker #3: Yeah, thank you.
Speaker #5: Got it. Thanks, Adrian. And congrats.
Lillian Lou: Got it. Thanks again, and congrats.
Speaker #4: Thank you. We will now take our next question from Lilian Liu from Morgan Stanley. Please ask your question.
Adrian Ding: Thank you. We will now take our next question from Lillian Lou from Morgan Stanley. Please ask your question.
Speaker #4: question. Hello, can you hear
Anne Ling: Hello, can you hear me?
Speaker #6: me?
Speaker #4: Yes, we can.
Florence Lip: Yes, we can.
Speaker #6: Okay. Hey, Joey and Adrian and Florence, congrats again. I have one question on Pizza Hut sales momentum, because obviously, it has still delivered very strong momentum in the fourth quarter.
Anne Ling: Okay. Hey, Joey, and Adrian, and Florence, congrats again. I have one question on Pizza Hut sales momentum because obviously KFC still delivered very strong momentum in Q4, higher than Pizza Hut's trend. And I recall on the 2026 onwards, major sales growth will be mainly driven by actual growth, actually, will be mainly driven by Pizza Hut, which should be growing at a faster rate than KFC. So I would like to understand in particular for 2026, what kind of incremental measures management plans to implement to drive up the Pizza Hut revenue or system sales momentum, which could be higher than KFC? Thank you. For Pizza Hut, first of all, our core business continues to drive very nice growth. And 2025, you will see we actually entered more than 200 cities. And this is a very big number for Pizza Hut.
Speaker #6: Higher than Pizza Hut's trend. And I recall on the Invest 2026 onwards, major sales growth will be mainly driven by actual growth, actually. It will be mainly driven by Pizza Hut, which should grow at a faster rate than KFC.
Speaker #6: So we'd like to understand, in particular for 2026, what kind of incremental measures management plans to implement to drive up the Pizza Hut revenue or system sales momentum, which could be higher than KFC.
Speaker #6: Thank
Speaker #6: you.
Speaker #3: For Pizza
Speaker #3: First of all, our core business continues to drive very nice growth. And in 2025, you will see we actually enter more than 200 cities.
Speaker #3: And this is a very big number for Pizza Hut. And that was helped by the Pizza Vow model, which cities. Because for a long alone entered into more than 100, penetration was stuck at 900 cities.
Anne Ling: That was helped by the Pizza Hut WOW model, which alone entered into more than 100 cities because for a long time, Pizza Hut city penetration was stuck at 900 cities. But now we are in over 1,000 cities. 2024 was the year we shared that we feel that Pizza Hut has reached the inflection point. So 2024 with nice growth and 2025 with the help of a Pizza Hut WOW store also grew very nicely. So that's one way. The other one I would like to mention is some additional color on the product. So it's worth trying if you have not tried it yet, is the handcrafted thin crust pizza, Soto Baudi pizza. The new crust actually is really amazing. Within a very short time, it accounts for 1/3 of the pizzas sold. This is a very big number.
Speaker #3: But now we are in over 1,000 cities. And 2024 was the year we shared that we feel that Pizza Hut has reached the—so 2024 was nice growth.
Speaker #3: And 2025, with the help of Pizza Vow store, also grew very nicely. So that's one way. And the other one I would like to mention is some additional color on the product.
Speaker #3: So it's worth trying if you have not tried yet. It's the handcraft thin-crust pizza, so those Bounty pizzas. The new crust was really, actually is really amazing.
Speaker #3: And we think, in a very short time, it accounts for one out of three pizzas sold. And this is a very big number. So now we have a good variety of pizza crusts with four choices: the thin crust, the pan, the hand-tossed, and stuffed crust.
Anne Ling: So now we have a good variety of pizza crusts with 4 choices, the thin crust, the pan, the hand-tossed, and stuffed crust. And for those who spend a lot of time with pizza, you will know that doing pizza crust is the real deal. It's much harder than doing the topping. And the other product I would highlight is burger. We have been selling burger for more than a year now. And it's missing a digit of our sales mix. So from the module to the key products, these are very exciting growth drivers for 2025, and it will continue into 2026. And I think I'll pause here. Thank you, Lillian.
Speaker #3: And for those who spend a lot of time with pizza, you will know that doing pizza crust is the real deal. It's much harder than doing the topping.
Speaker #3: And the other product I would highlight is burger. We have been selling burger for more than a year now, and it's mid-single digit of our sales mix.
