Thank you for standing by, and welcome to the Yum China third quarter 2023 earnings conference call. I would now like to hand the conference over to Michelle, Michelle Shen. Please go ahead. Thank you, Zach. Hello, everyone. Thank you for joining Yum China's third quarter 2023 earnings conference call. On today's call are our CEO, Ms. Joey Wat, and our CFO, Mr. Andy Yeung. I'd like to remind everyone that our earnings call and investor materials contain forward-looking statements, which are subject to future events and uncertainties. Actual results may differ materially from these forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statements 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. You can find a webcast of this call and a PowerPoint presentation on our IR website. Now, I would like to turn the call over to Joey Wat, CEO of Yum China. Joey? Hello, everyone, and thank you for joining us today. We held our Investor Day in September in Xi'an, China. It was wonderful meeting investors face-to-face. At the event, we unveiled our RGM 2.0 strategy with a strong focus on growth. We have set ambitious growth targets for the coming three years. These include reaching 20,000 stores by 2026, achieving double-digit EPS CAGR, and returning $3 billion to shareholders in dividends and share repurchases. With our long-term growth commitment in mind, let's zoom into the third quarter. Our results reflect continued strength. Third quarter net new stores, revenue, and adjusted operating profit all reached record levels. We accelerated new store openings with 500 net new stores in the quarter, while maintaining healthy store pay-back periods. Our portfolio now exceeds 14,000 stores. System sales grew 15% year-over-year in constant currency. Adjusted operating profit, excluding temporary relief, grew 21% year-over-year in constant currency. In the first nine months, adjusted operating profit exceeds $1 billion. Our team's relentless efforts produced these remarkable results. To drive sales in the peak summer trading season, we bolstered crew resources for excellent service, ensured supply pipeline readiness, and execute traffic-driving campaigns. Same-store sales growth in the third quarter was led by strong transaction growth. During the summer holidays, same-store sales at our tourist and transportation locations surged more than 50% year-over-year. It's important to remember, though, that consumers have continued to be cautious in their spending. Our formula to capture sales growth has always been simple: the food, the fun, and exceptional value. Now, let me go through what we have done. First, food innovations on a big scale. Our $100 million club showcase at Investor Day illustrates our success in building huge categories to boost sales. Recent innovations at KFC include our juicy whole chicken and beef burger. To put things into perspective, in the third quarter, these two categories combined exceed 6% of KFC sales mix. This is higher than our original recipe chicken, which we have been proudly serving in China over the past 36 years. It shows our ability to innovate, but also build very big categories. We are continuing to expand these categories with new flavors like Sichuan-style spicy whole chicken, Yanju Mizhi Quanji, offering it from Friday to Sunday only. This spicy whole chicken is perfect for at-home consumption. We also collaborate with Ultraman to promote our premium ultra cheese 2.0 beef burger. Consumers love them! At Pizza Hut, we sold over 100 million pizzas in the first nine months of the year. One out of every five pizza we sold was a durian pizza. That's over 20 million durian pizza, nearly 70% more year-over-year. Our in-house supply chain worked with suppliers to secure durian supply and expand capacity to satisfy the growing demand. Second, we are offering our customers amazing value for money on top of the innovative food. KFC Crazy Thursdays, Crazy Thursdays, is no longer just a marketing campaign. It has become a cultural phenomenon. Crazy Thursday sales consistently outperformed other weekdays in the third quarter by around 40%. To keep customers engaged, we rotate offers and regularly launch new flavor variations, such as spicy nuggets. We chose products that utilize existing ingredients and involve simple cooking process to provide exceptional value while ensuring operational efficiency. At Pizza Hut, we are expanding our selections for pizzas priced below CNY 50, which is a very significant portion of the overall pizza market. Around 20% of our pizzas we offer are priced below CNY 50, and that's not enough. We could do more. By enriching our lower-priced pizza offerings, we are tapping into this substantial opportunity that's currently underserved by Pizza Hut. Other than pizzas, we are adding new snacks that customers love. Our new cheese tart, 芝士蛋挞, became our best-selling snack in September and an amazing traffic driver. Not easy for a snack item to be a traffic driver compared to pizza. Next, keeping users engaged and having fun along the way. Our loyalty programs topped 460 million members in Q3, up 15% year-over-year. Notably, sales from members continue to be high at 65%. We collaborate with pop culture icons that resonate with young generations. KFC's campaign with Honkai: Star Rail, 星穹铁道, a popular e-game, generated huge social buzz and attract many new customers. Almost 40% of traffic generated from the campaign came from new or inactive members, and a significant portion are young adults, and that's a fantastic news for the brand. We are proud to be