Thank you for standing by, and welcome to the Yum China Third Quarter 2024 Earnings Conference Call. All participants are in 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 one on your telephone keypad. I would now like to hand the conference over to Florence Lip, Senior IR Director. Please go ahead. Thank you, Operator. Hello everyone. Thank you for joining Yum China's third quarter 2024 earnings conference call. On today's call are our CEO, Ms. Joey Wat, and our acting CFO, Mr. Adrian Ding. I'd like to remind everyone that our earnings call and investment materials contain forward-looking statements, which are subject to future events and uncertainty. Actual results may differ materially from these forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statement in our earnings release and the risk factors included in our filings with the SEC. This call also includes certain non-GAAP financial measures. You should carefully consider the comparable GAAP measures. Reconciliation of non-GAAP and GAAP measures is included in our earnings release, which is available to the public through our investor relations website located at ir.yumchina.com. You can also find a webcast of this call and a PowerPoint presentation on our IR website. Please note that during today's call, all year-over-year growth results exclude the impact of foreign currency unless otherwise noted. 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. I'm proud to share that we achieved strong results again in Q3 2024. We delivered robust sales growth as well as accelerated profit growth compared to Q2. System sales grew 4% year-over-year. Same-store sales index improved sequentially and reached 97% of prior year's level. Delivery sales achieved double-digit growth as it has for 10 consecutive years. On a comparable basis, both restaurant margin and OP margin expanded year-over-year. Core operating profit grew 18%, and diluted EPS increased by 32%. As we execute our RGM 2.0 strategy, we have a dual focus on operational efficiency and innovation. Savings generated from improved efficiency allow us to reinvest in food innovation and our value for money offers. This broadens our addressable market. It also helps us capture more traffic, drive sales growth, and expand profit margins. Meanwhile, our innovative business models, K-COFFEE Café and Pizza Hut WOW, are gaining momentum and successfully capturing new customer demand. In the first nine months, we set several new records: $8.7 billion in revenue, over $1 billion in operating profit, 1,200 net new stores, and over $1.2 billion returned to shareholders. We outperformed the industry in a challenging and fluid environment. Today, I will provide an update on our operations and store opening strategy. Adrian will then go through the financial performance and our latest capital return plan. I will start with operational efficiency. We are making great progress with Project Fresh Eye and Project Red Eye. We introduced these projects in quarter four of last year and quarter one of this year, respectively. These projects are to enhance operational efficiency through innovations across all aspects of our operations. Project Fresh Eye has reshaped our operations. We are evaluating processes through the fresh eyes of our restaurant managers, redesigning to support them more effectively. By simplifying, centralizing, and automating key processes, we are easing the burdens of restaurant managers so that they can focus on better serving customers. We are also using innovative technology and automation in our operations. This makes us more efficient. For example, intelligent energy management reduces utility costs. Project Red Eye has created a fresh mindset to innovate and deliver results by spending better and buying better. Our procurement teams are serving our marketing teams better and faster. Generated savings are passed on to our customers and fund innovations. We are also gearing our product design to optimize ingredient use and improve operational efficiency. These initiatives have enabled us to hone in on product innovations and value for money while expanding margins. On a comparable basis, Q3 restaurant margin improved 50 basis points year-over-year, and core OP margin expanded 140 basis points. Importantly, these are sustainable improvements that strengthen our business capabilities while driving high levels of customer satisfaction. Turning to sales, it's true that consumers are becoming more rational and sophisticated in their choices. But we know that the demand is there. Consumers seek value for money, good quality, and emotional value. [Foreign language] That's exactly what we are offering them, and it's working. We regard both system sales and single sales growth as equally important. On one hand, we see ample opportunities across China to enter underserved markets