Thank you for standing by, and welcome to the Yum China fourth quarter and fiscal year 2022 earnings conference call. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Ms. Michelle Shen, IR Director. Please go ahead. Thank you, Zari. Hello, everyone. Thank you for joining Yum China's fourth quarter 2022 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 a cautionary statement in our earnings release and risk factors included in our filings with 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 three sections. Joey will talk about our journey in the past three years and discuss fourth quarter performance. Andy will cover the financial performance and outlook in greater detail. Finally, we will open the call to questions. You can find a webcast of this call in the PowerPoint presentation, which contains operational and financial highlights on our IR website. Finally, we plan to host our 2023 Investor Day in Shanghai this September. We look forward to sharing more details about this event with you in due course. Now, I would like to turn the call over to Ms. Joey Wat, CEO of Yum China. Joey. Thank you, Michelle. I want to wish everyone joining us today a happy and healthy Chinese New Year. Before looking at the fourth quarter and full year, I would like to reflect upon our journey these past three years with COVID, some of our key learnings and how we have grown. First, I'm incredibly grateful to the entire Yum China team for their agility, creativity and tenacity during this difficult time. Together, we became a more resilient, nimble business, better positioned for long-term growth. During the past three years, we quickly pivoted when dine-in traffic came under pressure. Delivery doubled from just 20% sales mix in 2019 to 39% in 2022. Our hybrid delivery model and dedicated riders enabled us to capture the increase in demand. Combined with takeaway, off-premise sales reached almost two-third in the fourth quarter of 2022. Digital ordering also rocketed from 55% of sales in 2019 to now 89%. That's over $20 billion in digital sales in 3 years. We maintained our rapid growth. Our store portfolio expanded by nearly 40%, a total of 3,800 net new stores. KFC and Pizza Hut stores maintained a healthy payback of 2 years to 3 years, respectively. The first year profitability of new stores also improved. Strong new store performance was driven by our flexible store models. We optimized store size and secured more favorable lease terms. For new stores opened in 2022, more than half were in smaller formats. Such flexibility allow us to continue to increase density in higher tier cities, which is particularly useful and helpful for delivery, and capture white space in lower tier cities. We enhanced the coverage and agility of our world-class supply chain to support business growth. We expand from 29 to 33 logistics centers for better self-sufficiency in each province. During extended lockdowns, we add rail and sea freight to move our inventory apart from our traditional trucks. Our store inventory visibility system allows real-time sales forecasting and smart inventory replenishment. These capabilities help mitigate severe disruptions even during lockdowns and minimize wastage. Our agile also supported product innovation by securing supply at scale. Apart from our classic offerings, we launched over 500 new or upgraded menu items last year, from regional offers to national launches. We invested in digital and automation to improve operating transparency and efficiency. For example, we are rolling out smart order system, at KFC. The AI-powered system more accurately predicts demand and recommends food preparation plans to minimize stockouts and wastage, and also reduce waiting time for customers. It also enhances customer experience by reducing wait time and providing real-time order updates. Recently, we added robotic service at one-third of our Pizza Hut restaurants, [Foreign language], freeing up crews to serve customers. We remained profitable each and every quarter since the beginning of pandemic in 2020. By rephasing cost structures and implementing austerity measures, we cushioned shocks created by the volatile market situation. In the past three years, we were able to generate $1.9 billion in free cash flow and returned over $1 billion to shareholders. Notably, I'm proud to say we did this while also protecting the jobs of our employees. We have had no staff layoffs since the pandemic began. Looking back over this period, we seized opportunities, improved our ability to operate in good times and bad times. Looking forward, our anti-fragile operation will enable us to shine and drive long-term growth in China. Let me provide some highlights for the fourth quarter and full year. 2022 was filled with unprecedented challenges. In just 12 months, we managed sporadic COVID outbreaks, entire city lockdowns, nationwide infections, and the sudden lifting of COVID-related restrictions. In October and November, COVID infection quickly evolved into major regional outbreaks, leading to tightened COVID-related measures. In December, as China entered a new phase of COVID response, we faced brand-new challenges. With surging infection rates, a significant portion of our employees and riders became infected, resulting in a labor shortage. Thousands of our stores were temporarily closed or only provided limited services. Many residents also opt to stay at home to avoid infection or recover from symptoms. Dine-in traffic fell sharply. During this time, as always, the health and safety of our employees and customers remained our top priority. We moved quickly and support our employees with relief medicine and antigen test kits. We mandate daily testing for all crews and riders to minimize infections, and we organize informative health talks and a consultation hotline for our employees. At the same time, we took immediate steps to address the labor shortage. We simplified menus, shortened operating hours, and optimized labor shifts. We reallocate crew resources among stores, prioritizing stores with stronger demand, and we adjusted delivery operations, encouraged customers to pick up orders, and promote packaged foods products. I'm thankful for our team's nimble actions and amazing execution. Even in this challenging quarter, we delivered substantial year-over-year restaurant margin expansion despite lower sales. This was achieved by our extensive scenario planning, operational efficiency improvement, cost rebasing initiatives, and temporary relief. We were also able to open a record 538 net new stores in the fourth quarter, or 1,159 net new stores in the full year. Let's move on to the brand. By brand, KFC and Pizza Hut continue to introduce delicious food and exciting campaigns to delight our customers. At KFC, new categories grew with solid momentum. Juicy Whole Chicken, [Foreign language], and beef burger, [Foreign language], doubled in sales in 2022. Combined, they generate around 5% of KFC sales mix in the fourth quarter, nearly equal to our original recipe chicken. We continued to introduce more flavors in these categories, such as the spicy whole chicken, [Foreign language], launched during Chinese New Year. Following the success of Pokémon Psyduck in quarter two, Kědáyã, our toys in the fourth quarter also generated huge social buzz. These include Bouncy Chicken, and Fluffy Chicken Popcorn. Both were originally designed as pet toys or toys for your cats, but quickly became very popular with all customers and