exclusive western food catering supplier for the Asian Games in Hangzhou. Over 250 of our crew members from across China were chosen to serve at this sporting event. KFC and Pizza Hut set up nearly 30 pop-up stores and served over one million athletes and fans, and it shows that our food is good enough and healthy enough for the professional athletes, too. We also ran nationwide campaign, offering exclusive gifts at our restaurants and through our super app in celebration. In closing, I want to thank all of our teams for their hard work in delivering a strong quarter. Next week, we will hold our RGM convention for our restaurant general managers. This marks the first in-person convention for 13,000 attendees since 2019. Very excited about it. It's an excellent occasion to honor our RGM's dedication, celebrate our achievements, and reaffirm our goals for the coming year and beyond. Looking forward, the growth potential in China remains vast, even with moderate economic growth. RGM 2.0 provide us the strategic framework to grow sustainably. Evolving consumer preferences in the post-pandemic environment require us to stay agile and vigilant. Our robust supply chain and innovative digital ecosystem has enabled us to quickly adapt to changing market conditions. I'm confident we can continue to create long-term value for our shareholders. With that, I will turn the call over to Andy. Andy? Thank you, Joey, and hello, everyone. Let me share with you our third quarter performance. But before I do that, I want to point out foreign exchange had a negative impact of approximately 6% in the quarter. Overall, we achieved solid results, growing across key metrics. On a year-over-year basis, revenue grew 15%, and adjusted operating profit grew 10% in constant currency. Compared to pre-pandemic levels, we have a much larger store portfolio. Although same-store sales remain at approximately 90% of 2019 levels, system sales grew 22% compared to 2019. With that, let's go through the financial in more details. Third quarter total revenues were $2.91 billion in reported currency, a 9% year-over-year increase. In constant currency, total revenue grew 15%. System sales also increased 15% year-over-year in constant currency. The growth was mainly driven by new unit contributions and same-store sales growth of 4%. Dine-in sales continued to rebound year-over-year. By brand, KFC same-store sales grew 4% year-over-year. A strong rebound at transportations and tourist locations contributed to the growth. Same-store traffic grew 9%, while ticket average decreased 5%. These results were mainly driven by successful traffic-driving promotions, lower delivery mix, and rebound of the breakfast daypart. Delivery typically carries a higher ticket average than dine-in orders. Thus, a decline in delivery mix lower the overall ticket average. Breakfast orders tend to have a lower ticket average as well, so the rebound in breakfast sales contributed to traffic growth, but lower ticket average. Please note that overall ticket average in the third quarter was similar to the second quarter and higher than 2019. Pizza Hut same-store sales grew 2% year-over-year. Same-store traffic grew 12%, and ticket average decreased 9%. We want to highlight that by design, we are expanding our price ranges to enhance Pizza Hut's value propositions and to capture the underserved markets. Consistent with Pizza Hut's revitalization plan, we want to enhance Pizza Hut's value propositions to consumer. Particularly, we are targeting the sub CNY 50 pricing range, which represent a very significant segment of the pizza market in China. We also intend to increase the sale mix of delivery and off-premise dining over time. For Pizza Hut, delivery sales generally have a lower ticket average than dine-in. Finally, we aim to bolster the sales of single-person meal. This is different market segment compared to Pizza Hut's existing customer base, which tends to be group or family dining. Restaurant margin was 17%, 180 basis points lower than the prior year. This was mainly due to lapping of last year's temporary relief of $30 million, which translates into 120 basis point margin impact. Excluding this impact, year-over-year, year-over-year, margin change is only 60 basis points. Wage inflation, normalizations of staffing at the store level, increased promotional activities also impacted margins. On a positive side, occupancy and other expenses improved year-over-year, primarily due to sales leveraging and ongoing benefit of cost structure rebase, rebasing efforts. Now, let's go through the key items. Cost of sales was 31.1%, 40 basis points higher than the prior year. We increased promotional activities to drive traffic sales, sorry, drive sales, and we also faced higher poultry prices in the quarter. This was partially offset by more favorable prices for commodities, including beef and cooking oil, as well as full utilization of chicken. Cost of labor was 25.3%, 180 basis points higher than the prior years. Last year, we benefited from temporary relief of $17 million, which translates into 70 basis points margin impact. Two other key factors that impacted labor cost comparison were, one, mid-single digit wage increase for frontline staff due to annual wage adjustment. And two, normalized staffing level at our store compared to the pandemic last year. These were partially offset by sales leveraging. Occupancy and other was 26.6%, 40 basis points lower than the prior year, benefiting from improvement in rent and depreciation expenses. We continue to secure more