and enhance customer assets. On the other hand, we look to balance our unit growth with single sales growth. Seven consecutive quarters of Same-store traffic growth and sequential improvement in single sales index for both KFC and Pizza Hut show the strength of our strategy. Our delivery sales grew 18%, continuing the double-digit annual growth Yum China has maintained over the past decade. In quarter three, delivery sales reached around 40% of our sales mix. We have strategically adjusted delivery fees and introduced more entry price offerings to capture incremental consumer demand. We have enhanced our presence on aggregated platforms and expanded delivery coverage. Through these initiatives and more, we have captured incremental orders, especially from solo diners and value-cautious customers. As a result, both KFC and Pizza Hut have increased their market share on aggregated platforms. Even as we expand on aggregated platforms, we continue to maintain strong control over our business. Sales outside the delivery aggregators account for over 70% of our total sales, including dining, takeaway, and delivery. Let me share a few highlights on KFC. We continue to breathe fresh energy into our flagship products. Take the new Original Recipe Chicken Burger as we introduced in quarter two. It's an exciting innovation, though not so obvious. Taking our cue from the classic way kids in China enjoy KFC's Original Recipe chicken with mashed potato, we combined them into a new burger product. It's been very successful. Building on that success, we introduced an Original Recipe Chicken with Curry Gravy in August. [Foreign language] This time, we add curry gravy to the Original Recipe chicken and mashed potatoes. Customers are loving it. As a bonus, it doesn't require new ingredients in the stores. We maximize the use of existing ones while delivering exceptional value and taste to our loyal customers. In the first nine months, KFC sold nearly 200 million cups of K-COFFEE, surpassing all cups sold in 2023. During the period, both sales and cups sold increased by about 30%. As our membership data indicate that a significant majority of our members have yet to try K-COFFEE, we see huge potential for growth. We have just opened a 500th side-by-side K-COFFEE café this morning, China time, with a prime location in Shanghai, Xujiahui. We are also tapping into strategic locations like college campuses and transportation hubs. By the end of the year, we expect to exceed 600 cafés. Our distinctive menu of coffee, drinks, and food, stunning value proposition, and café ambiance are resonating well with their customers. Our disruptive limited-time offer of Original Recipe Chicken Latte [Foreign language] generated first disbelief, then curiosity, and finally trial. Perhaps surprisingly, it's become one of our best sellers. K-COFFEE cafés also effectively cross-sell to KFC's loyal customers, driving incremental sales and profit. K-COFFEE cafés' potential is exciting. Turning to Pizza Hut, the brand is making solid progress. Pizza Hut opened nearly 300 net new stores in the first nine months, exceeding 3,600 stores. Since 2017, Pizza Hut has been strategically lowering its ticket average to drive traffic and enhance its mass market appeal. We have launched more entry-price products designed for value-cautious customers and solo diners, capturing smaller ticket orders. Pizza Hut has also improved its profitability. Core OP increased 20% year-over-year in quarter three. Core OP margin was up by 140 basis points. We boost operational efficiency with simplified ingredients and redesigned kitchen processes. This also allows us to further improve our high food quality and service level. We continue to fortify our reputation as pizza experts. We recently upgraded the hand-tossed pizza dough for better taste, consistency, and easier preparation. In addition, we continue to build on our signature product, Durian Pizza, now our number one best-selling pizza. One in every four pizzas sold in Pizza Hut China is now a Durian Pizza. We sold nearly 30 million durian pizzas year-to-date. We have expanded our success with durian to burgers, launching the pizza dough-based burger with durian and pineapple. [Foreign language] It sounds unusual, but it's perfect for our durian lovers and sold out quickly. Our breakthrough Pizza Hut WOW store is looking like a promising vehicle for expanding our addressable market. It's been only five months since we converted our first store. Initial results are encouraging. For dining, we have seen significant single sales growth, driven by incremental transactions despite lower ticket averages. So far, we have converted around 150 stores, expanding from Guangdong to over 10 provinces, covering tier-one cities to lower-tier towns. We will continue to refine the model across different locations for both dining