drove traffic. At Pizza Hut, pizza sales grew nicely for the year, reaching almost 40% of sales. We sold over 100 million pizzas in 2022. That's nearly seven pizzas per second. Apart from our signature pan, hand tossed and crispy pizzas, we have add stuffed crust pizza. Customer can choose fillings like double cheese, sausage, and meat floss. These new launches encourage the trade ups and lift effective price. We continue to offer stunning value for money. Our signature value campaign at KFC, Crazy Thursday, attract excellent traffic, generating over 50% more sales on Thursdays compared with other weekdays. Sunday, Buy More Save More, continues to spur weekend sales. Customers love the option to mix and match and the sizable discount. At Pizza Hut, we brought back the wildly popular 2 pizza for CNY 59 promotion in November. The amazing value drove great traffic and sales uplift. New retail packaged food provide us flexibility during lockdown and when we were short of staff. In 2022, packaged food sales grew 90% and reached nearly 900 million CNY. We continue to broaden our offerings, adding some of the classics such as our egg tart and popcorn chicken. Moving on to our emerging brands. We have solid management teams and strategies in place. While it will take time to fine-tune and test the business models, we are making solid progress. Lavazza continues to execute its four-pillar strategy, which includes brand building, menu innovation, digital and delivery, and store development. Throughout the year, we introduced new coffee flavors such as orange buffalo latte with buffalo milk. We also introduced sweet and savory foods which that pair well with coffee, such as cute cornetto, which is a fluffy Lavazza croissant. Loyalty members more than doubled to 1 million in 2022. Contributing to over 40% of sales. We enhanced operational efficiency and optimize new store design, lowering upfront investment. Although COVID disruptions have delayed store openings, Lavazza reached 85 stores by the end of quarter four. Taco Bell doubled its store count in 2022 to 91 stores. We continue to localize the menu for Chinese customers. For example, a crispy wonton taco, use duck in a wonton wrapper in place of a tortilla. Why not? We also continue to improve the value proposition, customer experience, and unit economics. Little Sheep and Huang Ji Huang were accurately impacted by COVID due to their dine-in focus. We used 2022 to refine their business models and strengthen fundamentals from menu, marketing, store models, supply chain to digital initiatives. Huang Ji Huang also continued to generate operating profit. To wrap up, with a new chapter opening in 2023, we are excited to see positive momentum in the Chinese New Year season. We took decisive action to ensure operational efficiency and capture sales. At KFC, we brought back our signature Golden Bucket, which is a holiday favorite. At Pizza Hut, we introduced a holiday-themed pizza with wagyu beef and seafood. It's called pizza, which is inspired by a popular game. It's gratifying to see how our delicious food play an important part in our customers' celebration during the holiday. Yet COVID remains a reality and many challenges still lay ahead, including cautious consumer spending post-holiday. While we anticipate the road to recovery will be gradual and uneven, I'm optimistic that brighter days are ahead. We will continue to execute our proven RGM strategy, which stand for resiliency, growth, and strategic moat, to capture the growth opportunities and deliver shareholder value. With that, I will turn the call over to Andy. Andy? Thank you, Joey, and belated happy Chinese New Year to everyone. Let me share with you our fourth quarter performance. As Joey mentioned, we faced an extremely fluid and challenging fourth quarter, as there were substantial changes in COVID conditions and related policy. In late November, due to rising infections and strict COVID-related health measures, the number of stores that were either temporarily closed or offer only takeaway and delivery services reached a peak of over 4,300 stores. In December, we faced a different situation when most of the COVID measures were lifted. Due to labor shortage, we had to temporarily close or provide limited services at over 1,300 stores on average. In such a volatile environment, we took quickly action to capture the off-premise demand. Furthermore, we control costs, limited wastage, and enhance productivity despite lower sales. Our team did a wonderful job improving restaurant margin by almost three percentage points, despite very difficult circumstances. Let us now go through the financials. Unless noted otherwise, all percentage changes are before the effects of foreign exchange. Foreign exchange had a negative impact of approximately 11% in the quarter. Fourth quarter total revenue declined 9% year-over-year in reported currency to $2.1 billion. In constant currency, total revenues grew 2%. The contribution of new units and the consolidation of Hangzhou KFC were partially offset by same-store sales decline and temporary store closure. System sales and same-store sales both declined 4% year-over-year. By brand, KFC same-store sales were 97% of the prior year's level, with same-store traffic at 84%. Ticket average grew 16% due to the rise in delivery mix, which has a higher ticket average than dine-in. Pizza Hut same-store sales were 92% of prior year level. Same-store traffic was at 98%. Ticket average was at 95%, driven by lower ticket average of delivery orders and smaller party size due to the pandemic. Restaurant margin was 10.4%, 290 basis points higher than the prior year. The year-over-year increase was mainly driven by labor productivity, operational efficiency, and temporary relief. These were partially offset by their sales leveraging impact, which includes temporary store closure, as well as higher rider costs due to high delivery volume. We also face inflationary headwinds in commodity and labor costs. Our team worked hard to protect margins during the fourth quarter, which is seasonally slow in terms of sales and profits. Let me go through the key items and highlight the action we took. Cost of sales was 31.9%, 60 basis points lower than prior year. We kept commodity inflation relatively modest by strategically locking in prices and innovating the menu. We also carefully planned promotional activities and reduced wastage. Cost of labor was 28.8%, 90 basis points higher than prior year. This was mainly due to increased rider costs from higher delivery sales mix, low single-digit wage inflation, and sales leveraging. This was partially offset by better labor productivities and temporary relief of $14 million. Occupancy and other was 28.9%, 320 basis points lower than prior year, despite sales deleveraging. This was mainly due to lower rental expense and other cost-saving initiatives. Rental expense as a percentage of sales benefited from rental relief of $12 million, store portfolio optimization, and more favorable lease terms. G&A expenses increased 2% year-over-year, mainly due to increased compensation and benefit expenses, as well as the consolidation of Hangzhou KFC. The increase was partially offset by cost control initiatives. Operating profit was $41 million, compared to $633 million in year period. In the fourth quarter of 2021, we recorded a non-cash gain of $680 million from the remeasurement of our [audio distortion] equity interest in Hangzhou KFC. By excluding the remeasurement