favorable rental terms for our new stores, lower depreciation resulted from lower upfront investment and store portfolio optimization. It's important to note that 45% of our stores have been built after 2019. This was partially offset by lapping of $13 million in rental relief and austerity measure associated with pandemic last year. G&A expenses increased 14% year-over-year, in constant currency, mainly from higher accrual of performance-based incentives, and to a lesser extent, wage increases and higher travel expenses from the resumption of business travel. Operating profit was $323 million, increasing 9% in constant currency. Excluding $30 million in temporary relief received last year, adjusted operating profit grew 21% in constant currency. Our effective tax rate was 27.5%. We continue to expect our full-year effective tax rate to be around 30%. Net income was $244 million, and diluted EPS was $0.58, both increasing 18% in reported currency. Excluding the FX impact, net income increased 26%, and diluted EPS, 27% in constant currency. We generated $410 million in operating cash flow and $243 million in free cash flow in the third quarter. We returned $211 million to shareholders in cash dividends and share repurchases in the quarter, on track to return $600 million-$800 million for the full year 2023. Our balance sheet remains strong, with around $4.2 billion in net cash position by the end of the third quarter. Now, let's turn to our outlook. Regarding store opening, we opened 500 net new stores in the quarter, and 1,155 net new stores year to date. We are on track to meet our 2023 full year target of 1,400-1,600 net new stores. The new store payback period for our KFC and Pizza Hut store remains healthy, at two years and three years respectively. With our healthy new unit payback, together with flexible format and modules, we are confident to reach 20,000 stores by 2026, as we unveiled at our Investor Day. Looking ahead, the fourth quarter is seasonally a small quarter for both sales and profits. On the sales side, since the late September, we have observed softening demand, which extended to October. Consumers have become more value conscious. We have been focusing on food innovation and widening pricing ranges to tap into underserved market to drive growth. Regarding margins, sales remain the biggest factor. Fluctuation in sales may have a pronounced impact on margins in the fourth quarter. As a reminder, in the fourth quarter last year, we also received $26 million in temporary relief, which we do not expect to repeat this year. We also anticipate wage inflation of mid-single digits and returning to more normalized staffing levels at our stores. Just a reminder, in the fourth quarter last year, we experienced labor shortage due to widespread COVID infections. The post-pandemic economic recovery is shaping up to be a wave-like and non-linear process. So we will maintain our focus on driving sales and cost efficiency. However, the overall trend towards recovery is evident this year, and many of our performance metrics are setting new records. We have demonstrated our ability to quickly adapt to changing consumer preferences and seize opportunities under different market conditions. We are confident that the successful execution of our RGM 2.0 strategy will help us expand our store portfolio, grow sales, and both profits, delivering sustainable value creation and long-term returns to shareholders. With that, I will pass you back to Michelle. Michelle? Thanks, Andy. Now we will open the call for questions. In order to give more people the chance to ask questions, please limit your questions to one at a time. Zach, 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're on a speakerphone, please pick up the headset to ask your question. Your first question comes from Michelle Cheng from Goldman Sachs. Please go ahead. Hi, Joey, Andy, thanks for taking my question. My question is still about the competition. Especially you mentioned that the trend turned softer since the end of September. So can you share with us how do you see the competition landscape involved? And also, with this value campaign, how should we think about the balance between the top-line growth and also the full cost control? Thank you. Thank you, Michelle. Regarding the competition, we see it as a positive trend and sign, because despite sort of concern towards the macro situation in China in the media, in reality, both international and domestic players are investing aggressively in our industry. That shows that, you know, these players, competitors, are voting with their money and voting with their feet. And that's consistent to our view towards the business and our industry in China, particularly for the chain store business model. On top of that, we see very vibrant competition in the lower tier city. Again, that is good, because if you remember back to our Investor Day, we have very aggressive store opening plan, especially in the lower tier city. And that resonate well with our view that there's a lot of opportunity in the lower tier cities. So, you know, we're quite happy to see that. And then when it come to the point about value-driven consumer, we have been a player that has benefit from the more cautious and more rational spending for the consumers. We're a fast food company. When customer becomes more value driven, it's good for us, as long as we have the capability to deliver, and we do. And it has been a consistent focus for our company to focus not only value, but innovative products and fun experience, because