Thank you all for standing by, and welcome to the Yum China First Quarter 2022 Earnings Conference Call. [Operator Instructions]. I'd now like to hand the conference over to your first speaker, Florence Lip, Senior Director, Investor Relations of Yum China. Thank you. Please go ahead.

Thank you, Tara. Hello, everyone. Thank you for joining Yum China's First Quarter 2020 Earnings Conference Call. Joining us on today's call are our CEO, Ms. Joey Wat; and our CFO, Mr. Andy Yeung. Due to the current COVID restrictions in Shanghai, we are dialing in from different locations today. If we experience a technical difficulty during the call, please remain on the line as we reconnect. Before we get started, I'd like to remind you that our earnings call and investor presentation 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 GAAP measures is included in our earnings release. Today's call includes 3 sections. Joey will provide an update regarding our performance in the first quarter. Andy will then cover the financial performance and outlook in greater detail. Finally, we will open the call to questions. You can find the webcast of this call and a PowerPoint presentation, which contains operational and financial information for the quarter on our IR website. Now I would like to turn the call over to Joey Wat, CEO of Yum China. Joey?

Thank you, Florence. Hello, everyone, and thank you for joining us today. We are battling the most severe outracing COVID-19 first emerged 2 years ago. The challenges we face are unprecedented. The case count, duration, geographical coverage and restrictive measures are far more extensive than previous outbreaks. Shanghai, Tianjin Jilin and Guangzhou were among the places to experience extended periods of lockdown. Shanghai, one of the most impacted cities, has been locked down for more than a month now. Our operational headquarters in Shanghai are all working remotely. Hundreds of millions of people across China are currently under some level of restrictions. Even regions with new cases have tightened containment measures, in line with the dynamic zero-COVID policy. Compared to 2020, it's far more complex to keep our stores open get our employees to work and obtain necessary approvals. Our store operations, delivery and supply chain have been heavily impacted due to ever-changing restrictions. I want to thank our frontline employees at restaurants and logistics centers, our delivery riders and our stars at the back office for working tirelessly during this difficult time. I'm extremely proud to see how quickly we adapt to each new challenge and how teams from across the company support one another. From procurement, logistics, IT, HR to public affairs, we work as one team. Our mission is to serve the community and customers in need to the best of our ability. Hundreds of our back-office staff rising to the occasion. They volunteered to serve at the frontline, supporting our restaurants. They performed health check at restaurants, delivered food using their own cars and served as customer service representatives. Soon after the lockdown in Shanghai started, where most business activities have come to a halt, we became one of the few and first authorized food suppliers…

Ladies and gentlemen, it appears that Joey has dropped from the call. Please stand by while she reconnects the line.

Hello. The line just drop, and I just called back. Can you hear me?

Yes, Joey. Please go ahead.

Yes. I hope by now, you have a better picture of the challenges that we face and even in situations like this how we find ways to serve our customers and communities. This is the third year for the COVID pandemic, so it is understandable that pandemic fatigue may be settling in. I'm very proud of our team members. They have been courageous and continue to maintain a positive attitude in face of adversity. The pandemic will surely pass and our business will recover. As we look ahead, I'm confident that as long as we focus on new opportunities remain in a way, both with our initiatives, the agile in our action and control our cost structure, we can get through this challenging time and become even stronger. We remain confident in the long-term prospects in China. We will continue to invest and focus on our RGM strategy so we can fortify our market leadership and capture the significant growth opportunities across our brands. Before I pass to Andy, let me say a few words about changes in our leadership team. I'm pleased that Jonathan Huang, previously, the General Manager of KFC, is now our first Chief Customer Officer. This strategic move will better integrate customer centricity into a brand-driven culture. Jonathan will focus on building capabilities to better understand and serve customers. He will be the head across functional initiatives, including cross-brand customer loyalty program and delivery initiatives. He will also oversee COFFii and JOY, Lavazza and Taco Bell. With Jonathan's strong technology background and deep understanding of the organization, I'm confident that he's the best leader for this role. Warton Wang, our Chief Development Officer, foresee Jonathan as the new KFC GM. Warton joined KFC as an operations management trainee 24 years ago, and work his way up. He led various initiatives to improve KFC's business operations, innovates performance and business model. I believe that Warton's strong leadership and deep operations experience will bring KFC to new heights. Warton's achievement as a homegrown leader will also inspire our entire frontline employees. With that, I will turn the call over to Andy. Andy?