and delivery. With our dual focus on system sales and single sales growth in mind, let's talk about our store expansion plan. In Q3, we opened 438 net new stores, with over 1,200 net new stores year-to-date. We are on track to meet our target of 1,500-1,700 net new stores this year. This growth is underpinned by strong new store performance. At KFC, the payback period held steady at two years, and at Pizza Hut, payback improved to 2-3 years. Around 80% of new stores opened in the past two years turned profitable within three months of opening. Alongside our successful equity store model, we are accelerating franchise development to unlock additional opportunities. Our franchise strategy focuses on assessing strategic and remote locations, as well as lower-tier cities that were previously beyond our reach. We have built the infrastructure to support our franchisees, from food safety to store management. We have also innovated new store models suitable for franchisees, such as KFC's Small Town Mini, so we are now prepared to pick up the speed. Currently, franchisees represent 12% of KFC's store portfolio. The franchisee mix for net new stores increased from 15% in 2023 to 27% year-to-date, exceeding the guidance we gave at last year's investor day of 15%-20%. We now expect this ratio will gradually increase to 40%-50% over the next few years. Pizza Hut will be on a similar path, but will take more time to get there. For Pizza Hut's net new stores, the franchise mix was 7% year-to-date. We anticipate this ratio will gradually increase to 20%-30% over the next few years. With that, I will hand the call over to Adrian Ding, our acting CFO. By way of background, Adrian has been with Yum China since 2019. Leveraging his investment banking background, Adrian has led multiple successful strategic investments and capital market projects in his role as our Chief Investment Officer. He was also instrumental in establishing our Lavazza joint venture and building the business in China as our general manager of Lavazza JV. Adrian's combination of financial background with operational experience makes him well-suited for this position. I'm thrilled to welcome Adrian to his new role. Adrian? Thank you, Joey, and great to be with everyone today for my first earnings call. In the third quarter, we achieved strong results, with major KPIs trending positively. System Sales grew 4%, and same-store sales index sequentially improved to 97% of prior-year level. Restaurant Margin expanded 50 basis points year-over-year on a comparable basis. Core OP margin also saw a significant rise of 140 basis points. As we grew our top line, Core Operating Profit surged by 18%, and diluted EPS grew 19%, excluding the mark-to-market gain from our equity investment. As a reminder, Restaurant Margin on a comparable basis excludes VAT deductions, as well as temporary relief from landlords and government agencies received in the prior year. Core Operating Profit further excludes foreign exchange impact and special items. We're immensely satisfied with these meaningful sequential improvements in our quarter three results. They demonstrate our ability to outperform the industry in both good times and bad. With our confidence in our cash-generating capabilities, we plan to step up our capital return to shareholders. First, let's take a closer look at our third-quarter performance. By brand, KFC's system sales increased 6% year-over-year. Same-store sales were at 98% of prior-year levels, with 1% same-store transaction growth. Our strategy is to widen the price range and capture lower ticket average delivery orders by using results. Entry-price combos have driven incremental traffic, and delivery sales continue to grow double digits. Our quarter three ticket average was RMB 38, 3% lower than prior-year levels, but increased from RMB 37 in quarter two. Smaller ticket items like coffee and breakfast continue to outperform. Pizza Hut's system sales increased 2% year-over-year. Same-store sales were at 94% of prior-year levels, with same-store transaction growth of 4%. Ticket average was 9% lower year-over-year. It is in line with our strategy to transform the brand to increase mass market appeal. Our entry-price pizzas, burgers, and single-person meals attracted incremental traffic from value-conscious consumers and solo diners, which, of course, lowered per-person spending. The Wow store model is positioned with even more accessible pricing. Pizza Hut's traffic has grown in response to our strategy, and profit margins have improved year-over-year, thanks to our team's relentless drive for operational efficiency and innovation. Now, let's go through our margin and key top lines. Our OP margin as a percentage of revenue was 12.1%, 100 basis points higher year-over-year, or 140 basis points higher on a comparable basis. Resilient restaurant margin