value itself is never enough for our customers. And we'll continue to do that, and you can see that in this quarter, in the past many years, we have been very consistent with our ticket average. With the ups and down, our ticket average compared to the last, you know, sort of more stable year, 2019, is still up a little bit, because we are very careful about it with KFC, price increase every year and Pizza Hut, during the turnaround time, for the original product, we kind of keep the price the same, but then we get a bit more opportunity with the new product. But the ticket average has been relatively stable, and even in the last quarter, you can see we have very healthy growth of transaction TC. In our business, TC growth is so good, and it cannot be better to have TC growth. So it shows them we react very quickly, and we are very agile, and we get the sales. Last but not the least, while we are doing all this innovative product, we deliver value products or state. We are able to protect our margin with our innovations and value campaign, and that is very important. In fact, our year-to-date margin has already exceeded that of 2019, which is, you know, pre-pandemic. You know, there's some movement, and Andy, I'm sure, Andy will go through it later on. There's a movement between the different lines of cost structure, but the restaurant margin, that's where we protect. We, we reduce the rent, we reduce the O&O, and then we put the money into food and to service to serve our customers. So net-net, competition for us is good because we see it's a vote of confidence for our industry and our market. Thank you, Michelle. Thank you, Joey. That's very clear. Your next question comes from Lin Sijie from CICC. Please go ahead. Thank you, Joey and Andy. So I have one question regarding the margin. So Andy have mentioned the reasons behind the margins year-over-year change. But if we compare Q3 with the same quarter in 2019, our revenue increased 26%, but operating profit only increased 8%, which is quite different with Q1 and Q2. So could you please help us help us better understand this? Thank you. Okay. Sijie, thank you for your questions. And so, as you mentioned, you know, if you look at the year-over-year comparisons, you definitely need to take out the impact, you know, from the temporary lease last year. And when we compare to 2019, you know, obviously, you know, over the past few years, we continue to see, you know, the labor costs that was increasing, you know, over the past few years. But we're able to partially offset that by improvement in our O&O, which is, you know, occupancy and other expenses. And then, you know, if you look at, you know, by item, you see that COS is actually pretty stable, around 31%. Our COS, as mentioned, because of wage inflations and a high mix of delivery, we have seen, you know, some increase there. However, on the O&O side, we are much better, mainly benefiting from store portfolio optimizations, and rent negotiations and better lease terms. And we also have other initiative to rebase our cost structure to possibly offset that. You know, if you look at the same-store sales, which is about 90% level of 2019. Now, looking at the, you know, as we mentioned a little bit earlier, looking ahead in the fourth quarter, fourth quarter is a smaller quarter for us in terms of sales and profit. And so, as we have mentioned, we have seen some softening demand since September. So sales fluctuations will have a multiple amount of impact on the profitability and margin. Now, again, in the fourth quarter, compared to last year, last year, we received $26 million of temporary relief, which we do not expect to repeat this year. Now, in term of wage inflation, let me just repeat it again, mid-single digit wage inflation, normalization of staffing levels at our store. Longer term, as we have mentioned, our Investor Day, we, you know, our goal is to maintain a stable margin and potentially improve it over time. You know, obviously, we have to work hard to continue to offset wage inflation impact every year and potentially commodity inflation in the long term. It's important to keep, you know, a short-term and long-term balance in mind. You know, we will continue to benefit from cost structure, raising efforts that will stay in place for a long time. For example, high-level rent, you know, our mega store restaurant staff sharing program. We also have more flexible and a lower investment for our store model. So, we'll maintain, you know, our discipline in cost efficiencies and also continue to improve our KFC. That's how we look at the margin in both short term and long term. Thank you. Thank you, Andy. Your next question comes from Christine Peng from UBS. Please go ahead. Thank you, management. I actually have a question which is also related to competition, but I want to ask more details specifically in terms of this Chinese-style burger. I think in the Investor Day, Yum China, your KFC management actually shared with investors KFC's plan to launch the Chinese-style burger products in the very near future. So can management share with us the timetable as well as more specifics about this product in terms of price strategy, product strategy going forward? Thank you. Thank you, Christine. We actually have test launched this particular product in three provinces already, Jiangxi, Fujian in particular. So it's interesting that we test launched it in, not in Guangzhou, Beijing, or Shanghai. We do it in sort of second tier cities. The progress has been good, and we are, you know, we