Thank you, Joey. And hello, everyone. Now let me share some color on our first quarter performance. Compared to a relatively stable January and February, the COVID situation in March rapidly deteriorated. Large same-store sales declined by more than 20%. As Joey mentioned, our team put in tremendous efforts to sustain operations, mobilize and fully utilize available resources to drive sales and proactively manage costs. We achieved a profitable quarter, demonstrating the resiliency of the business. We continued to grow by opening 329 net new stores and ending the quarter with over 12,000 units. First quarter total revenue grew 4% in reported currency to $2.7 billion. The contribution of new units and the consolidation of Hangzhou KFC was partially offset by the same-store sales decline and temporary store closures. System sales were down 4% in constant currency. Same-store sales were 92% of prior year's level. By brand, KFC same-store sales were 91% of prior year's level with same-store traffic at 86%. Average ticket grew 6%, mainly due to the increase in delivery mix, which has a higher average ticket than dine-in. Pizza Hut same-store sales were 95% of prior year's level, same-store traffic was at 97%, while average ticket was down by 2%. This was driven by the increased mix of delivery, which has a lower average ticket than dine-in. Restaurant margin was 13.8%, down 490 basis points compared to last year. This was mainly managing higher commodity prices and wage inflation as well as higher delivery costs due to increasing delivery volume. Now let me go through each expense line item. Cost of sales was 31.1%, 90 basis points higher than last year. This was mainly due to commodity inflation. We also incurred higher logistics costs and wastage due to the regional outbreaks. Cost of labor was 26.2%, 90…

Thanks, Andy. We will now open the call for questions. Operator, could you please start the Q&A?

[Operator Instructions]. Our first question comes from Sijie Lin at CICC.

So I have two questions. The first is the multiple waves of COVID outbreak, especially the Omicron this year. It's a very difficult situation for market players in the whole restaurant industry. So regarding the impact on industry supply, what's your observation? If there were many closures of mom and pop during last 2 years, are we seeing more small- and medium-sized chains between difficulties this year? And my second question is, could you please give us more color on the promotion strategy at the current stage? What's the difference compared to last 2 years considering the situation?

Thank you, Sijie. Let me share some thoughts here. First of all, we are very grateful with our own business model. This is Yum China, particular KFC and Pizza Hut, a fantastic business model that we can do well. The timing is good, but it's also proven again and again during challenging times, this is a very resilient business model. So we are very grateful, and we still can capture 40% to 50% of sales in Shanghai with 10% to 15% of store. In terms of competitive landscape, it's still a bit difficult to tell, particularly in Shanghai or locked down cities because we are still going through it, but I think this is definitely the time that differentiates the company with solid operating capability and also prudent financial arrangement versus the others. So fortunately, I think for Yum China, both our operation and digital capabilities and also our prudent financial philosophy helped us through the difficult time. In terms of promotion strategies, we have multiple scenarios. So while the formation-wise, the sales is under pressure. But for the country -- for the city and the province that are still going on with our normal business operations, the business is as usual. We still pursue good products with fantastic values, with promotion. And recently, we just launched the entry-level beef burger priced at CNY 19. And for Pizza Hut, we just launched the new menu for the year, which is, again, 40% improvement of the menu items on the menu. So this is still going on, and we still have like our very famous Crazy Thursday for KFC and Screaming Wednesday for Pizza Hut as value program. But for cities that are in lockdown such as Shanghai or Guangzhou or Shenzhen, we put the promotion because the focus is about maximizing our limited resources to meet the customers' unmet need. Here, we really have the unmet need because the rather small percentage of our stores can open and we also put back our menu. As I mentioned earlier, in KFC case, we only offer one combo, which is for our chicken. We don't have burger, we don't have fries, just fried chicken with some Pepsi cola. And then for Pizza Hut, there are 2 pieces, the very famous...

Sorry, ladies and gentlemen, it looks like Joey's line has dropped once again. Please stand by. Thank you, Joey. You're now free on the call. Please continue.little

Okay. We can take the next question.

Certainly. Our next question will come from Lillian Liu at Morgan Stanley.

And given all the challenges, the operation we're facing, could you give us a bit update about the trends in Eastern and the Southern area close to the end of April or May, i.e., the latest trend? Especially, I think in Southern China, it seems like the situation is better than Eastern region. If we talk about the economic importance, both regions are very important. So just to give a little bit color of if the lockdown, kind of what the impact could be. And following on that, also, because you mentioned that there is a simplified menu, and also in the normal areas, we also offer the normal menus. So I want to understand a little bit further, under such a complicated situation, how do we manage the logistics and also procurement, especially I understand that the transportation disruption bottleneck is still there.

