Ladies and gentlemen, thank you for standing by, and welcome to the Yum China 2019 First Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today, Tuesday, the 30th of April 2019. I would now like to hand the conference over to your first speaker today, Ms. Florence Lip. Thank you. Please go ahead.

Thank you, Rachel. Hello, everyone, and thank you for joining Yum China's first quarter 2019 earnings conference call. Joining us on today's call are Ms. Joey Wat, CEO of Yum China; and Mr. Jacky Lo, CFO of the company. Before we get started, I'd like to remind you that our earnings call and investor presentation contains 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 and reconciliation thereto. Today's call includes three sections. First, Joey will cover Yum China's fourth quarter 2018 highlights; and Jacky will cover the financial results. We will then open the call to questions. The webcast of this call will be available on our IR website. A PowerPoint presentation, which contains operational and financial information for the quarter is available for download as well. At this time, I would like to turn the call over to Ms. Joey Wat, CEO of Yum China.

Thank you, Florence. Hello, everyone, and thank you for joining us today. First, I would give an overview of the quarter before providing more detail on our operational initiatives for each of our core brands. I'm pleased to report that we delivered our 10th consecutive quarter of system sales growth since we spun off from Yum brand. Strong systems sales growth of 9% was driven by accelerated new store openings, robust performance at KFC and a meaningful improvement at Pizza Hut. In the first quarter of 2019, we continued to aggressively expand our market leading footprint, opening 237 stores compared to 203 stores in the same period last year. Our new store openings continue to be dominated by KFC given the attractive cash payback period and strong growth opportunities. With excellent execution over the critical Chinese New Year period, KFC delivered an 11% increase in system sales and a 5% increase in same store sales, successfully lapping three very strong first quarters with healthy growth across all city tiers. We are also pleased to see the ongoing improvement at Pizza Hut, which achieved positive 1% same-store sales growth, strong increase in traffic and significant margin improvement. Excluding the Wuxi, re-measurement gain in the first quarter of 2018, we successfully achieved operating profit growth in the first quarter, despite the margin pressure from rising poultry prices and wages. This reflects the benefit of self-leverage and our effective cost management initiative. We were also very pleased to unveil our strategic partnerships with Sinopec sales company and CNPC at our Investor Day. Through these partnerships we will jointly develop the gas station retail business, which is an exciting example of the many untapped opportunities to grow our presence in China. Now I will provide more color on the performance and strategy of our…

Thank you, Joey. Good day, everyone and thank you for joining us. Let me quickly go over our first quarter 2019 financial results. Total revenues reached $2.3 billion in the quarter, up 10% year-over-year excluding foreign exchange translation. Total system sales grew 9% year-over-year ex-FX, primarily due to strong same-store sales growth and a series of new store openings at KFC as well as improving sales at Pizza Hut. We opened 237 new stores during the quarter, an average of well over two stores per day and the majority were KFC stores. Our portfolio is now 8,653 restaurants as of the end of March 2019. Looking at our current pipeline, we are confident that our gross new openings will exceed the top end of our original target of 600 to 650, and we'll provide additional detail as we get greater visibility on our second half pipeline. During the quarter, KFC year-over-year system sales grew 11%, while Pizza Hut system sales increased 3% both excluding foreign exchange translation. Yum China same-store sales increased 4% with KFC same-store sales grew 5% despite lapping three consecutive years of positive same-store sales growth. And Pizza Hut achieved same-store sales growth of 1% the first time since 2017, and a significant improvement compared to 2018. During the quarter, KFC traffic increased 3% year-over-year, while ticket average increased 2% year-over-year due to pricing offset by increased promotions. Pizza Hut traffic increased 8% year-over-year and was positive for both dining and delivery businesses. As a result of successful value promotions and digital initiatives, ticket average decreased 7% year-over-year as a result of our focus on driving value perception and the growing share of delivery. KFC restaurant margin was under pressure at 20% versus 20.9% in the first quarter of 2018. Positive sales leverage and labor productivity improvement,…