are happy with the result, and we continue to work on a plan, and then move to next stage when we are ready. The price point is competitive, it's very affordable. You know, it's one of our strategies that for the lower tier city, we have slightly different product and a more affordable pricing. But at the same time, we still maintain the margin for the business. But it's going well. I taste the product myself. It tastes great. So, hopefully next time, we can get it closer to Hong Kong, where you can, you don't have to travel that far to try it. Thank you, Christine. Your next question comes from Chen Luo from Bank of America. Please go ahead. Hi, Joey and Andy. So my question is also on competition. In fact, last time in Xi'an, I also raised a question on testing and the likes of TikTok coupons. And, I think given our current value campaign and our initiatives to broaden our price range, as well as to sell more coupons on TikTok, do we think that the ticket average decline that we saw in Q3 could actually extend into the coming few quarters? And would the ticket count increase can be enough to offset the ticket average decrease? Lastly, in terms of our food paper cost as a percentage of sales, do you think that in the near term, it could be under some pressure on a year-on-year basis into the coming few quarters? Thank you. Thank you, Chen. Let me just point out that the ticket average compared to is not exactly the best comparison because last year is during the pandemic, ticket average is unusually high because people are locked down at home, and when they order, they order big, big, bigger size, right? What is more comparable is we look at the ticket average compared to sort of the more normal year. Although we are, you know, our business is very different compared to 2019, but we can compare the ticket average with 2019. The ticket average is still slightly higher than 2019, so that is sort of more normal. So I ask our investor not to be overly concerned about the ticket average drop compared to last year. Usually, when our sales move, the more focused number is always a ticket transaction, TC. And the fact that our TC grew at almost double-digit is a good sign. So, in our business, over many, many years, just go beyond one quarter, go through the, you know, five years or 10 years, you will see our ticket average is always rather stable. So that's, hopefully address your concern about the ticket average. And go on. Yeah. Let me just address both TA. As I try to, you know, in a prepared amount, try to decompose, you know, what is, you know, driving the TA. Obviously, you know, promotion is a part of that, but it's only one of them, right? If you look at, for example, for KFC, today, the TA is still higher than, you know, what we have seen in 2019, as Joey mentioned. And, you know, part of that is, you know, delivery mix, right? You know, we have high delivery mix compared to 2019. And then, you know, if you look at compared to last year, we also will declined in the mix for delivery as people returning to the store. And so that would have an impact, you know, on the TA, because the delivery TA for KFC obviously is higher than the dine-in component. The other one is, you know, if you look at KFC, for example, you know, we also mentioned about breakfast day part, right? So, you know, last year, because of the pandemic, the breakfast day part was impacted more so than the other day part. With the rebound in breakfast day part, we, you know, and which tend to also have more TA, you know, so the increase in traffic for breakfast day part will also have impact on that. So there's a number of components. And if you look at our fuel ads, you will notice that it's actually very stable, right? Compared to last year, only 40 basis points different. Compared to 2019, 10 basis points. It's almost flat line, right? So we have ability to, you know, manage, you know, the overall, you know, our profitability, our margins, with, you know, with different, you know, driver for TA. Just come back to your return to your food and paper costs. I mean, I think we have shared in our investor day that we're being able to manage the food and paper costs at a very stable number over many years. When there are some factors driving up the food cost, well, such as commodity, inflation. Yeah. We are able to deliver a very stable cost because of our innovations and using all parts of ticket and being flexible with our supply chain. So we are always quite stable here. And I keep reminding our team internally, the problem, the food paper costs become a problem is when it become too low. That means that we are not giving the value for money, the quality of food and the volume of food to customer. So it, it's a terribly stable percentage for the food paper cost over the many years. Thank you. Yes. Thank you, Julia and Andy. So we also have confidence in the management ability to stay agile and take the right measures to address competition, and further we share. Thank you. Thank you. Thank you. Your next question comes from Wilkins Tong, from Morgan Stanley. Please go ahead. Hey, sorry. This is Lillian from Morgan Stanley. Can you hear me? Yep. Yeah. Yes. Yeah. So I have a question, again, on margin side, but in different aspect, because I think despite all this, losing the subsidy impact and normalization of labor staffing to stores, is there any impact from acceleration of store expansion to margin? Because I think going forward, we're gonna keep up this expansion pace. So should we kind of rethink about the margin