Speaker #3: So, from the module to the key products, these are very exciting growth drivers for 2025, and it will continue into 2026. And I think I'll pause here.
Speaker #3: Thank you, Lilian.
Speaker #4: Okay, thank you. Thank you. We will now take a question from An Ling from Jefferies. Please ask your question.
Adrian Ding: Okay, thank you. Thank you. We will now take our next question from Anne Ling from Jefferies. Please ask your question, Anne.
Speaker #6: Hi, thank you, management team. A couple of questions here. So I would like to check first regarding the company mentioning the expansion or ramping up in 2026, the Gemini stores.
Christine Peng: Hi, thank you, management team. A couple of questions here. So I would like to check first regarding the company mentioned about the expanding or ramping up in year 2026, the Gemini stores. So I just want to check whether we will have a figure, how much more Gemini stores do we plan to open. And you mentioned that there is a new format on the franchising, which is called equity franchise model. I'm just wondering whether it means that Pizza Hut will, sorry, I mean, Yum China will be investing in the franchise model, and if you can elaborate that. And the second question is on the new coffee format as well as the KPRO. What is our plan for year 2026 and whether this contributes to same-store sales growth, how much is attributable to same-store sales growth in year 2025? Thank you.
Speaker #6: So, just want to check whether we will have a figure—how many more Gemini stores do we plan to open? And you mentioned that there is a new format on the franchising, which is called the equity franchise model.
Speaker #6: I'm just wondering whether it means that Pizza Hut will—sorry, I mean, Yum China will be investing in the franchise model. And second question is on the new coffee format as well as the KPRO.
Speaker #6: What is our plan for year 2026? Attribute to same-store sales growth, how much does it attribute to same-store sales growth in year 2025? Thank you.
Speaker #6: Again, I'll take the first question, Adrian. You can take the second one. Thank you, An. So, Gemini store at the side-by-side, KFC small-time, and Pizza Hut Vow store is a pair.
Anne Ling: Again, I'll take the first question. Adrian, you can take the second one. Thank you, Anne. So Gemini stores are the side-by-side KFC Small Town and Pizza Hut WOW store is a pair with their own separate entrance and counter. However, on the back, we share the in-store resources, the staff, equipment, rent. And it's particularly effective to enter lower-tier cities. And the CapEx is good. It's only RMB 0.7 to 0.8 million for a pair. So very attractive for franchisees. And the sales is sort of the lighter version of the KFC Small Town and the lighter version of Pizza Hut WOW. So we would like to control the average payback estimate at about still at two years. The menu will continue to be even simpler. So KFC menu will be similar to the Small Town one.
Speaker #6: With their own separate entrance and counter. However, in the back, we share the in-store resources, the staff, equipment, and rent. And it's particularly effective to enter lower-tier cities.
Speaker #6: And the capex is good. It's only ¥0.7, ¥0.8 million for a pair, so very attractive for franchisees. And the sales is sort of the lighter version of the KFC Small Time and the lighter version of Pizza Hut Vow.
Speaker #6: So we would like to control the average payback estimate at about, still at two years. The menu will continue to be even simpler. So KFC menu will be similar to the small time one Pizza Hut menu.
Anne Ling: Pizza Hut menu is probably only about 20 to 25% of the regular margin. We expect the margin contribution will be incremental. It's still early stage. We only have 42 pairs right now. It's a very small number. We are testing it. But we do expect the Gemini model to improve its OP margin of our franchise business in the long term. That's sort of the most updated progress of the Gemini store. Adrian?
Speaker #6: It's probably only about 20–25% of the regular margin. And we expect the margin contribution will be incremental. And it's still early stage. We only have 42 pairs right now.
Speaker #6: It's a very small number, and we're testing it. But we do expect the Gemini model to improve its OP margin of our franchise business in the long term.
Speaker #6: And that's sort of the most updated progress of the Gemini store. Adrian?
Speaker #2: Yeah, sure. And I think you have a small question between the first one and the second one, which is: What is the equity-franchise hybrid model?
Chen Luo: Yeah, sure. Anne, I think you have a small question between the first one, second one, which is what is the equity franchise hybrid model? Just to clarify, that is not a particular store model. It basically means the acceleration of franchising initiative for Yum China. So in the future, we'll become a business shifting from an equity-focused business only to a hybrid of equity franchise business. So that's not a particular store model, just to clarify on that one. And then your second question is basically regarding K-Coffee Café and KPRO. As we mentioned, K-Coffee Café contributes a missing digit of incremental sales to the parent KFC store. And KPRO, which is a reasonably new initiative, I mean, the KPRO model now is quite different from the older KPRO stores years ago, right?