gain, adjusted operating profit increased 189% year-over-year from $60 million to $40 million. The net contributions from Hangzhou KFC's consolidation was 12% of operating profit in the quarter. It included the last quarter of amortization of intangible asset acquired, which was roughly $15 million. Effective tax rate was 29.9%, 480 basis points higher than prior year due to lower pre-tax income and the Hangzhou KFC consolidation. Prior to consolidation, the equity income from JVs was not subject to tax, resulting in a lower tax rate. Net income was $53 million. Adjusted net income was $52 million. Excluding the $4 million mark-to-market net gain on our equity investment in Meituan in the quarter and the $9 million net loss in the prior year period, adjusted net income grew 154%. Diluted EPS and adjusted EPS were $0.13. The mark-to-market gain in Meituan increased diluted EPS by $0.01. In December, we acquired an additional 20% stake in Suzhou KFC JV for approximately $115 million. This increased our total ownership in the JV from 72% to 92%. For the full year 2022, we generated free cash flow of $734 million. We returned roughly $668 million to shareholder in cash dividends and share repurchases. Cash and short-term investment was $3.2 billion, down from $4 billion in the third quarter. The reduction in cash and short-term investment was mainly due to the reclassification of around $600 million from short-term investment to long-term time deposit. We invested in long-term bank deposits to benefit from better interest rates. Let's now turn to our outlook for 2023. In January, most of the temporarily closed stores resumed normal services. Our same-store sales from the comparable Chinese New Year holiday season were up mid-single digits year-over-year but remain below pre-pandemic level. Same-store sales benefited from pent-up demand as the relaxation of COVID policy coincided with the Chinese New Year holiday. However, the real test will be the sales trajectory after the holiday as we face more cautious consumer spending and macroeconomic uncertainty. Looking ahead, we are encouraged by the new COVID policy. The future indeed looks bright. We must keep a level head and recognize that uncertainties and challenges still lie ahead. Other countries have shown that further outbreaks and the emergence of new COVID variants are real possibilities after COVID restrictions are lifted. We also face macroeconomic headwinds, such as elevated commodity and wage inflation, as well as softening global economic conditions. These factors may impact our operations and consumer spending in China. At the risk of sounding like a broken record, we continue to expect recovery to take time and be non-linear and uneven. For 2023, our top priority is to drive sales. At the same time, we will remain agile. One of the lessons we learned in the recent years is the importance of planning and preparing for a wide range of scenarios, both to capitalize on growth opportunities and to mitigate risks when needed. On store development, we are targeting to open 1,100-1,300 new stores. We expect capital expenditure of $700 million-$900 million to support organic growth, remodeling, digital, supply chain, and other infrastructure development. As always, the quality of growth is what matters to us the most, not just the quantity. We will continue our systematic and disciplined approach to investment and growth. Finally, we remain committed to returning capital to shareholders. The board has approved to raise the cash dividend from $0.12 per share to $0.13 per share. This is supported by our healthy balance sheet and strong cash flow. With that, I will pass you back to Michelle to start the Q&A. Michelle? Thanks, Andy. We'll now 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. Zari, please start the Q&A. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Brian Bittner from Oppenheimer and Company. Please go ahead. Thank you. Good morning to you. My question is on the new stores that you've built since COVID began. You've built a significant amount of new stores over the last three years, over 3,700 of these new stores. I know the payback on these stores are still very strong, despite operating in the pandemic, which is incredibly impressive. Andy, can you talk about where the sales productivity and the margins on this class of stores that have been built since COVID, where it currently stands relative to the rest of the asset base, so we can kind of understand how to think about the model moving forward? Thank you, Brian. If we look at our store opening for the past few years, as Joey has mentioned, we have been opening almost increased our store count by almost 40%, right? Nevertheless, I think if you look at the new store performance, the payback period were very consistent and very good. For KFC, it's about three years sorry, for KFC, it's about two years, and for Pizza Hut, it's about two to three years. Pizza Hut is the reason why it's two to three years, because if you look at satellite store model, which is the new model that we have, the performance is on par with KFC, which is about two years. You know, obviously, there's more standard models, the payback period is a little bit longer. If you look at overall for this year and last year, you know, the new store that we opened, you know, their unit economics continued to perform very well. If we look at, you know, the stores that are opened recently, you know, their break even, you know, most of them are breakevens within, you know, three months of time, even with this very challenging environment. If you look at our new store portfolio, the difference with all the existing store is that over the past couple years, we did, you know, increase penetration in lower tier cities, where is the white space. We also increased density in the urban area, especially with smaller model, satellite store model or KFC smaller model, really to cater to consumers, you know, demand for convenience and delivery and takeaways of this. The new store generally are smaller, so their throughput, the sales throughput are generally less than their existing portfolio. Roughly about two-third of the sales compared to the portfolio average. Now, the popularity of those new store are better. As we mentioned, we have lower, you know, the up-front investment for, you know, the small store. If you look at it properly, we probably spend about $2.5 million, you know, for a new store opening. You know, now when, you know, like, we are spending on average about $2 million on these, and then, you know, for a small model, it's close to $1.5 million on this. Also we have obviously improved the efficiencies throughout this pandemic. As you look at the restaurant margin, for example, last year, in 2022, despite, you know, the favorable outcome environment throughout the year, and sales leveraging, we managed to improve, you know, restaurant margins, especially at KFC. I think, you know, we're pretty confident that, you know, we have the right, you know, format, and resources, to grow, our store network, at a healthy pace and also, you know, maintain a very, you know, robust payback, for our investment. Brian, I would just like to add some color to your question. The theme here of the aggressive new store opening is resiliency. While we emphasize how many store we have opened in the last three years, how many 3,700 net new stores, but actually 4,800 growth new, growth stores. At the same time, what we did not talk about, but also important, how many stores we have retired. When we open the more productive new store, we at the same time retire the less productive assets. Thus, the quality of our assets for Yum China has improved in the last three years. Just have a bit of highlight here. For the new store we opened right now, we are talking about 90% of the store have, the new store have flexible rent, which make us more resilient. You talk about lower CapEx. Even more, if you think about our CapEx, roughly 40-60. 