Thank you, Jacky. To sum up, the 2019 got off to a good start with strong execution during our critical Chinese New Year sales period. I want to take this opportunity to send our operations team who are at the front line of our business as well as all the supporting functions for their hard work. KFC continues to perform strongly as a very resilient and defensively profitable business model and is well positioned to manage market uncertainties. We see a long runway for growth for KFC as we continue to add new units across the country and drive same-store sales growth through daypart expansion and delivery, We are seeing multiple positive signals in our revitalization of Pizza Hut, with positive things ourselves, significantly improved traffic and improved profitability, as well as positive trends in customer feedback. We know there is more work to do, but we've remained confident in the revitalization plan for Pizza Hut. At our Investors Day in March, we aligned our commitment to our vision of becoming the world's most innovative the restaurant company and demonstrated the powerful impact the innovation has on driving growth. By adapting to our customers' needs and utilizing new technologies, Yum China is focused on relentlessly driving defensible, profitable growth. For those of you who were not able to join us back to March, I encourage you to review the presentations and webcasts available on our webcast. With that, I'll pass you back to Florence to start the Q&A. Thank you.

Thanks, Joey. We will now open the call for questions. In order to give as many people as possible the chance to ask questions, please limit your questions to one at a time. Rachel, please start the Q&A.

[Operator Instructions] Your first question comes from the line of Sara Senatore from Bernstein. Please ask your question.

Thank you. I just wanted to follow-up on the comment you said on demand environment. We've heard from another Western QSR saying that it also seeing intensified competition around value. But that it's also seeing a stabilization or improvement its own trend. So I'm just trying to reconcile what I think we're hearing about the environment with a couple of data points that say that companies themselves are doing better. So do you think you're seeing something where sales players are taking a lot of share from smaller independent is it local concepts that are losing some of that traffic and is the distinction is it a better value proposition that you're offering, is it the digital piece just trying to understand how it is that the environment is getting more competitive, but your businesses are improving.

Thank you, Sara. It's very difficult to comment on the environment, but the good news is we definitely have seen KFC continues to be a very resilient business model in a range of demand environment. From competitors side or in the market we - or from the from the customer demand we certainly see the customer demand for good value products, but that's not enough. And what we have learned in the last few decades is the combination of fantastic products and great value. So it's the combination that give great value for money for the customers. And then at the store is the execution is the day-to-day operation. So for us, we just continue to focus on what we are good at and what we see customer want is great product, great value, really good operation, exciting marketing campaign. And they of course, supported by the digital innovation, which comes in both marketing and operations. So it's a combination of the key value proposition that customers want. It's very hard to sort of single out one particular reason really. So I hope that gives you a feel of the competition that we are in and what do we do to please our customers really.

Thanks.

Your next question comes from the line of Michelle Cheng from Goldman Sachs. Please ask your question.

Hi management, congrats for the good results. My question is about coffee pleasure, especially for KFC, we noted that in the first quarter the food costs increased significantly and as you have been mentioned that to comprise will continue to be the pressure. But also understanding from third quarter last year we launched this Crazy Thursday event. So is it possible to help us split the impact between these value for money promotion versus the comprised impact. And also I think earlier we guided full year like low single-digit commodity inflation, are we still maintaining these expectations? Thank you.

Jacky?

Yes, well Mitchell maybe I'll just give you some additional colors in terms of the KFC restaurant margin in this quarter. I can go for line by line. So overall if you look at KFC restaurant margin it was down about one percentage point year-over-year. So we mentioned both on the Q4 earnings call as well as the Investor Day, poultry innovation will put some pressure on the restaurant margin. So initially we said at least in the first half of 2019, but right now based on the current trend we expect it would continue for the remainder of the year. So overall obviously KFC has self-leveraged in the 5% same-store sales growth in Q1, but that was offset by inflation and promotions for example like Crazy Thursday. So let me give some additional colors line by line. So first on food and paper cost, since the Crazy Thursday promotion was so well received by customers we continued the promotional activities in Q1. So that actually put some pressure on the margin on the food cost. But commodity inflation was also mid-single digit this quarter due to the increased poultry prices which is higher than the typical low single-digit we saw in prior quarters. And on labor cost, so there was obviously labor inflation, it was high single-digit, and we have worked very diligently on the labor productivity and also in-store efficiency to offset that impact. And so - and looking forward in terms of chicken price, the market price were up about 30% year-over-year, but for KFC we managed to keep the price increase at low double-digit in Q1. So with our long-term relationship with our suppliers, we're able to negotiate lower their market price increase during times of very high poultry inflation. And we also benefit a bit from the lagging effect due to the inventories from the chicken we procure in the fourth quarter of 2018. So as I just mentioned the commodity inflation was about 5% this quarter which is higher than normal and so we expect this continue for the rest of the year. But keep in mind poultry is only one of many commodities in KFC and we'll continue to optimize our product mix and look for alternative cost of chicken or alternative protein. So - and we face inflation every year and price volatility is nothing new to us. So we have managed it very well for the last 30 plus years. But in terms of your question on inflation, so in this quarter wage inflation was about 6% so high single-digit for KFC and low single-digit for Pizza Hut - mid-single digit for Pizza Hut and commodity was 3%. So as I just mentioned it was 5% for KFC and a slight deflation for Pizza Hut. But looking forward we maintain the guidance that we provided. So for the full year we still expect low single-digit commodity inflation and high single-digit labor inflation.