base, given such situation? Just wanted to really kind of get some color on how to quantify the impact of faster unit expansion to margin. Thank you. Okay. Thank you, Lillian. You know, so when we look at, you know, our net new store opening, you know, they continue to be very healthy. You know, if you look at the overall cash payback periods for our new store opening, it's still two years for KFC and three years for Pizza Hut. In fact, as we mentioned, the small store model actually perform even better. Now, if you look at, you know, how they ramp up, obviously there's a ramp-up period for, you know, the newer store. We've mentioned large majority of our new store actually break even, you know, in the first three months, and they continue to ramp up, you know, through the years. You know, it may have a short-term impact when they just open, you know, because it's ramping up sales and margin tends to be lower, but, they tend to be, you know, very healthy, in terms of unit economics, as, you know, they progress, into, you know, a year or two, from the opening. So, there's no change in the way we look at store opening. You know, you know, important thing, the important indicator for us really is to look at, you know, how the new store are performing in term of cash payback, in term of, you know, unit economics. And as long as those are good, we'll continue to stick with our plan. And as we mentioned, we have been quite disciplined about store opening. It's driven by, you know, our, you know, investment models, and then also from ground up from our market. So we have a automatic acceleration based on the performance of the store. Thank you, Andy. Thanks. Your next question comes from Anne Ling from Jefferies. Please go ahead. Hey. Hi, hi, hi, everyone. Thanks for taking my call. Questions, you know, regarding the current trading environment. You guys mentioned about, like, you know, being a little bit softer and with, like, you know, sales fluctuation. Would you like, you know, elaborate a little bit on that? Is it like, you know, you're talking about like, you know, post-festival event that there is a fall-off in terms of sales performance, regardless of like, you know, any like, promotion or innovative product that you launch? Or is it because, like, you know, certain day part that you noticed that didn't really like, you know, perform as expected? Maybe like, you know, or certain like, you know, geographical area. Like, you know, would love to hear a little bit more about like, you know, what drives the softness, you know? Is it like, is there anything that we can do about that? Yeah. Thanks. Sure, Anne. So at the high level, I mean, summer was vibrant. You know, particularly July, there's some pent-up demand. So as I mentioned earlier, you know, transportation helped the traffic, you know, increase 50% year-over-year, which is really a good sign. And then comes to the just recent national holiday in during the first half of October. It's quite interesting here, actually. We observe sort of first half and second half during the national holiday. Because this year, particularly this year, the national holiday at the beginning is at the same time as Mid-Autumn Festival. So we see softness during the first half, because after three-year pandemic, Mid-Autumn Festival, for Chinese people, what do we do? Go home. So, you know, the first half of the holiday, we see massive number of customers going home, go back to see their families, to spend time with them. So the demand was soft. And then by second half of the holiday, after seeing mom and dad, I think people decided, still decided want to travel a little bit. So the second half of the October festival, actually the traffic picked up. So that's a little bit of this, you know, natural human behavior happening during the national holiday, during Mid-Autumn Festival. That's the point one. Point two is, in terms of the consumption, cautious spending, we do see customer spending a bit less on the premium product. Although our premium burger, our premium product in pizza still are doing quite well. But, you know, there's that little trend going. And then it comes to the third point is, what are we going to do about it? Well, we have been working on, and we have been doing it quite well, actually, with pretty good result, is widening the price range. So it's not only the bottom, the top bit, because we serve very large customer base, and there's always some customer who want to treat themselves, the same customer who want to treat themselves during certain time. So, you know, the premium beef burger, et cetera, we do that. But at the same time, we also enrich entry price offering. Pizza Hut, the pizza is a good example. We have a sort of single digit revenue coming from pizza below 50 RMB. And in fact, this is a very big segment for both international and domestic players. We see this as a big opportunity here. So, you know, you can imagine we are going to have more and more product in this particular segment. Not only the below 50 RMB pizza, but also single person meal. Because for Pizza Hut business, our business model, our average, average number of customer per transaction is over two people. Well, that shows that we have the opportunity to serve the one person meal as well. And we see good progress in it, and we could do more and get more market share in the one person meal sector. And then for KFC, we also, you know, continue to work on the choices of products at the entry price offerings to capture untapped potential customers, particularly those in