40% is equipment, which we can move around. 60% is sunk cost. The reduction of the CapEx in terms of sunk cost is even more than just the total reduction of the CapEx. The size is smaller, so the productivity of the new store is better actually. The location of the stores matter too, because they're both in higher tier city and lower tier city. It's about 40-60 spread, too. For lower tier city, 60% new stores are there, and they're very, very effective in entering new cities. For KFC 2022, we actually entered 200 new cities. These are white space. You can imagine these are pretty good market to go. For higher tier cities, our focus is on filling the gap or the distance between the stores to increase the density of our store in high tier city, which is incredibly important if you think about our focus on our delivery business. I hope that gives you some flavor about the new stores in terms of the quality and in terms of the resiliency for the business. Thank you, Brian. Thanks. It does. Thank you so much. Thank you. Your next question comes from Chen Luo from Bank of America. Please go ahead. Thank you, Joey and Andy, Happy Chinese New Year. Before I raise my question, I'd like to highlight three things, if I may. First, out of the 12 quarters during the pandemic period, for five quarters, we actually reported restaurant margins better than the pre-pandemic level. Despite the fact that, for the four quarters, we have same store sales, like mid-to-high single-digit same store sales decline versus 2019, whereas for Q3 last year, we actually saw more than 10% same store sales decline over the same period in 2019. Apart from the one-time cost relief, we have significantly rebased our cost structure and innovated the store formats, as Joey and Andy just elaborated on. Meanwhile, we also consolidate Hangzhou and Suzhou KFC in the past three years. Supposedly, this portion of business carries higher margins than the group average. I think the market in general would expect pretty meaningful margin expect recovery or expansion going forward, once sales start to recover. For point number two, I also noticed that our priority this year is to drive sales. Meanwhile, the market generally believes that the company is very good at balancing top line and margins. Point number three just now we also highlight that we will be planning for multiple scenarios in a very fluid situation. I've highlighting all these three points. Now let's come to my question. Sorry, it's a bit long. I understand the situation is very fluid, but let's assume that for 2023, our macro environment is kind of okay so that the momentum could be similar to that of second half of 2020 and first half of 2021. That we might see some pretty okay same-store sales recovery, but may not be fully back to the 2019 level. Under that scenario, is it fair to say that we can actually bring our restaurant margin to a level largely similar to 2019 or even a bit higher than that? That's my question. Thank you. Oh, Shaobo. thank you for the summary and also the summary takeaway and also, you know, the question about restaurant margin potential. you know, as we have always said, you know, like, you know, when there's same store sales decline, generally that will put pressure on, you know, restaurant margins, overall margins. When there is recovery on sales, we also expect, you know, some optional leverage too. Obviously, as you mentioned, we are quite, you know, encouraged by, you know, the relaxation of the COVID policy. I think which will give us a little bit more certainty about, you know, the business environment and store operations. Also, you know, the Chinese New Year trading period. So, in general, I think, you know, we are cautiously optimistic. The reason we mentioned a couple, you know, in term of, you know, the macro conditions and also, you know, the COVID still being, you know, a reality is really, you know, the reality is that we need to keep a level head. I think, you know, if you look at the operational improvement, label to improvement, and then, you know, some of those margins improvement, as we mentioned before, which we expect, you know, most of them or some of them would continue. You know, as we have mentioned, we did a lot of work to rebase our cost structure over the past few years. So, you know, if you think about, you know, some of our, labor structure, you know, our restaurant management versus crew, part-time versus all that. Also, you know, if you think about, you know, as we mentioned, you know, the rental expenses where we also got some favorable lease terms, et cetera, I think those will carry forward. Obviously, you know, over the past couple of years, because of the COVID situation and the fourth quarter this year too, right? In the fourth quarter alone, we received about $26 million of rental relief and other type of relief. For the full year, we received about $86 million in total. Those are likely to go away, as you mentioned, if things become more normalized. That would also have an impact. The other one is that we're looking in the commodity prices and labor inflation. I think, you know, obviously for the past year, because of the COVID and also the overall economic conditions, that have been relatively moderate in China in 2022. Cost of sales, commodity price inflation was about, you know, low single digits and same for our labor cost inflation. You know, we see if you look at the commodity prices, for example, chicken prices, they have been rising since the second half of last year. We do expect, you know, probably low single digit in commodity price inflation next year, at least in the first half this year, in 2023. We also expect, you know, cost of labor inflation to return to more normal pace. As we mentioned, low single digit is not, you know, the normal, mid to high single digit is the norm. We expect that to gradually return to a more normal pace of inflation pressure there. That's how we generally look at, you know, the sort of like the margins and the cost environment, as we, you know, we move into 2023. Thank you. Let me add some color here. The way that the management think about all these core costs and margins is as follow. If you look at our numbers historically, cost of sales and cost of labor, going forward, even in 2023, I think for your modeling purpose, we can expect cost of sales or cost of labor, we management team will try to keep it relatively stable if we could. You know, we have to manage inflation for cost of sales, but at the same time, it won't be too low either. You know, for 2022 it's about 38%. If you go all the way back to 2016, when we start get listed, it's also about 29%-30%. But the big delta is Pizza. Actually, pizza at that time. Right now, pizza is on 31.5%. At that time, pizza was only 26%. That was a problem because when the cost of sales is too low, means the value for money is not good enough for customer, and that's very dangerous. Our goal is to keep it relatively stable. Cost of labor, you know, the fact is, it just keeps increasing, and our job is to manage it at reasonable level. We have to pay our staff at a competitive price, at competitive wages, otherwise we won't get good staff. The area that over the years which we have improved quite a bit, I would say, is occupancy and other operating expenses such as rent, sand, A&P depreciation, amortization, et cetera, et cetera. 