Speaker #2: Just to clarify, that is not a particular store model. It basically means the acceleration of the franchising initiative for Yum China. So, in the future, we'll become a business shifting from an equity-focused business only to a hybrid of equity and franchise business.
Speaker #2: So that's not a particular store model, just to clarify on that one. And then your second question is basically regarding K Coffee, because they're in K Pro.
Speaker #2: As we mentioned, K Coffee Cafe contributes mid-single digits of incremental sales to the parent KFC store. And K Pro, which is a reasonably new initiative—I mean, the K Pro model now is quite different from the older K Pro stores years ago, right?
Speaker #2: So, this new version of K Pro—we opened more than 200 menu locations in the year 2025. And it's contributing double-digit incremental sales for the parent store, with incremental profits.
Chen Luo: So this new version of KPRO, we opened more than 200 menu locations in the year 2025. And it's contributing double-digit incremental sales for the parent store with incremental profits. But given it's only 200 locations or slightly more than 200 locations out of a 13,000 total store count for KFC, so you could imagine the KPRO contribution to the same-store sales there for KFC is rather limited. Similar for K-Coffee Café, actually, because if you think about K-Coffee as a whole, the menu mix for K-Coffee and K-Coffee Café altogether is roughly, we mentioned previously, roughly 4% of KFC's menu mix. So the K-Coffee Café alone is even smaller. But we do have high hopes of both these two modules.
Speaker #2: And, but given it's only 200 locations, or slightly more than 200 locations, out of a 13,000 total store count for KFC, you could imagine the K Pro contribution to the same-store sales there for KFC is rather limited.
Speaker #2: Similar for K Coffee Cafe, actually, because if you think about K Coffee as a whole, the menu mix for K Coffee and K Coffee Cafe altogether is roughly—as we mentioned previously—roughly 4% of KFC's menu mix.
Speaker #2: So the K Coffee Cafe alone is even smaller. But we do have high hopes for both these two modules. When they grow bigger and bigger, when they have more locations, they will represent a higher contribution to the same-store sales growth of KFC.
Chen Luo: When they grow bigger and bigger, when they have more locations, they will represent higher contribution to the same-store sales growth of KFC. Thank you.
Speaker #2: Thank
Speaker #2: you. Thank
Adrian Ding: Thank you. Thank you. We will now take our next question from the line of Christine Peng from UBS. Please ask your question.
Speaker #6: you. Thank you.
Speaker #4: We will now take our next question from the line of Christine Peng from UBS. Please ask your question.
Speaker #6: Thank you, management, for the opportunity to raise questions. So I have two questions. Firstly, it's about K Pro. So Adrian, can you provide us more details in terms of the economics of the K Pro model, such as ticket value, the margin profile, and most importantly, if you can provide some details in terms of the customer profile—kind of the differentiation from the major format of KFC?
Anne Ling: Thank you, management, for the opportunity to raise questions. So I have two questions. So firstly is about KPRO. So Adrian, can you provide us more details in terms of the economics of the KPRO model, such as ticket value, the margin profile, and most importantly, if you can provide some details in terms of the customer profile, the kind of the differentiation from the major format of KFC? I think that would be very helpful to understand the model in a longer term. I think the second question is about the Pizza Hut launching burger. The question for Joey is that what's the management rationale behind this? Because obviously, this is mostly targeted maybe like a single-person menu. And in terms of the product differentiation, pricing strategies, what are the differentiations from the KFC burger offering?
Speaker #6: I think that would be very helpful to understand the module in the longer term. I think the second question is about the Pizza Hut launching burger.
Speaker #6: The question for Joey is: what's the management rationale behind this? Because obviously, this is mostly targeted, maybe like a single person menu. And in terms of the product differentiation, pricing strategies, what are the differentiations from the KFC burger offering?
Speaker #6: And what's going to be the longer-term development strategy for this category going forward? Thank you. Christine, for the K Pro, we plan to double the number of stores in 2026.
Anne Ling: And what's going to be the longer-term development strategy for this category going forward? Thank you. Christine, for the KPRO, we plan to double the number of stores in 2026, so from 200+ to at least 400. And it offers a very good value for money for the light meal with very strong food safety as a brand. And the menu is very distinct. You just need to cross the border and try in Shenzhen. We have quite a few of those in Shenzhen. It offers energy bowls and smoothies. Smoothies are doing incredibly well there. In terms of the format, what else I can say is, again, it's consistent with our corporate strategy of front-end segmentation and back-end consolidation. So it has its own counter and space for seating space for customers. But we share the KFC store space, membership, equipment, resources, you name it.
