Yum China Holdings, Inc. (YUMC) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 31, 2023 8:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Thank you for standing by, and welcome to the Yum China Second Quarter 2023 Earnings Conference Call. All participants are in a listen-only mode. There will be a presentation followed by question-and-answer session.

I would now like to hand the conference over to Ms. Michelle Shen, IR Director. Please go ahead.

Michelle Shen

Thank you, Ashley. Hello, everyone. Thank you for joining Yum China's Second Quarter 2023 Earnings Conference Call. On today's call are our CEO, Ms. Joey Wat; and our CFO, Mr. Andy Yeung.

Before we get started, I'd like to remind you that our earnings call and investor materials contain forward-looking statements, which are subject to future events and uncertainties. Our actual results may differ materially from these forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statement in our earnings release and the risk factors included in our filings with the SEC.

This call also includes certain non-GAAP financial measures. You should carefully consider the comparable GAAP measures. Reconciliation of non-GAAP and the GAAP measures is included in our earnings release.

You can find the webcast of this call and a PowerPoint presentation on our IR website.

Now I would like to turn the call over to Joey Wat, CEO of Yum China. Joey?

Joey Wat

Hello, everyone, and thank you for joining us today. I'm delighted to report outstanding performance in the second quarter, both topline and bottom line. Our results are the testament to our resilient in anti-fragile business, which allow us to capture upside in good times and protect downside in bad times. From the back office to the front lines, our teams are doing a great job. During the quarter, we reached new heights on multiple fronts.

First, sales performance. Total revenue of $2.65 billion set the new record for second quarter, especially given the exchange rate. System sales grew 32% and same-store sales grew 15% year-over-year. We observed strong demand around holidays. Trading for the May 1st Labor Day holiday was vibrant. However, demand actually softened afterwards with a dip in customer traffic. We adjust nimbly with attractive campaigns and regain sales momentum in June.

On June 1st Children's Day, we hit the record 8.5 million transactions that equivalent to a transaction every minute in every location across our 13,000 plus store portfolio in a single day. Thanks to our amazing operation team, robust end-to-end digitalization and agile supply chain. We flexibly handle the spike in demand during campaigns without compromising quality and customer service. The result demonstrate our brand equity and ability to connect with customers with delicious, innovative food and compelling value for money.