2022 is 28.6%, and 2016 is 34.2%, a massive 5.6% delta. That shows management team's co-consistency and focus on reducing the rent, which is always the right thing to do, I would like to believe. Also depreciation, which is from reduced CapEx. That has been our focus. When we... You know, and that's true for both KFC and Pizza Hut, by the way, 5%-6% improvement for both brands over these many years. One thing I would like to emphasize again and again, when we save all this money, we don't just, you know, let it flow through to the margin. We always pass on some savings back to the customers. That's the way that we build long-term business. I hope that helps you to think about management focus for the margin and various key cost items. Yeah. In our P&L. Thank you. Thank you. That's very helpful. By the way, your Beng Beng Ji toy is really cute, and also I'm very amazed by the newly launched Ma Xu Wang type of product, so I'm looking forward to have a try. You must- Yeah. You must close the box. Yeah. Yeah. Yeah, go. Yeah. Thank you. Your next question comes from Wei Xiaopo from Citi. Please go ahead. Hi. Good morning, Julie and Andy. Happy New Year. I have a long-term question. We had appreciated the great rundown of Julie's opening remarks, sharing the journey of the past three years, how you build your agility, and also keep the growth in the long-term target. My question is, in the past three years, your agility is very visible, which will protect your margin, will capture the digital and delivery. When China reopens, the market will be more dynamic. I just want to get a sense that whether Julie and team will be more offensive or a little bit aggressive than before in terms of demand activation. You always been stay ahead of competition. You stay ahead of competition to reserve your cost and protect margin during the bad time. Will you be a little bit offensive in market share gain looking forward upon China reopening? Thank you. Thank you, Xiaopo. I think I would like to address the narrative that whether in the past three years, whether we have been offensive, defensive. I think we have been very aggressive in the last three years, if you consider what we just talked about earlier with Brian's question. We have expanded the footprint by as much as 40% within three years. Our view is, we shall take advantage of the crisis and adversity, and I think we did. You know, we, when we look forward from 2023 and beyond, I think we'll continue our pace, which have been rather aggressive, I would say. The focus and priority is to drive sales. Focus on delicious food, new product, value, exciting campaign, while at the same time continue our disciplined approach to capture more growth. If you think about the last three years, our biggest constraint actually was on the sales side due to disruptions of the pandemic. Going forward, we will focus even more on driving sales and then continue the disciplined approach, which include accelerating store growth. We talk about targeting 1,100 to 1,300 net new store in 2023. Secondly, optimize the store format, because there's still a lot to be done. We have done a, I think, pretty decent job with KFC and Pizza Hut. Let's not forget, in the last three years, the smaller brands actually had more challenging time to test, to try their store format themselves. The different system piece of store models, and we are certainly looking forward to a bit more supportive environment for the smaller brands to grow. Third, to invest to strengthen our strategic moat in terms of supply chain, digital, et cetera. I hope that give you a sense about our focus. Our focus is still on resiliency, growth, and strategic moat. Our anti-fragile operations, which have improved in the past three years, will continue with strong focus on sales. Thank you. Shaobo, let me add, you know, another point, which is, you know, when we look at our store network expansions, I think we have been very disciplined, you know, all through since the spin-off, right? We're very consistent about that. Within that very consistent approach, very systematic and disciplined approach is building, you know, a mechanism, right, to accelerate growth when, you know, the unit economics perform well. You know, decelerate when, you know, the unit economics is not performing as well. As we mentioned before, you know, if you think about it, you know, when times are better, and the store format are right and performing really well, the store manager themselves or the market manager themselves will propose more store and then more store will be approved, you know, by our model. Vice versa, right? This is a classic example, if you look at Pizza Hut, right? Pizza Hut, even before the pandemic, you know, it was, you know, rejuvenation program. You see, you know, their the store unit economic at that time, new store unit economic at the time was, you know, partly constrained and therefore, you know, you see limited net, you know, new store growth for Pizza Hut. You know, with the success of the satellite store model, you see, you know, a pretty significant acceleration for the store development there. I think, you know, our model and our approach is, while it's disciplined and systematic, it also reflects very much, you know, the current economic conditions and our unit economics, which will accelerate and decelerate according to, you know, the store performance. Thank you, Shaobo. Great. Thanks. Looking forward to meeting both of you very soon physically. Thank you. Absolutely. Yeah. Same here. Thank you. Your next question comes from Michelle Cheng from Goldman Sachs. Please go ahead. Hi, Joey, Andy. Thanks for taking my question. My question is about the promotion activities and the competition landscape. We know in the past few years, the smaller players have been squeezed out, significantly, and this actually benefit our business. Going forward in the new, like, reopening world, how should we think about the competitive landscape changes? On the other side, we know the consumption part has been pretty challenging, these days. What is your strategies to drive traffic back, leveraging those promotion activities? Thank you. Hi, Michelle. For the competitive landscape, I'm happy to report that I think we have been doing quite all right. I mean, from 2019 to 2022, the overall market in our business has dropped by mid-single digits. Yum China, ourselves, we hold up there. That means our market share has increased a little bit. I think we have done something right. Going forward, regarding your question of promotion itself, momentum, we always look at the promotion product operation all in a holistic view. How to drive sales? Well, the focus of driving sales, we always prioritize traffic and then take an average, and we want kind of both. How to get both? We will have a series of initiatives that form the promotion and sales strategy. We always have fantastic products because it's really not very healthy just to only focus on promotion without amazing products. Product comes first. Therefore, even during the three years pandemic, every