Thank you, Jacky. Michelle, maybe I'll provide a little bit color on this one. So for our Crazy Thursday promotion, since last year we have been able to find product with very good course economics. Therefore we are able to maintain the margin despite the challenges of poultry price increase. And as Jacky mentioned, we will continue to find sort of alternative products to promote during the Crazy Thursday and of course the crazy Thursday the sales leverage helped the margin as well. So net-net it was down and we'll continue to manage that for the rest of the year. Thank you, Michelle.

Thank you very much.

Your next question comes from the line of Brian Bittner from Oppenheimer. Please ask your question.

Hi, thanks. This is Mike Tamas, on for Brian. Just wanted to talk about the Pizza Hut margins a little more, you had great margins in the first quarter. So I'm just wondering how much of that can actually continue throughout the year or were there some very specific things that are siloed to the first quarter that aren't going to repeat for the rest of the year? Thanks.

Sure, Mike. So if you look at Pizza Hut restaurant margin, it was up almost 4 percentage point year-over-year. So again, let me go through line by line. So in terms of food and paper cost, our investment in promotional activities and value campaigns, such as Scream Wednesday, has been very critical component of our strategy to drive traffic and all the value for money to customers. So with a step up in value promotion in this quarter, so we are very pleased to see that Pizza Hut restore positive same-store sales growth and continue to see significant traffic growth. But albeit that put some pressure on our restaurant margin for the short-term. And the sales leverage and commodity deflation have to offset the impact of the value promotion. So on labor costs, labor inflation was mid-single digit year-over-year, and we have significant improvement in labor productivity during the quarter. But some of these is ongoing, a significant portion is related to better matching of labor and sales during the critical Chinese New Year period, which I talked about earlier during the prepared remarks. So - and on occupancy and other costs, there are few components in this line item, but the improvement mainly came from a combination of savings in utility, from lower utility price, and the efficiency management, and also less depreciate expense from all the stores impairment we took in prior years. So in addition, I want to point out one point before we took back control of the last mile delivery in the later part of 2018, the rider costs were amounts we paid to aggregators, and they were record under occupancy and other costs, for example, in Q1 last year. But with the delivery being handled by own dedicated riders now, the rider costs have been included under cost of labor, for example, in this quarter. Looking forward for the remainder of the year, over at a high level we will is continue to drive labor productivity, and improve in-store efficiency, reduce restaurant operating costs, and manage and tighten cost of sales to offset all the value promotions that will take and also wage inflation. However, due to the one-off items I just talked about, for example, the labor productivity, so keep in mind we have a very low base last year. We talked about that extensively on Q1 last year's earnings call. So the year-over-year improvement is expected to taper off. And also the utility savings that we talk about, we expect that impact to reduce in the second half of the year. So also we are adjusting the business model, and we have a very clear and deliberate strategy in the short-term to drive traffic through investment in promotions. So I just want to reiterate at this point, our strategy is to restore traffic and sales, followed by profit. But in the longer term as the revitalization takes hold, we are very confident in restoring the margin back to the revitalization level.

Thank you, Mike.

Your next question comes from the line of Chen Luo from Bank of America Merrill Lynch. Please ask your question.

Thank you, and congratulations on the solid Q1 result. Just now, we comment that KFC's very strong same-store sales growth in Q1 cannot be an indicator for the full year same-store sales growth. But in fact, heading to the coming two quarters, we actually are facing a very easy lap. So what actually makes us give a pretty cautious guidance of same-store sales growth for the rest of the year? Is there anything that we have seen, i.e. conditional other factors that actually makes us a bit cautious. And also related to that question, given the riding pressure of the chicken cost, are we actually going to reduce the promotional intensity, especially in view of the easy lap to keep up better productivity between same-store sales growth gross and margins for KFC? Thank you.