and savings in G&A expenses help us achieve that. Our restaurant margin was 17%, steady year-over-year. On a comparable basis, restaurant margin was 50 basis points higher. Savings in the cost of labor and occupancy and other costs offset the increase in COS. Cost of sales was 31.7%, 60 basis points higher year-over-year, or 30 basis points higher on a comparable basis. We kept cost of sales rather stable compared to 31.5% in quarter two, while continuing to offer excellent value for money. Key factors include favorable commodity prices and savings from spending better and buying better initiatives under Project Red Eye. Cost of labor was 25.1%, 20 basis points lower year-over-year. Improved operational efficiency more than offset wage increases from our frontline staff and the impact of sales deleveraging. Occupancy and other was 26.2%, 40 basis points lower year-over-year, or 60 basis points lower on a comparable basis. This came from more efficient marketing and advertising initiatives, as well as other cost optimization. Our G&A expenses decreased 19% year-over-year. This was due to operational efficiency gains and lower performance-based compensation this year, among other factors. G&A expenses as a percentage of revenue were 4.5% in the quarter, down by 130 basis points from 5.8% a year ago. For the full year, we aim to keep the G&A ratio around 5%. Operating profit was RMB 371 million, growing 14% year-over-year. Core OP increased 18% year-over-year. Our effective tax rate was 27.3% in quarter three, on par with the same period last year. We expect a full-year ETR in the high 20s. Net income was RMB 297 million, growing 21% year-over-year. Our mark-to-market equity investment had a RMB 26 million positive impact in quarter three this year, compared to a negative impact of RMB 3 million in the same period last year. Excluding this impact, our net profit grew 9%. As a reminder, we received lower interest income this year from a lower cash balance. Diluted EPS was $0.77, growing 32% year-over-year, or 19%, excluding the mark-to-market equity investment impact. Now, let's turn to capital returns to shareholders. Since our spinoff, we've returned over $4 billion to shareholders. In the first nine months this year, we already returned more than $1.2 billion, including over $1 billion in share repurchases and $187 million in quarterly dividends. We bought back more than 27 million shares, around 7% of our total shares outstanding, partially contributing to our EPS growth. Our cash position remains healthy, with net cash of $3.1 billion as of the end of the quarter. We're committed to returning excess capital to our shareholders. A year ago, we set our three-year plan to return $3 billion to shareholders through dividends and share repurchases from 2024 - 2026. With our cash generation capabilities proven in good times and bad, we now plan to step up our capital returns by 50% to RMB 4.5 billion over the same period. This includes RMB 1.5 billion in 2024. Finally, moving on to our outlook. We're encouraged by the recent stimulus policies. These measures are a positive step forward. But as you all know, such things can take quite a while to trickle down to consumers and thereby move the needle in businesses like ours. Entering the fourth quarter, we've not observed significant changes in market conditions and consumer sentiment. Despite this, we remain confident in China's midterm and long-term growth opportunities. Quarter four is traditionally a low season for us, with smaller sales and profits. We maintain our focus on operational efficiency and innovation to pass on savings to our consumers. We expect these efforts to continue driving overall sales and profit growth. I am confident in our strategy and our ability to navigate this complex and evolving environment and achieve sustainable long-term growth. As a reminder, in quarter four last year, we benefited from RMB 6 million in temporary relief, equivalent to around 30 basis points in OP margin, which we do not expect to repeat this year. Let me pass it back to Joey for closing remarks. Thank you, Adrian. Before we turn to Q&A, I would like just to recap the three key messages I want you to take away today. First, our quarter three results highlight our resiliency and growth strategy. With our dual focus on operational efficiency and innovation, we are well-positioned to capture opportunities in this market. Both system sales growth and same-store sales growth are key focus for us. Second, we remain bullish on China's long-term growth opportunities. Our widened price ranges, optimized delivery strategy, and breakthrough business models help us broaden our addressable market. We continue to capture underserved customer segments with both equity and franchise new stores. Lastly, we maintain our dual focus on sustainable growth and capital returns to shareholders. We plan to step up our three-year capital returns to $4.5 billion for 2024 - 2026. With that, I will pass it back to Florence. Thanks, Joey. 