Thank you. Andy has mentioned earlier about his thought and our thought about Q2 and the early May trading, so I'm going to comment on the trading pattern. Let me take KFC as an example to help sort of understand the overall big picture. The dine-in sales definitely dropped very significantly. The delivery has come up, and we can understand that. Nationwide, we drove growth through our hybrid delivery model with our own rider. As I mentioned earlier, in Shanghai's case, when we don't have enough rider or our rider are being quarantined, our own back-office staff volunteer to deliver whenever we could if we can get the license or approval to go out and deliver. So that's the dine-in versus delivery. And then the transportation hub, as you can imagine, really suffer. The transportation hub, like the train station, et cetera. The train right now is about 50% below the pre- COVID level, which is -- before compared to 2020. Nontransportation location also declined because the decline is nationwide. And then in terms of weekend, weekday. With the weekend, it's doing slightly better because it's a bit more functional. Sorry, weekday is a bit more better because of the expansion. Weekend is slightly a bit weaker relatively speaking. And then lower-tier cities are doing slightly better because they are less impacted by the transportation hub. And then the higher-tier city is more impacted by the regional outbreaks. And then system sales in lower-tier city also is better because of the new store opening there. And by region, interestingly, despite the outbreak in the southern part of China and Eastern part of China, Eastern part of China is still doing better in terms of same-store growth. It's a very resilient part of the country, and we are very focused on…

[Operator Instructions]. Our next question will come from Anne Ling at Jefferies. .

Just a follow-up regarding the same-store sales comment that Joey just mentioned that the same-store sales was better in Eastern part of China despite all these strange lockdown. So meaning that the other is -- for the rest of the nation, we are seeing like a much weaker same-store sales trend. I just want to check with management, what is the take on this? Is it like -- does it mean that there's more fundamental issues regarding the consumer sentiment or some underlying structural issue, which we should continue to worry about even when the COVID situation start to subside this on that? And we're also seeing like the membership sales as a percentage of sales was lower on a quarter-on-quarter basis. So does it mean that during this period, we have more new customers? If that's the case, how are we able to capture these and turn it into our members? And if it is not the case, how are we going to remedy that?

Thanks, Anne. This is Andy. I think I will take your question. I think the first question is about the regional differences between Eastern China and the rest of the country. I think there's a couple of things. One is, obviously, we're referring to the overall Eastern part of China not impacted by -- while that's not significantly impacted by the COVID situation. For example, Shanghai, obviously, because of the lockdown is significantly below the national average. And so I think what we're referring to is that overall, the situation in Eastern China. Outside of Shanghai, it's is probably still performing quite busy. So I think you haven't probably had to do with the overall economic vibrancy here in Eastern China. As you know, Eastern China is the most vibrant economically speaking, regions in the country, account for a big part of GDP, a strong growth rate. And we see that the wealth distribution is also quite evenly distributed. So that's why we continue to see Eastern China as a very important and a very good growth market for us. Now obviously, there's some regional differences. For example, northeastern part of China this year and over the last couple of years had been hit by wave after wave of COVID. And so I think overall economically speaking, the northeastern part of China is also less wipe compared to, for example, Eastern China. So I think that's generally the some regional differences. And obviously, our strategy, our store network expansion would also factor that in as we open new store. Now I think the other question is about the sales decline. I think it's very important to keep in mind the sales decline or same-store sales decline in recent months driven by COVID surge, Omicron surge, which resulting in very strict…

Right. But what I'm also referring to is on the membership sales as a percentage of system sales, where it's strong from 60% to 62%.

I think like the membership sales is not always higher the better. You understand we -- our membership continued growth. And obviously, in this period of time, like maybe it may not be impacted. But we continue to need to have -- attract new customer. If we have 100% member sales, then that would be problematic for us in the long term because that means we're not attracting a new customer to purchase at our stores. So I think it's a healthy mix in 60-some percent in membership. It's a very high number. We don't basically pursue a number for membership sales, and we don't particularly think that having higher membership sales would necessarily be better. I think this is a healthy level, where we have a good mix of our member sales and then also a good mix of new customers coming to our store.

Our next question comes from Veronica Song at Credit Suisse.

This is Veronica from Credit Suisse. I have a quick question on the store expansion. So the expansion today is very well on track, and I understand that management maintains the annual expansion target for now. But may we ask what market condition or at what days will the management consider to lift or cut the annual expansion target? .