year, we are still able to launch about 500 new products with or without the help of sort of traditional marketing, because we have now over 430 million members. We can always market the new product to our members. With the new product, we have really effective promotions. That now becoming more effective over time because we have less promotion campaign, but more effective promotion campaign. For example, as I mentioned earlier, in the first part of the call, Crazy Thursday, amazing. It took four years to make, to produce, or to come to A mazing Crazy Thursday promotion. That worked really well for weekdays. You know, for weekends, our business has been quite challenging because reduced social activity in the last three years. For 2022, we pushed [Foreign language] campaing Buy More Save More for KFC. Then for Pizza Hut, that is like the value promotion for the two pizza for CNY 59. Fewer but more effective promotion that drives sales, but that also protect the margin for our shareholders. Now, you'll think about, you probably have the hidden question here is about price increase. It is also within our plan, but we do it hopefully in a clever way. We expand the range of price. We have lower entry price point product, and we also have some very high-end product to please the customer who will want to treat themselves. Our favorite example is the wagyu beef burger for KFC, which is always a very interesting idea for traditional KFC lovers. With the combination of multiple initiative, we hopefully can both drive traffic, maintain the margin, and also preview the sales for our shareholders. Thank you. Yeah. Thank you, Joey, and thank you for the comment on the pricing. Thank you. Your next question comes from Anne Ling from Jefferies. Please go ahead. Thank you. Hi, Joey. Hi, Andy. A couple of questions here. First of all, regarding the company's disclosure that 5%, same-store sales growth, I'm sorry, mid-single- digit same-store sales growth, you know, during Chinese New Year. Would you share with us, like, you know, like, you know, how is it like, you know, more or less similar for both KFC and Pizza Hut? How does it differ, you know, in terms of the pace of recovery, what we should be expecting? Then also, if we take a look at, like, both brands, we have, like, you know, an increase of the delivery business versus year 2019. How would it change when we have the reopening? Will we see, like, you know, more stabilization on this part? Yeah. Thank you. Hi, Ann. For the Chinese New Year same-store sales, the mid-single- digit number, KFC did better, slightly better than Pizza Hut because of the transportation hub s tores performed very well. As we mentioned in our earnings, in the earnings release this morning, it's even, you know, better than the government statistics, so that helps a lot. In terms of the regional difference, all regions perform quite well, across all regions, and lower tier cities perform better actually. But I have to mention is we need to be prudent to look at the number because this year Chinese New Year is very early, so the comparison is rather difficult. We shall look at the Chinese New Year number to including January and February. That, the picture would be more, more complete. In terms of delivery business, the increase is good. Between 2019 to 2022, it moved from 20% to 40% for Yum China. However, I would also like to mention that as the management look at this business, we also look at off-premise business as a whole. Because delivery business, it still outperformed, still outperformed compared to dine-in. The question is, where's the ceiling? I mean, I would just like to highlight the off-premise sales right now for our business is about two-thirds, which I mentioned earlier. And that's incredibly important in our analysis because it's about the resiliency of our business. That is something the management team has worked very hard to achieve. That's also the reason why we have done okay in the last three years. When off-premise business is as high as two-thirds, it help protect the business. Think about what our break-even sales. That's how we think about it. What's the break-even sales of our business? It's right now, you can work out a number, we only need less than 80% of the sales or same-store sales to break- even, to achieve break- even. Even during the pandemic when a significant portion of our store was shut, we can still achieve break-even sales because that sales transfer from dine-in to delivery and off-premise even during the lockdown. That's the way that we look at the business, and I hope you guys will also look at the business in this way as well. That 20% increase therefore from 2019 to 2022 is incredibly important. If I mention one more slide point is if you look at our number during quarter four 2022, KFC did better than Pizza Hut. One reason is KFC's off-premise business is much higher than Pizza Hut. Protect the dine-in side much better. Thank you, Ann. Oh, interesting. Thank you. Thank you. Your next question comes from Lillian Lu from Morgan Stanley. Please go ahead. Thank you, Joey and Andy, for your explanation of the situation. Just a very quick follow-on question, 'cause that's exactly what Joey just mentioned, that KFC versus Pizza Hut recovery pace. Given this currency-volatile situation, meanwhile we are seeing an improvement of premise traffic. Like for Jan and Feb, even for 2023, are we seeing, like, is it fair that we can expect that the KFC's momentum in terms of the pickup trend will be stronger than Pizza Hut? And especially, how this delivery portion maybe normalized down a bit versus last year? How does that kind of impact our forecast for same-store sales growth? I believe traffic will offset some downward pressure on ticket size for KFC and update situation for Pizza Hut. Basically, how do we picture this dynamics in the next couple of months and also 2023? Thank you. For KFC and Pizza Hut, they are very different business in a way, right? One is to us all, very clear to us all. The other one has very big portion in dine-in, in casual dine-in, which is very, very unique. They will be different, and we talked quite a lot about the KFC already, so I'm going to focus on Pizza Hut in response to your question, Lillian. Pizza Hut we started turnaround back to 2017, and our focus has been drive the traffic first and then drive the sales. Once we get the sales under control, we move on to make it more profitable. Sales first, profit later. I presume you guys all still remember. After we get the profit under control, then, we work on the store expansion and resiliency. For this year, 2022, let's not forget, Pizza Hut opened a lot of stores this year. This is the record opening store year for Pizza Hut. Over 300 stores. Well, at least we are very happy about it, so I hope the shareholders are happy about it, too. What is next for Pizza Hut is open more stores by increasing the scale. One very important topic for Pizza Hut going forward is the resiliency. I think, as I mentioned earlier in the last question from Ann, right now, KFC's resilience is slightly better than Pizza Hut. Therefore, our focus for Pizza Hut going forward is more store and better resiliency. How to do better resiliency? The satellite store. Other than all the operational improvement will continue, the satellite store. The satellite store is fabulous. I mean, right now, between the satellite store and the other smaller store, we have about 20% of the portfolio, about 600 