the lower tier cities. So, you know, we can operate at a wide price range all the way to tier six city. And that's what we do, and therefore, we see very good, very good traffic growth. On top of that, in terms of the day part, weekday, weekdays are still doing better than weekends. And why the weekend traffic is still a bit soft, and that has a lot of, you know, reasons behind it. But the point is, our focus on the whole chicken, which is mainly at home consumption product, our focus on certain other products to support the weekday traffic. We're doing the right thing, and we see very good results from, from customers. And therefore, for quarter three, we delivered record revenue, record profit. But, you know, of course, the biggest challenge for us is the foreign exchange, that eat up 6% of our, of our revenue and profit, which is a problem. But in constant currency, you know, that's we are doing, doing quite well. So we, we, we'll continue to, to focus on the few things that I mentioned. Really good product and very good price and good experience, but still protect the margin for the investors and shareholders. Thank you, Anne. Got it. Got it. And can I ask another questions, you know, regarding the franchise business? We talked, talked a lot, you know, about, about this, you know, during the Investor Day. Can you like, you know, share with us, like, you know, the latest update with your captive, franchise, you know, i.e., like, you know, those specialty, those hospital, you know, uni and, and also, like, you know, the highway, centers. When will we see the ramp-up on the franchise business? Right. So, you know, if you, you know, I'll just be quick about this one. You know, as we look at the, you know, third quarter, for example, you know, our franchise, you know, number of new franchises growing, you know, pretty fast, is, you know, like 20%+ compared to last year. And so, you know, like, for new store opening. So I think we're making progress there. But obviously, you know, things is not gonna happen overnight, it's gonna come to ground. So that's how we look at it. Okay. Thank you. Thank you, Andy. Your next question comes from Ethan Wang from CLSA. Please go ahead. Hi, Joey. Hi, Andy. So my question is on same-store sales. So we see that tickets, ticket price at KFC and Pizza Hut decline, but I guess that is understandable with China's consumption space and consumption space competition. Yeah, it, it's good to do more promotions and have more traffic. It's, it's always a balancing act. But I just wonder, if we decrease, ticket, ticket sales and maybe prioritize on the traffic, is that gonna, like, cause some pressure on, on future, margin, especially from labor? Because with more people, we need to have more staff, but, with every order, the ticket price comes lower. We understand there's the impact from the delivery, but just wanted to understand, want to have some more color, on your thinking some, on, on this trend going forward. Thank you. Okay. So let me try to address that, and then, so in terms of the TA, I think, you know, there's a couple questions concerning TA. Let me try to, you know, help folks understand a bit, you know, more in detail. Again, you know, if you look at, you know, the, for example, KFC TA shift, there are three sort of like key component to it. Obviously, number of people have mentioned, you know, traffic driving promotion activities. But that's only, you know, part of the story and, you know, it's not even the main part of that. We also have the lower delivery mix shift, right? So last year, during the pandemic, we have seen, you know, very high delivery and, you know, when this delivery come back, especially, you know, what we call like group ordering delivery last year, right? Group buy delivery. And so when this year, when things return to more normal, we do see, you know, the delivery mix to be, you know, slightly lower than last year. And so that's normal because people are coming back to the store. And so that's about impact. The other one is, as we mentioned, you know, the same daypart, right? The shift would also have impact on that. For breakfast, as we mentioned, generally we have a lower TA, and so when that's growing faster, then you would also see, you know, a TA impact on the overall KFC TA. Same for Pizza Hut, maybe slightly differently, as we have mentioned, you know, besides of, you know, the promotional activities, we are actually by design, trying to target, you know, and tap market, which is, you know, below 50 RMB, you know, segment, which is very underserved by Pizza Hut. But, you know, it's a very, you know, big part of the pizza market overall, which is, you know, like obviously right now, number of, you know, players are active in there. So we want to penetrate that market. The other one, you know, for TA, for Pizza Hut, as Joey mentioned, is our purposeful, you know, targeting of single person new set. You know, Pizza Hut, well, KFC, if you look at a TA, and then you look at Pizza Hut, you will see that, you know, Pizza Hut always have high TA. And then, you know, and then a part of that is because it's in group dining and also in family dining. So, you know, when we have product that defines particularly for, you know, single person meal set, especially working lunch and whatnot, you're going to see, you know, the TA shifting there. And finally, as we, you look at even before the pandemic, we have done a purposeful job to actually increase the value proposition to, you know, consumer. One of the biggest, you know, challenge and