Okay. Joey, let me address this question for Veronica. So in terms of our store network expansions, I think it's wealthy to keep in mind that we employ a very disciplined strategy for store network expansion, and we continue to see good opportunity. That's why we continue to expand our network. And our store economics, our payback period reflect that disciplined approach and also the strong economics. So if you look at KFC, for example, the payback period for those new stores were 2 years. And for Pizza Hut, it's about 3 years. So it's very strong economics. And because we apply a consistent, disciplined approach, we sell relatively consistent. And that can happen. I think a lot of people have asked questions why it seems like we have some COVID challenge. How come you store economics and payback is still very strong? That's because over the past few years, we continue to innovate in our store model. We lower the CapEx, make us more flexible. And so we just see more opportunities, more sites available that meet our internal requirements. On the other hand, I think obviously, COVID and the new store is not immune to COVID. But I think if we look at the situation, if the prolonged situation, obviously, longer term, you will see that impact reflected in our payback period. Our payback period is based on a 12- to 24-month performance. So when you have a sharp impact in the short term, it may not show that up in the near term. Now what will change in our -- the store network expansion. As We have mentioned, obviously, in the first quarter, we're going to slow the store expansion because of the COVID situation right now. It's some of these is practical reasons. We also are…

Our next question comes from Lina Yan at HSBC.

I think there are a lot of uncertainty in the short term. So I actually want to ask a question about the longer term. So if I look at like a KFC per store sales per year, like in 2019, it was close to like RMB 8 million per store. That's lower number in 2020 and even a lower number in 2021, probably because we opened more stores in lower-tier cities. So I think like if we consider like a longer term, like considering the mix of new store opening, do management have an estimate of where is the ideal like the per store sales for KFC can settle at like in the absence of COVID situation? And also considering the opportunity from retail? Like Joey just shared the retail has like grow very fast. Like capacity-wise, like theoretically, kind of retail revenue we could expect in 2022? And what is more like a medium-term target? So that's my question.

Thank you. Let me share some thoughts with you in this particular area. One is about the store average sales and the other one is the new retail. So for store average sales, I would like to take a step back and share that KFC and Pizza Hut both has a range of store models. There are some big store, have more seating, and there are some smaller stores that is more off-premise-driven. And this is incredibly important because if we keep chasing the average store size, then we miss the big opportunity in terms of the convenience. The reason why this is so important because if you can see our mix of off-premises business is growing and growing. And off-premises is really driven by the store network. And as Andy just mentioned earlier in our new store opening strategy, the store density within our current top-tier cities is incredibly important. And then, of course, we are opening a store in the lower-tier city as well, as you mentioned. And if you just think theoretically within the same 5 kilometer, if I have more store there, then the convenience and the speed of delivery is much higher and more efficient. So we will continue to pursue a range of business model or store models within the business. And let's say, Pizza Hut, for the new store that we opened this year, 70 to 80 of the stores are smaller stores. We are talking about 100 square meter or 150 square meter or below. That is the smaller store we are pursuing. When it comes to retail, new retail, it's still early days. Last year, for 2021, our sales was about, give and take, about USD 80 million, and that doubled the sales the year before because we have been incubating…

Thank you so much for sharing the store sales and different formats, Joey. If I observe like correctly, I actually also observed your per store number of employees declined by around 30% in between 2021 to 2019. So if I assume like things are back to normal one day, actually there is a hope for like a labor cost productivity gain like to show like in your financial results. I'm not sure if that's your expectation.

Yes. Labor profitability is an ongoing challenge. And back to 2015, 2016, we have -- 2015, we have 7,000-plus stores. We have about 420,000 or 440,000 staff. Right now, we have 12,000 stores, we still only have 420,000 staff. So that gives you a sense about it. And then during the lockdown of Shanghai, some store are operating 5 to 10 people, but this is not sustainable. That means our staff really putting every ounce of their energy. But there will be some innovation coming out of this because we are pushing our thinking into sharing management headcount across the store, which is something that we learned from ourselves in our deliveries, rider, sharing among few stores. So some innovations will stay. But to what extent, we are still in the process. Thank you.

[Operator Instructions]. Our next question will come from Xiaopo Wei at Citi.