stores, in this category, satellite stores, 960 stores. These are very low, low investment store, but with very good sales productivity. The payback is two years for the satellite store. For total new store for Pizza Hut, the payback is three years. Two years payback. Well, after 30- some years of Pizza Hut business, this is the best payback store model for Pizza Hut. You can imagine we're gonna open more of these. When we open more of the satellite store, smaller store, you can also imagine the delivery business will also benefit as well. I think, I hope that you can see our focus for the business is very clear. We know what we are doing, we do it in our own pace. It's like running a marathon. At the beginning, it takes some time, but once we are at a certain speed, we'll run at a certain speed because we can. Thank you. Thank you, Joey. Thank you. Your next question comes from Lin Sijie from CICC. Please go ahead. Thank you, Joey and Andy, and congrats for another resilient quarter. I have one question which is more about the whole picture. Regarding the recovery of China's consumption, we find that the recent recovery, even after the Chinese New Year, of the shopping mall traffic and restaurant sales is really good in some cities like Chengdu, Chongqing, Changsha, but not sure if it's a common situation nationwide. Since we have extensive layout in most regions and most city tiers, what is our opinion? May wonder will there remain difference for recovery among regions and city tiers in the future? Thank you. Sijie, thank you. As I mentioned earlier, you know, the Chinese New Year recovery is encouraging. The momentum is good. We also saw good recovery across the region and in particular in some Tier 2 city like, you know, Chengdu or Xi'an or Changsha because Pizza Hut, the tourist destination for domestic traveling, so they benefit from the CNY. Our low-tier city stores also benefit because people have not been able to go home for three years. We are happy to see that. Our caution is on post Chinese New Year trading. While all these happy improvements are happening, we are also cautious that the value for money, the cost of spending is also happening. Therefore, while we are happy to see that traffic coming back, we still focus a lot on value promotion to get our customers through the door. Going forward, our focus right now is look at the post-Chinese New Year trading, because particularly when they are concerned about economy and macro situation, the customer spending post big holiday might be cautious. That's not only specific to Chinese. I spent 10 years in UK, and I think that consumer behavior is consistent across all countries or everywhere. It's just natural human behavior. Therefore, we have that cautious, optimistic preparation towards the January and February trading as a holistic trading period itself, just January. Thank you, Sijie. Yeah, Sijie, I just want to add a little bit to Joey's comment. I think in general, we are very encouraged, obviously, by, you know, the new quote policy and also the Chinese New Year trading period. We are optimistic for the year. I think things are looking brighter. I think what we trying to say is that we do not take sales or growth for granted. We believe that, you know, like this view, there's gonna be uncertainty and change ahead, and we're gonna work hard to drive that sales growth and then, you know, be disciplined about our store expansion. As the old saying would say, you know, we plan for the best and prepare for the worst. That had been, you know, for the last couple of years, strategy, and we'll continue that. Quite positive scenario. Thank you, Sijie. Thank you, Joey and Andy. Thank you. Your next question comes from Ethan Wang from CLSA. Please go ahead. Thank you. Good morning, Joey and Andy. My question is on the supply chain, which is very important to our business, both during COVID and post-COVID, but, largely ignored by market sometimes. We noticed that we have made a very strong commitment to reduce the carbon footprint, on Scope 3, that may apply to our supply chain as well. Just wondering, does that mean we may make some changes in regard to our supply chain choice or we may make some investment to our supply chain partners, to achieve our goal and how that's gonna affect our business going forward? Thank you. Hi, Ethan. Thank you for, you know, your questions. In terms of supply chain, I think, you know, obviously it's continue to be a very important competitive advantage for us. It's very important for our long-term sustainable growth. For supply chain, we will in the next couple of years, we'll continue our, you know... As we mentioned, you know, in the Investor Day, we'll step up investment in supply chain and our infrastructure. You know, obviously, you know, we'll be expanding our footprint in terms of our store, our supply chain centers, also including automation, but also investment, you know, to reduce carbon footprint, as you mentioned. Now, obviously, it's very important for us to work with our supplier base, our supplier partner to work toward that goal. I think, you know, if you look at, you know, the climate change initiative is still relatively new. We are learning it. We have, you know, planned for it, and we have, you know, submitted, you know, the Science Based Targets initiative, you know, for our plan. We have committed to, you know, achieving net zero by net zero emission by, you know, 2050. So, that's a commitment that not only require us internally to make investment and improve our operations, but also work very closely with our supplier. Then in the future, we will also work very closely with our consumer, too, because, you know, to make a sustainable environment require, you know, everyone's involvement. So it's not that we would necessarily change, but we'll work together and, you know, obviously study and encourage, you know, our supplier base to also work towards that goal with us as well. That's how generally we think about, you know, our supply chain initiative, you know, versus, you know, the ESG initiative, especially climate change. I have two points to add, Ethan. One is, when we talk about investment in supply chain responding to ESG, some people naturally think that, oh, that means margin impact, that means additional investment. I have to emphasize that in Yum China's philosophy, that means that the investment must have a desired payback. It does not mean that we just, you know, justify the additional investment because it's the right thing to do. It has to be right thing to do now in the future, it has to be sustainable for the business as well. One example is we invest in little measurement meters in the store to measure the usage of energy. The original, this little cute equipment is very expensive. It does not justify our payback. It- ... 