Speaker #6: So, from 200-plus to at least 400. And it offers very good value for money for the light meal, with very strong food safety as a brand.
Speaker #6: And the menu is very distinct. You just need to cross the border and try it in Shenzhen. We have quite a few of those in Shenzhen.
Speaker #6: It offers energy bowls and smoothies. Smoothies are doing incredibly well there. In terms of the format, what else I can say is, again, it's consistent with our corporate strategy of front-end segmentation and back-end consolidation.
Speaker #6: So it has its own counter and space for seating for customers. But we share the KFC store space, membership, equipment, and resources—you name it.
Speaker #6: And here's some interesting sort of context for the customer. A significant portion of customer naming—could be as high as 80% or 90% of our sales—are from KFC members.
Anne Ling: Here's some interesting sort of context for the customer. A significant portion of customers, meaning, could be as high as 80% or 90% of our sales are from KFC members. And this is a great example of how our membership program is really helping our long-term and short-term business. So it's alternative. It's an alternative for KFC members, and that drives frequency. The frequency so far is very pleasing to us because it gives very little psychological burden to people for their light meal option, I guess. And also, you can imagine the office location worked really well for the KPRO. So we are hopeful for that. And then let me move on to Pizza Burger. We offer that for over a year now. And it's different from KFC burger. It's different in both ways.
Speaker #6: And this is a great example of how our membership program is really helping our long-term and short-term business. So it's alternative—it's an alternative for KFC frequency so far as members.
Speaker #6: And that drives frequency. That is very pleasing to us because it gives very little psychological burden to people for the light meal option, I guess.
Speaker #6: And also, you can imagine the office location worked really well for the KPRO. So we are hopeful for that. And then let me move on to Pizza Hut burger.
Speaker #6: We have offered that for over a year now. And it's different from the KFC burger. It's different in both ways. The Pizza Hut burger bun is freshly made in the store with the same pizza crust dough, if that makes sense.
Anne Ling: The Pizza Burger, the bun is freshly made in the store with the same pizza crust dough, if that makes sense. So now you can probably understand why we are doing burger because we have this lovely dough. We can make pizza dough, and we can also make burger bun. Why not? It tastes really good and then with very high-quality meat. And there are two flavors, which are fantastic: the burger with pineapple, fresh pineapple, and also bolognese sauce, which is quite creative. Why bolognese sauce? It's pizza. Pizza sauce. It's a sauce the customer really loves. It's classic. So we have this new product, burger. And you are absolutely right. It works very well for the single-person's offering. And we can see the single-person meal is an opportunity for Pizza Hut.
Speaker #6: So now you can probably understand why we are doing burger. Because we have this lovely dough. We can make pizza dough, and we can also make burger bun.
Speaker #6: Why not? It tastes really good. And then we're very high-quality meat. And there are two flavors which are fantastic. It's the burger with pineapple, fresh pineapple.
Speaker #6: And also Bolognese sauce, which is quite creative. White Bolognese sauce is pizza. Pizza sauce is the sauce the customer really loves. It's classic. So we have these categories, these new products of burger.
Speaker #6: And you are absolutely right. It works very well for the single-person's offering. And we can see the single-person meal is an opportunity for Pizza Hut.
Speaker #6: Right now, the base is low. But for 2025, that one-person meal is growing at 50%—five-zero—for Pizza Hut. It's lovely. So we continue to do a bit more of that.
Anne Ling: Right now, the base is low, but for 2025, that one-person meal is growing at 50%, 5.0 for Pizza Hut. It's lovely. So we continue to do a bit more of that. And let's see what 2026 will bring us. But again, it's still early days. It's only one year. We'll continue to learn and do better for our customers. Thank you, Christine.
Speaker #6: And let's see what 2026 will bring us. But again, it's still early days. It's only one year. We'll continue to learn and do better for our customers.
Adrian Ding: Thank you, Joey. I'll take our next question from Ethan Wong from CLSA. Please go ahead, Ethan.
Speaker #4: Now, let's take our next question from Ethan Wang at CLSA. Please go ahead.
Speaker #4: Ethan. Good
Ethan Wang: Good evening. So my question is on the delivery.