My question is about the new business. I mean we appreciate the great effort in the top time. And we know that is our sophisticated supply chain, a very agile digital ability will press as again in the top time. So you did mention in your prepared remarks about the group purchase, which is a very new model in Shanghai. You think this is going to be a valid model to expand into other part of China even if the COVID situation improves? That's the first question. The second question is for the market consolidation, really, we are seeing the top time like COVID situation always a good opportunity to consult at market. We still remember that in the second quarter 2020, post the first week of COVID, you guys are consulting market immediately. So presumably, the dine-in segment can be more consolidated post the COVID weeks than the [indiscernible]. So this is referring to the Pizza Hut where the investors have been focused a lot. Shall we say that your Pizza Hut business could be even more enjoying more advantage of market consolidation post this with only versus previous ones? So those are 2 questions.

Thank you. The first question, community purchasing, we...

Unfortunately, it looks like Joey's line has dropped once again. Please stand by while we reconnect her.

While we connect, Joey, let me address the second question, which is about the consolidation opportunities in the marketplace. I think as we have mentioned on our capital acquisition strategies, obviously, we have put a lot of emphasis on investing in CapEx to drive organic growth and then also to build out strategic moat. So our presence for consolidation in the marketplace is really to the expansions of our store network across all the brands. We have the KFC, quick service restaurant business. We also have Pizza Hut in the investment casual dining business. We also have COFFii and JOY and Lavazza in the coffee business, and then we also have the Chinese goods business. So I think we already have a number of opportunities. As we mentioned, today, we also have a joint -- sort of like a new announcement arrangement with YUM! Brand to join a step-up investment to accelerate store expansion here in China for Taco Bell. So I think we already have a lot of wonderful opportunities in COFFii and Taco and as well as the growing opportunities here with KFC and Pizza Hut. So I think the main focus is the main driver for us for consolidating the market is really through the expansion and the growth of our whole organic brand. I see like Joey is already back online. So Joey, will you address the first question? Yes.

So the community purchasing, we, of course, share the best practice within the company. So we get the scenario plans for whatever cities and province if it's going to lockdown. And after lockdown, we keep options open. Right now, community purchase in Shanghai as the shopping becomes slightly easier. We can see the demand come down a little bit, which is a pretty good thing actually. But at the worst time, we have 10 to 15 stores open in Shanghai. But as of right now, we have about 40% of our stores open. So we can still serve customer better with more stores open than just relying on community purchasing. But it is sort of an example of our agility and the stability of our business model and our team. So thank you.

Our next question comes from Jack Chen at CLSA. Looks like Jack dropped from the call. Our next question will come from Christine Peng at UBS.

Management for answering the questions. So I have a quick question regarding the cost-cutting measures. So given this prolonged and fluid situation about COVID restrictions and lockdown in China, so I'm just wondering what kind of cost-cutting measures management has put in place or considered putting into place to deal with this situation. And also, I remember back in 2020, there are quite a few government grants given to Yum China during the COVID period. So are there any government grant similar to 2020 that will be given to Yum China for the remaining of the year?

Christine, so let me address your questions regarding obviously the cost control and cost reduction. I think obviously, we're looking at from a COS side, pretty strong inflationary press globally. And so we will continue to work with our supply chain to our long-term supply chain partner to manage, that is -- that will be including potentially a longer-term contract. We -- as you mentioned before, our contract usually work in a quarter or 2 ahead of time. We may effectively deal with that given the inflationary pressure. For example, for coffee bean, we have locked up supply contract that would last us to 2023, and that will help us to mitigate that. Obviously, not everything can be done like that. But I think we'll -- we have a very smart, logical and supply chain folks here that have a lot of experience and historically deal with different environment -- inflation environment. Now the other one is obviously the energy cost. Energy cost in China and global we also gone out. As we mentioned, utility price is up 10%. Then we are also implementing -- that's why we invest in technology. We have and we continue to invest in technologies that would help us to reduce energy consumption. So hopefully, that will pay off in the long term. And the other one is we will continue to deploy technologies across our supply chain to make sure that we both have a flexible -- flexibility to deal with given potential scenarios, but also make them more efficient. I think it's paying off as we see in the current situations. We are able to very flexibly to redefine their supply chain network, the routing and using both railroad and sea freight to flexibly manage our logistic operations. Also, we see technology being…

So I just want to make sure the previous guidance about commodity costs and labor cost increase for 2022 will not change despite all the volatilities we have seen in the past to the 3 months globally.