Thank you, Luo Chen. For the lapping, for management, there's no such thing called easy lap to be honest. If we look at the three years CAGR, Q1 for KFC the last year was 5%. And Q2, actually for three years CAGR actually was 4%. And then if we look at last year's numbers, last year we have very exceptional Q1 and then Q2 relatively flat, as well. So we are quite cautious over three years' time, the last lapping is still not so easy still a challenge. So we just sort of have a bit of caution about simple extrapolation of the trend for Q1. The business, particularly for KFC the momentum is good, the business is doing well and it has proven to be very resilient. But we must always be prepared to respond to unexpected conditions rapidly. Of course, our business is structured and agile to do, but we still have to be cautious. Regarding your question about less promotion, given the high poultry price, as Jacky mentioned earlier, as I mentioned earlier, the way that we support the Crazy Thursday basically there are two ways to support it. One is, we look for products that have very good course economics. So that is a win-win-win situation, is a win situation for us, is a win situation for supplier, is a win situation for customers. Alternatively, we will look for some sort of ingredient that that probably has not been used before like [indiscernible], which we tried that in the last quarter. So we are looking for an exciting product with good course economics that pleased the customers. Driving traffic is very important, and as I mentioned at the very beginning the first question, responding to Sara, smart value is still very important to our customers, as we have seen from last year and the Q1 this year. So we'll manage the balance of the sales and margin. But I just want to emphasize smart value with exciting products still incredibly important to our customers. Thank you, Lou Chen.

Thank you, Joey.

Your next question comes from the line of Xiaopo Wei from Citigroup. Please ask your question.

Joey, Jacky, good morning, congratulations on strong result. My question is focused on the restaurant margin, if we look at the restaurant margin of both KFC and Pizza Hut, we're seeing that the occupancy and other operating expenses to sales ratio actually was down year-on-year, the each of the division my understanding is a benefit from strong delivery. And also you're better efficiency, maybe some smaller size of new store which open last year. So I'm seeing this component were offsetting on a negative impact of the higher poultry cost pressure looking forward. Shall we see this kind of trend will continue in the next few quarters mitigating the impact of commodity cost? And also accelerated openings in the rest of the year. Thank you.

Yes. So first of all, let me just give some additional colors on the occupancy and other costs. So this line item actually include a few components. So advertising and marketing expenses, utility expenses, rental expense, depreciation expense, the license fee we paid for Yum brands and all the other miscellaneous restaurant related costs. So the improvement in this particular quarter was mainly due to obviously sales average. And also I talked about earlier the utility savings from lower utility price and efficiency management, which we started last year. And also there's less depreciation expense after the stores impairment we took in prior years. And also for KFC there was savings in advertising and marketing expenses, because we are shifting from the traditional mass media to a digital and targeted marketing. And I touched on this briefly earlier also for Pizza Hut, you see a significant improvement is because we took back the last mile of the delivery. So there was a classification difference quarter-to-quarter. So in last year's Q1, all these delivery riders costs were in occupancy and other costs, but in this quarter is in the cost of labor. And looking forward, we expect some savings in occupancy and other costs in the first half of 2019. But it will gradually reduce due to the lapping year-over-year. And in terms of poultry, initially we expect the inflation to be high in the first half and then it will gradually tail off in the second half. But right now, looking at the current trend, we expect maybe there'll be some continuous pressure throughout the rest of the year. So - but occupancy and others already talked about is going to - the impact will taper off. So it may not necessarily like offset each other.

But Xiaopo, I think, I sense your sort of - your assumption behind the question whether the smaller store have some correlation with all the savings. I think generally, we can have that assumption. Because for the new stores that we are opening in both KFC and Pizza Hut, we certainly go into a direction of smaller, faster and more delivery friendly stores. As you can imagine with smaller stores or faster store basically smaller store and we - management has done a lot to reduce the investment per store. So, the combined effect is lower depreciation, lower rent, lower utility just because we are more strategic about the type of the new stores that we are opening. So, I think if my sense of your assumption behind your question, I would say, yes, generally there is such correlation. I hope we answered your question or am I assume question of your question.