Speaker #7: Good evening. So my question is on the delivery.
Speaker #6: Sorry, Ethan. You might want to speak louder. We're having a hard time hearing.
Adrian Ding: Sorry, Ethan. You might want to speak louder. We have hard time hearing you.
Speaker #6: you. Sorry about
Ethan Wang: Sorry about that. Good evening.
Speaker #7: Good evening. Yes, Joey. And yeah, hi. So my question is on the delivery strategy. So if we take a relatively longer-term view, I know delivery is our key strategy to grow our same-store sales growth.
Adrian Ding: Thank you.
Speaker #6: Thank you. that.
Ethan Wang: Yes, Joey. Yeah, hi. So my question is on the delivery strategy. So if we take a relatively longer-term view, I know delivery is our key strategy to grow our same-store sales growth. We mentioned that yesterday. But given what is happening in China, and especially last year, it seems likely that consumers also want dining experience when they do so much delivery. And in lower-tier cities, maybe consumers also want to do dining. So I'm just wondering, how do we think about the dining and the pickup consumption scenario going forward? Are we saying we still focus on delivery, so that is the only focus, or actually, we're doing something on those two fronts? That's my question. Thank you.
Speaker #7: We mentioned that we invest today. But given what is happening in China, and especially last year, it seems likely that consumers also want dining experience.
Speaker #7: When they do so much delivery, and in low-tier cities, maybe consumers also want to do dine-in. So I'm just wondering, how do we think about the dine-in and the pickup consumption scenario going forward?
Speaker #7: Are we saying we still focus on delivery, so that is the only focus, or actually we're doing something on those two fronts? That's my question.
Speaker #7: Thank you.
Speaker #6: Thank you, Ethan. That's a good question as well. So, as we have observed over the last 10 years' trend, as Adrian mentioned earlier, the delivery continues to grow.
Adrian Ding: Thank you, Ethan. That's a good question as well. So as we have observed over the last 10 years' trend, as Adrian mentioned earlier, the delivery continued to grow. So we continued to expect it to grow in 2026 too. But at the same time, I'm with you too. The dine-in and takeaway will still continue too. If I look at Pizza Hut, the takeaway, for example, 2025 takeaway percentage compared to 2019, it almost doubled. And I want to grow more for takeaway. Takeaway is a good business. But at the same time, dine-in is still an important part of our business. For KFC, dine-in is still about 30%, and Pizza Hut is over 40%, 45%. So it's still a very important part. And we still believe that the business will still be there in the long term.
Speaker #6: So we continue to expect it to grow in 2026, too. But at the same time, I'm with you, too. The dining and takeaway will still continue, too.
Speaker #6: If I look at Pizza Hut, the takeaway, for example—the 2025 takeaway percentage compared to 2019—it almost doubled. And I want to grow more for takeaway.
Speaker #6: Takeaway is a good business. But at the same time, dining is still an important part of our business. For KFC, dining is still about 30%.
Speaker #6: And Pizza Hut is over 40%, about 45%. So it's still a very important part. And we still believe that the business will still be there in the long term.
Speaker #6: But at the same time, we are not judgmental. We basically embrace whatever the customer preference is in terms of delivery, takeaway, and dining. And we strive to serve them well in all three channels.
Adrian Ding: But at the same time, we are not judgmental. We basically embrace whatever the customer preference in terms of delivery, takeaway, and dine-in. And we strive to serve them well in all three channels. And then we'll balance the cost structure to do the best we could. So yeah, we're really open-minded, and we'll do our best. But dine-in will continue. And in the lower-tier city, would dine-in be slightly higher to a certain extent in the sense that the ticket average, all the big family consumption, still is a ganshu. But one last thing is, how do we balance the growth of delivery? While the growth of delivery continues, we protect the margin, as you can see we have done it.
Speaker #6: And then we'll balance the cost structure to do the best we could. So, yeah, we really are open-minded, and we'll do our best. But dining will continue.
Speaker #6: And in the lower-tier city, with dining being slightly higher, to a certain extent, in the sense that the ticket average or the big family consumption still is a ganxue.
Speaker #6: But one last thing is, how do we balance the growth of delivery? While the growth of delivery continues, we protect the—but at the same time, we have new growth margin, as you can see.
Speaker #6: We have done it. Drivers, such as Tesuchi or Cayman Zoom, mean customers right now. We see a growing trend in terms of car ownership, right?