Well, I think there will be some changes. But I think -- the biggest driver for office margin, as I mentioned, is sales leveraging and deleveraging. Then the other part is obviously the inflationary pressures. Some of these commodity prices have been more stable. Some are in line with our expectation, but some of this is actually very jump very high right now. So if you look at sort of ample poultry and pork they're rarely in line with our expectation. But if you look at bean, if you look at other commodities, you have surged quite a bit. And then also, if you look at energy costs also go up. And so for example, cooking oil, all that is impacted. All in all, I think like as we mentioned, those are the smaller factor, but the sales leveraging is the biggest.

Our next question comes from Brian Wong at China Merchants Securities.

Basically, I want to understand your opinion here, how much of your cost of good sold and also the restaurant has fee. So how much still variable. Because so P&L, so I don't see that the run, 30%. And I wonder that how much is largely based on of the store sales.

Brian, I think your line was coming in and out, but my -- I guess your question is about cost, I mean particularly variable costs versus fixed costs, in our -- okay. So I think as I mentioned before, obviously, the key cost structure for us is largely variable cost is the wall input and paper and packaging for our products. And so we have a hybrid model, obviously, we have full-time workers and then we also have a large part-time workforce that on a more flexible scheduling basis. In terms of O&O, as you mentioned, the rent, a big part of a large percentage of the rent, 80% of that have a variable component to it. And in terms of dollar side, it is probably -- depending on the sales, obviously, use is wearable. So a number of times, maybe 40%, 50% of that, above 50% or so at this time, about it's wearable for rent. And then we also have, obviously, marketing expenditure and all that reflects around that. So your overall cost structure, I think it was fair to say that majority of our cost are flexible wearable. But we also have a very large portion of them is fixed, including our G&A expenses. For example, salary for our headquarter staff, local operations and then the fixed cost in the rental. So sales leveraging revenue is real for our business and as we have mentioned over and over again. So -- but we -- as we mentioned before, we're doing a lot of things to control costs in the near term, but also looking into longer-term structure. For example, like G&A and in the short term may be impacted by sales leveraging and deleveraging. And then -- but in the long term, our goals would keep G&A growth to be below sales growth, for example. So that's overall how our things will go out. We'll use technology improve our deposits and store format, et cetera, to make sure that in the long haul, our labor productivity is in a good trend. So thank you, Brian>

Our final question comes from Jack Chen at CLSA.

My question is regarding on Taco Bell brand strategy because this brand has entered China market for years but still in small size. So as we are planning to have over 100 Taco Bell stores by this year, so could you please share us more about how we're going to develop this brand to benchmark with KFC and Pizza Hut? And since the COVID hit several big cities in China, so if this trend continues, we want to know how it will impact our store opening such as maybe we can only find the store locations in lower-tier cities and less-impacted regions .

Thank you, Jack. We look at this Taco Bell opportunity in -- for a very, very long time. If we look at, let's say, Pizza Hut we are already in 700 cities. And only in 700 city, out of 2,700 cities and KFC in 1,700 cities. So if we in the coming 3, we want to open at least 225 stores. And honestly, it's not that.

Joey had dropped off the like.. So I would just complement what you are mentioning. So obviously, we have looked into the Taco Bell business for a number of years. But as Joey mentioned, we still have a lot of opportunities, not only for our existing brands, KFC have to enter, but obviously, for Taco Bell. 225 million new store by 2025. It's a mission type that is not an overstretching target. If we look at the reason why we are confident about stepping it up, obviously, we have experiment with the brand quite a bit with the format, the pentamer and whatnot. And then I think some of the product testing that we have earlier to make us more efficient and flexible are showing some very encouraging sign, especially for the newer smaller format, which is about 1, 2 square meters and lower capital expenditure and with simplified menu. I think if you look at the store performance, that give us quite a bit up. encouragement in terms of expanding the store network there. Again, like we -- obviously, it's really important for us with any store opening is the dicing process. We do supply discipline process with the small store format and a new format for Taco Bell as well. And so in terms of our Taco Bell is we -- I think we've seen that in the urban top-tier cities, pretty popular with younger generations. They are more open to trying out new goods. So -- and then if you look at -- during the lockdown period, the brand also did quite well with the product offering as well as the delivery coverage. So we're excited. We're excited with the Taco initiative. Over the next few years, you should see more growth in that brand, and then we would obviously separate investment with Taco Bell international to drive that store and that growth Thank you.

Thank you for joining the call today. We look forward to speaking with you on the next earnings call and sorry about the connection. Have a great day.

Thank you so much. This does conclude the call today. Thank you all for joining. You may now disconnect.