Yes. So Joey, I just want to clarify. So why I asked the questions, because last year we have accelerated opening. And Jacky also mentioned in the presentation that we will accelerated openings this year as well. But if we look at the fourth quarter results for the margin, actually, we didn't see a lot of impact on the restaurant margin due to new opening. As we've seen other global retailers in the same scenarios is why we ask the question.

Yes, Xiaopo, I mean, maybe I can answer this and then Joey, you can elaborate as well. So I mean, yes, I mean, we talked about us continue to accelerate new builds for KFC. So the main reason is to capture market share. So that helps to drive the strong system sales and operating profit you see in this quarter the significant growth. But all these new units, especially in China, because of our first mover advantage, but also they will be dilutive due to the time it takes to nurture these stores and until maturity. So there'll be some short-term pressure on margin for sure, from all this - from this accelerated new unit development strategy. And also for Pizza Hut, I mean, I want to also talk about the remodel. So as we talk about, we're going to aggressively remodel about 500 stores this year. And in the first quarter, we only remodel about 28 stores. So they are still over 470 plus stores that we have not remodeled. So right now we are looking, maybe wait towards Q2 and Q4, we'll actually ramp up the remodel, because Q3 is the summer rush period. So we want to maybe scale towards Q2 and Q4. So obviously, over the years, we have improved the speed and the cost of the remodel, but nonetheless, it's going to put some pressure on sales and operating profit. So - because there will be low sales for period of time.

During the time we close the store for remodeling.

So yes, also overall, a series of new builds, accelerated remodels all these initiatives will put pressure on the margin.

Initial terms. Thank you, Xiaopo.

Thank you.

Your next question comes from the line of Lillian Lou from Morgan Stanley. Please ask your question.

Thanks management. Because most of the questions were answered. So I have a bit follow-up coffee, because I think Joey saying so much the corporate day, I think the company formally put coffee as one pillar for growth in the long-term. So I know that you share a little bit more information about the progress. But could you give us a little bit more idea of - in terms of cups of coffee sold year-to-date compared to last year. And also you start to do office delivery type of coffee, is this under COFFii & JOY or is under K Coffee or actually we're doing both? Thank you.

Lillian. Hi, good morning. For the Q1 the cups sold in that was 126. So that's very nice for KFC this is for KFC. And then for COFFii & JOY we have not start to count it that way yet because it's still early days, we look at how many stores we open. We have opened five more store for Q1. So right now we are at 18 stores altogether. So for delivery we have we have been delivering delivery for COFFii & JOY and K Coffee, but mainly K Coffee really. So Lillian just for your question about delivery just want to make sure I answer your question you more curious on C&J part or the K Coffee there.

I think the both.

Okay. K Coffee we've been good in K Coffee obviously in 2015. And we are very pleased to see the scale of the business and the growth rate. And the proposition is mainly [indiscernible] is a cup of good coffee with good price. So we'll continue to drive it in KFC, we'll strengthen the branding a bit because we can see the potential in it. And delivery has been part of the business. Because we deliver K Coffee together with breakfast and other food. And for C&J the coffee delivery business is still early days really, we have to figure out the business model as we speak. So it's a bit early. But we do some kind of - we do delivery. We also mentioned in my presentation earlier that we work with WeWork, so the coffee WeWork is not delivery, we actually have our lovely coffee machine with the beans that produce coffee in the WeWork offices in Shanghai and then later on would be Beijing. So as you can see, because C&J is such a new concept in terms of business in terms of store model, business model, delivery model or even B2B model. We still accelerate and we will report that when we have more concrete conclusion, and then we will roll it out if we are commence. I mean I hope I answer your question on that. But for further more detailed question, I can follow up with you afterwards.

Your next question comes from the line of Anne Ling from Deutsche Bank. Please ask your question.

Hi, management team. Just want to check on in the call and also during the Investor Day that you mentioned a couple of times regarding like the use of alternative protein. Is it a new category that you're going to come out? Or would you elaborate a little bit more on what is that that will help ease some of these chicken price increase? Thank you.