Adrian Ding: But at the same time, we have new growth drivers such as drive-thru or curbside, means customer right now, we see growing in terms of car ownership, right? The car ownership is growing. And then the business related to that is growing too. And then we will deliver the food closest to customer's car. And that is growing nicely. Now we have over 4,000+ KFC stores have that we call car-side pickup. So we are doing a variety of the business to balance the sales growth. Thank you, Ethan.
Speaker #6: Car ownership is growing, and then the businesses related to that are growing too. And then we will deliver the food closest to customers' cars.
Speaker #6: And that is growing nicely. Now we have over 4,000-plus KFC stores that have that. We call it car-side pickup. So we are doing a variety of the business to balance the sales growth.
Speaker #6: Thank you,
Speaker #6: Ethan. Thank you,
Ethan Wang: Thank you, Joey.
Speaker #7: Joey. Thank
Adrian Ding: Thank you. Our final question for today comes from Sijie Lin from CICC. Please go ahead, Sijie.
Speaker #4: Today comes from you. Our final question for Sujielin from CICC. Please go ahead, Sujiel.
Speaker #8: Thank you for the last question. Thank you, Joey and Adrian. So, my question is on the delivery platform subsidy. We know it's very dynamic.
Sijie Lin: Thank you for the last question. Thank you, Joey and Adrian. So my question is on the delivery platform subsidy. We know it's very dynamic. But could you provide a sense on how should we evaluate the trend and impact in 2026? And when the platform competition mitigates, what measures will we take to attract customers back to our own channels? Thank you.
Speaker #8: But could you provide a sense on how we should evaluate the trend and impact in 2026? And will the platform competition mitigate? What measures will we take to attract customers back to our own channels?
Speaker #8: Thank you.
Speaker #7: Thank you, Sujiel. So on delivery platform subsidy dynamics, as we mentioned in the prepared remarks, we have a different scenario planning for the subsidy, how that evolves.
Ethan Wang: Thank you, Sijie. So on delivery platform subsidy dynamics, as we mentioned in the prepared remarks, we have a different scenario planning for the subsidy, how that evolves. And regardless of what the scenario would be, we believe and we're confident that the impact on our business will be limited because of our disciplined approach to drive sales, at the same time to protect margin and price integrity. And at the same time, and that's kind of the short-term horizon, the long-term horizon is we do believe this whole delivery aggregator subsidy, as we previously mentioned, is good for the merchants, especially the larger merchants in the long run because the merchants have choice of working with multiple parties. And also, we can obviously take the opportunity to secure some long-term benefits during the subsidy war. So that's a response on both the short-term and long-term.
Speaker #7: And regardless of what the scenario would be, we believe, and we're confident that the impact on our business will be limited because of our disciplined approach to drive sales.
Speaker #7: At the same time, to protect margin and price integrity. And at the same short-term horizon, the long-term time, and that's kind of the horizon is we do believe this whole delivery aggregator subsidy, as we previously mentioned, is good for the merchants, especially the larger merchants, in the long run because the merchants have choice of working with multiple parties.
Speaker #7: And also, we can obviously take the opportunity to secure some long-term benefits during the subsidy war. So that's a response on both the short-term and long-term.
Speaker #7: And I think the natural question has always been on margin. And as we demonstrated in the previous quarters, we were able to protect our margins, actually even slightly increase our margin.
Ethan Wang: I think the natural question has always been on margin. As we demonstrated in the previous quarters, we were able to protect our margins, actually even slightly increase our margin. That's why we're confident to give the guidance for the full year 2026. We have an improvement in restaurant margin and OP margin for Yum China slightly. But I would like to caution again, sorry to repeat myself, for Q1, we face a tough comparison. Our guidance for Q1 is to stay roughly in line for restaurant margin and OP margin year-over-year for Q1. Thank you, Sijie.
Speaker #7: And that's why we're confident to give the guidance for the full year 2026. We have an improvement in restaurant margin and OP margin for Yum China slightly.
Speaker #7: But I would like to caution again, sorry to repeat myself, for quarter one, we faced a tough comparison. And our guidance for quarter one is to stay roughly in line for restaurant margin and OP margin year-over-year for quarter one.
Speaker #7: Thank you, Sujiel.
Speaker #6: Thank you, Adrian. Thank you,
Adrian Ding: Thank you, Adrian. Thank you, Joey. This concludes our Q&A session. Thank you for joining the call today.
Speaker #8: Thank you, Adrian.
Speaker #6: Joey. This concludes our Q&A session. Thank you for joining the call today.
Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.