'Cause our overall payback, think about store economics, two years, three years. Well, we have to, you know, work towards that direction. What our team do, we work with the suppliers of that little cute equipment. We get rid of the bells and whistles, so it's very affordable. We install them in our stores, and the saving is enough to justify the investment. The payback is still protected. That's one discipline. We also share whatever we learn with our suppliers to help them. That's point one. Point two is supply chain. I'm personally very excited about this area, and my team is very, very passionate about it too, because there are some really fun and exciting innovations happening in the last few years here. I can share one with you. During the Shanghai lockdown, we have one warehouse. While we have 33 logistics centers to supply the chicken to different provinces, we have one warehouse to supply the package. The paper box, the bags, et cetera, for our stores. But that warehouse, what happened was in Shanghai, and Shanghai was completely locked down. That is a serious business, right? How can we keep our store open without the packaging paper, the wrapping paper? Well, our team, which is a brilliant team, when we are faced with such challenge, we came up with even more brilliant solution. That's when we start to build a logistic site in the most nearby port within a week. We start to ship these packaging material through sea freight. One direction went to the north to Tianjin, and then they ship build from Tianjin to cover the entire northern part of China. One went down to Guangzhou. It covers the southern part of China. Well, what happened to the middle part of China there? Well, there's railway. The railway can stop everywhere without the problem of lockdown. Some part of these packaging material get on the train and went to Chengdu and Wuhan, everywhere, and we're okay. Now you can imagine, in the past, when we opened a logistic center, we look at the trucks route. Now we look at the truck, the rail, and the sea freight, everything. I love it. I think that's the way that we shall do our business in the past few years and going forward. It's fun. Thank you. Great. Very useful. Thank you. Your next question comes from Rap Tse from CMBI. Please go ahead. Hi. Hello. Can you hear me? Yes. Hi. Hello, Joey and Andy. Thank you so much for the detailed sharing and the resiliency last year. The question I would like to ask is about your new store target. I'm just wondering if you guys think your new target is a bit too conservative. Because obviously, you guys have done really well last year on opening more than 1,100 stores last year with COVID. Without COVID, do you think the numbers could be a bit more higher this year? Also, seems your CapEx spend last year is much lower than your previous expectations. Perhaps the per store CapEx is much lower now. Also the level of rent, is still lower than the pre-COVID level. Why should we take more advantage of that? Also, do you mind breaking down the number of store, opening for the smaller brands like, Lavazza and Taco Bell as well? Thank you. Hi, Rap. Thank you for, you know, your questions about, you know, our new store opening target. I just want to talk, echo a little bit about our previous comment, which is, you know, like for last year, we opened more than 1,800 stores. The more than 1,100 store is the net new store that was increased. As Joey mentioned, you know, obviously, we're very disciplined, and our new store performance available is very good. We have been opening new stores quite aggressively, even during the pandemic period. We also aggressively to optimize, improve our portfolio of brand and also, you know, our store network. That's why, you know, you see, you know, the net number is 1,100 plus for last year. Now, this year. As I have mentioned before, you know, like obviously the target that we set up is, you know, 1,100 to 1,300 new stores this year. At that, I would say emphasize that, you know, for our company, you know, the quality of growth is more important than the quantity of growth. You know, we generally do not give a quantitative, like, you know, dictate or number to our staff and say, hey, this year you're gonna open X, you know, thousands of stores. That's not the way we do it. We do it in very disciplined way, right? What we look at is like what's reasonable, you know, sort of range of new store. Ultimately, how many stores we open is really dependent on the market conditions, right? The unit economics. As I mentioned, you know, when the store economics, they perform really well, the market is, you know, booming, be sure, you know, our market manager, they will be promoting, you know, store opening, and they will propose more store for opening. The unit economics is good. More store will be approved. There will be accelerations automatically that build our process. Our process is not based on, you know, a person's or a particular point of view. It's really based on a consistent, disciplined approach that reflects both the market conditions and also the unit economics. We're confident that, you know, if things are doing really, really well, I'm sure like we are confident that, you know, our store manager and then, and they will make the right decision, and we'll see very healthy, very strong robust, you know, store network expansion. As we mentioned before, you know, and this year our focus is on driving sales growth. This is really important because that's the sales, not only, you know, in terms of top line, but also in terms of margins. The biggest driver for margin is really sales, and then we talk about other cost factors. This will be our focus, I'm really confident that, you know, you look at number for last few years, I think we have, you know, outperformed the overall market in terms of, you know, restaurant industry. We're confident that, you know, we will be able to, you know, to do it in the long haul. Rap, I have one point to add in. Analytically or from analyst point of view, the CapEx, the rent, the sales, all these are important factors to open store. Operationally, what is not mentioned enough, the most important factor actually is how many good store managers do we have. Good store managers take some time to train, two to three years. For us, we don't apologize for that focus because even in our culture we emphasize on our GM number one. Our store managers are the most important people in our organization. In order to ensure quality of growth, as Andy mentioned, we need to get all these things under control, the CapEx, the rent, the operations, the sales. The most important job of me and my management team is we make sure we have good store managers to run the store. Thank you. Right. Very much quickly right on now. In terms of like by brand, I think, you know, like obviously KFC remain, you know, the largest brand for, you know, store opening. You've seen, you know, Pizza Hut have accelerated store opening, as Joey mentioned, record number in, you know, probably recent years, in recent number of years, even before the pandemic. We are continuing to see very robust expansions for Lavazza, right? After now, you know, it's more than, you know, 80, 85, you know, store already, and keep growing very rapidly. You think about it compared to last year, it's multiple store increase. Taco Bell also have increased, you know, the store network expansion. In terms of the Chinese cuisine business, we work very closely with our franchisees. We will likely see, you know, you know, the network increase by 2023 for the Chinese cuisine business, which improve both relationship and margin. Thank you. Thank you. Thank you. Thank you. you. There are no further questions at this time. I'll now hand back to Michelle for closing remarks. Thanks, Zari. Thank you all for joining the call today. We look forward to speaking with you on the next earnings call. If you have further questions, please reach out through the contact information in our earnings release and on our website. Have a great day. Thank you. Thank you, everyone. Thank you. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.