Sure. Well, in the Investor Day we mentioned about let's say [indiscernible] which is a part of the chicken that we somehow have not used in the last 30 some years, which is always amusing to ourselves. So that that is the piece of chicken between the chicken wing and the chicken breast. So we will continue to explore with the introduction of new technology can we find another way to cut our chicken and introduce very good course economic product to our customer. But I'll give you another example, for example, shrimp and crayfish and traditionally these are pretty expensive protein relative to chicken price right now suddenly they look fine. And the economics workout again. I'll give you another example it's coming soon. So I am happy to do the advertisement here. We're going to possibly have some stuck in our product, probably the wraps. So other than our famous chicken wraps we are going to introduce that, it just seems logical with the flavor that we already establish and explore with customer. So these are some of the examples that we can share at this point. And then, we of course continue to search for other alternative protein alternatives such as sea food or stuff, et cetera, to make our customers happy. I hope that makes sense.

Yes definitely. And on Pizza Hut, on the same-store sales trend, now that we have a positive for this quarter, do you think that we should be seeing continuous improvement that will more stabilized that same-store sales is more sustainable or we might still see some volatility throughout the quarter?

Thank you for entertaining me by asking me a question about Pizza Hut. We - of course, we are quite happy to see the positive sales terms finally happen, is a very clear sign of a good momentum of the business turn around. What I want to comment is when we embarked on the revitalization journey back to May 2017. We have focused on four areas, which we're all familiar with right now. And for effort that we work on they are all, what I will call short-term painful, but long-term beneficial to our business. So back to 2017 one of the four pillars is the delivery is really delivering very good same-store sales that lift the entire business. By 2018 the improvement the delivery is no longer enough to support the decline in dining, but we continue to focus on the other three pillars such as digital, such as asset and the fundamental such as menu. And awful area in terms of the painful changes have bear fruit. What I want to say is the 2018 - 2019 Q1 the momentum is aggregated result of some fundamental changes in all four areas. Delivery wise is not only just promotion, we integrate, we took back last mile delivery and we integrated pizza home service and pizza dining. And we went all the effort to put dedicated delivery areas in 75% of our dining assets. So these are all very, very big and fundamental change. And then fundamentals such as the menu, the menu originally we have 120 items on the menu. For the new menu, we introduce March 2018, there are only 77 items and among the 77 items, only about a quarter of them are from the previous menu, the rest of the product on the 77 items either…

Thank you.

One last question.

Your last question comes from the line of Christine Peng from UBS. Please ask your questions.

Hi, management. Congratulate on a great result. I have two questions regarding the store opening strategies of KFC and Pizza Hut. Regarding KFC, so Joey in your earlier presentation you mentioned about the gas station plan with one of the oil companies in China. So can you elaborate the details in terms of the number four, in terms of the store revenue contributions profitability, et cetera? And what key points between the stores and the traditional stores KFC has? I think that's the first question I have. The second question is regarding Pizza Hut, so basically first quarter is very strong quarter and I think it's also is better than management previous guidance. So given this situation would you consider opening more Pizza Hut stores going forward? And I think you mentioned about hub and spoke model on Investor Day. So what is the new thought behind this? Thank you management.

Okay. Thank you, Christine. For the strategic partnership there is a little update since our last meeting at the Investor Day. As you recall we have entered into exclusive right in franchisee business with CNPC, but we also get the right of first refusal for both Sinopec and CNPC for about 20 years. And we also share about our prudent approach that we want to figure out the business model first before we become specific on the economics and the details. And right now the updates we are testing one store, and then we are identifying more suitable locations. So the aim is to open 100 stores in the next three years. So I understand this is the modest goal given the fact that both great companies have 50,000 gas station all over China. But we believe once we take out the gas station we do have the credibility and ability to scale up pretty quickly. What's the difference between old and new, the first difference I can imagine is it will be - it's likely to be slightly smaller than our sort of normal store, but at the same time we're within our store business model we have eight or nine business model and we do have the small store model already. So the size wise recovery will be sort of smaller. And then it will be sort of more very focused on the convenience as you can imagine because it's important in this kind of location for the detail specific and we are testing it right now. For the Pizza Hut you're right to point it out that the store opening plan or number is related to business performance as you can see historically in KFC's number we opened 191 store this quarter, we opened 144 store last…

Thank you everyone. Thank you, Christine, thank you everyone, thank you for joining the call today. We look forward to speaking with you on the next earnings call. That concludes today's call. Have a great day, thanks, Rachel. Thank you all.

Ladies and gentlemen that concludes our call for today. Thank you for your participation. You may now disconnect.