for Pizza Hut, you know, before their hybrid program, was that you got, you know, the, you know, their value propositions to consumer. And so we've been working very hard and hold the price stable and whatnot to drive that. And so that's why, you know, by design doing that. Because, you know, when Pizza Hut is going to try to expand and address a bigger, bigger customer base, you know, you're going to have a wider pricing range. And so that's why, you know, you know, you kind of continue to expect TA over there, have some movement there. So that's a lot of components there by our strategy. But the key point is that despite all that stuff that goes on, you see that, you know, our COL is very stable, you know, 31%, right? Because we have product innovation. We have a very strong supply chain managing that. You know, overall, that's how we want to keep a balance between, you know, driving, you know, the traffic, expanding our addressable market, and at the same time, maintaining our TA. Now, obviously for COL, the biggest concern on the long term is, you know, the demographic change in China and whatnot. And so, you know, it's very important for us to continue to invest in automation, digital, and to improve, you know, our restaurant operation, so that we can continue to improve the labor productivities, you know, of our workforce. We've been quite successful doing that before the pandemic. And coming out from the pandemic, we're also pretty stable at about 25%-26%. And, you know, that's the things that in the long run, as we mentioned, trying to maintain the overall margins and expand it potentially over time. Thank you. Maybe I just add some color on the COL side in particular. If we look beyond just one quarter, we look at our COL over the last few years, as we share in our investor day, when we have few thousand stores, 6,000-7,000 stores, we have 430,000 people, or 450,000 people actually. Now, we have 14,000 stores, almost double. We still only have 430,000 people. So as Andy mentioned, we use, you know, automation, digitization to manage labor costs. When it comes to handling the promotion and while managing the COL, well, as I mentioned in my prepared remark, we tend to pick those products that utilize the existing ingredients and that they are very easy to make. And we're very careful about, you know, maximum number of items that the staff can handle in our store. And that's why having an amazing, I would say, second to none operation team is important. We do have pretty dedicated and good balance of how many items we sell in a store and what's the impact on the COL, and most important, what's the quality of foods that we can protect in order to deliver in the short term and long term. Thank you, Ethan. Got it. That's fair. Thank you, Andy. Thank you, Joey. Thank you. Thank you. Your next question comes from Xiaopo Wei from Citi. Please go ahead. Morning, Joey and Andy. I have a quick follow-up question on restaurant margin. In the third quarter, did you see any widened divergence of the restaurant margin of high-tier city versus low-tier city? And also, Andy, in the prepared remarks, you explained a lot about, we are having concession rent for new store, et cetera. Looking forward, shall we expect our, occupancy and other expenses to sales ratio to keep low? Because in the past of two years, this has been very good factor to mitigating other inflation component in the restaurant market. Thank you. Thanks, Xiaopo. So in terms of, you know, the different variants, I think, you know, that's not material changes to the way, you know, margin pattern, as we have mentioned before. You know, obviously, in the Tier One cities, Tier Two cities, the high-tier cities, you know, generally, you know, those stores have higher throughput at the store. And but, you know, generally, you know, you have, you know, a slightly lower margin because higher costs, labor and rent. And then in low-tier cities, you know, although you have a smaller throughput through a store, generally costs are lower, labor and all that. So the margin is slightly higher in the lower-tier cities. But all in all, you know, because also their investment, upfront investment is different, in different tiers, so we end up, you know, have a pretty, you know, good payback period, for both, you know, the top-tier and the lower-tier cities. And so that's, you know, in terms of, you know, the variance between, margins in different tier cities. Now, in terms of O&O, you know, I think as we have mentioned, you know, obviously last year we had some temporary relief, but, but overall, like, you know, O&O even, you know, including those, you see continued improvement there. You know, those contracts are longer term contracts, and when you get, you know, favorable long-term lease, you get a favorable long-term impact. And then we also have other cost structure, you know, initiative and portfolio optimization. So, I think, you know, O&O improvement would stay. But, you know, obviously, you know, that's also, you know, limited in terms of how low it can get, right? No one's going to give you free rent. But, but I think, you know, in the long run, I think we'll, we'll continue to see, you know, pretty, pretty healthy O&O as a percentage of sales. Thank you. Thanks, Paul. There are no further questions at this time. Thank you for joining the call today. For further questions, please reach out through the contact information in our earnings release and on our website. Goodbye. Great. Thank you. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.