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. Operator, 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 handset to ask your question. Your first question comes from Xiaopo Wei with Citigroup. Hi. Hi. Can you hear me, Joey and Adrian? Yes. Yep. We can. Okay. Thank you for taking my question. Congratulations on a strong third quarter. I probably want to ask a long-term question. It is the first quarter we are seeing both your core OP margin and your spending and same-store going down. As you know, the market has been focusing on same-store sales for long, but it seemed to me that is actually, as Joey said, the system sales is equally important as same-store sales. Shall we say, looking forward, shall we look more into the same-store sales base of transaction volume rather than the same-store sales value? Because, as Joey rightly pointed out, you guys have this innovative format and model actually widen your pricing range. So the mix of your products or the ASP actually distort the traditional understanding of same-store sales. If that's the case, is there any other areas you will build your economies of scale in terms of enlarged volume to drive your margin resilience looking forward? Xiaopo, thank you for your long-term question. If I'm allowed to indulge myself, give a comprehensive view of our long-term strategy. Quarter three actually is a good result and illustration of how Yum China executes our RGM 2.0 strategy in the long term with dual focuses on multiple areas. As a CEO, I mean, I often get questions posed or decisions presented on either/or, such as either same-store sales or system sales. But the fact is, the only acceptable answer is both. We want both. And then the same-store sales, obviously, is composed of the transaction. So the way that we deal with it is we really are pursuing dual focus because we cannot just focus on the other. So I refer to several in my earlier remarks, but just to recap first, we have dual focus on system sales growth and same-store sales growth. And in quarter three, obviously, we deliver 4% system sales growth for the quarter and also seven consecutive quarters of same-store transaction growth going forward. Because between the TA and TC, I think you can see over long term, we focus on transaction growth, which really is the most important, one of the most important drivers for business like ours. Not to mention, the growth is also supported by 10 years of delivery growth. Second, and that related to your margin question, we have dual focus on operational efficiency and innovation. And I certainly believe that any good company who wants to survive needs to do both. So for Q3 alone this year, we delivered 18% core operating profit growth through multiple margin improvement projects like Project Red Eye. And then we reinvest our savings into multiple innovations, such as food innovations and then value for money, and then some breakthrough model innovations, such as K-COFFEE and Pizza Hut. And with this kind of operational efficiency and innovations, both K-COFFEE café model and the 150 Pizza Hut WOW stores right now, they broaden our addressable market and capture new customer demand to grow the business. So we have dual focus on opening equity stores and accelerating franchisee development, and that helps, obviously, manage our capital return. So far this year, we opened 1,200+ new stores in the first nine months, and we are on the track to reach full-year target. The payback is good, and 80% of the new stores turn profitable within three months, as mentioned in the earlier remarks. At the same time, we are accelerating the franchisee opening to unlock opportunities in strategic locations, remote or lower-tier cities. Last but not least, the dual focus on investing in business growth and returning capital to shareholders is also happening at the same time. With the sales, with the profit, at the end, we are growing the business and returning the capital at the same time. To summarize, in each of the above four areas, we do our best to avoid unnecessary compromises. We use all our energy, our capability, creativity to get what we can of both, including both same-store sales and system sales. Thank you, Xiaopo. Your next question comes from Lillian Lou with Morgan Stanley. Hey, thank you. Hey, good evening, Joey, and congrats again, Adrian, for your position. And also, congrats for the very good result. My question is more on the near term because I think Joey has been very clear on the long-term strategy. I think in the third quarter, I noticed that for KFC, our pricing actually recovered pretty nicely compared to the previous quarter's trend. And I just want to check the thinking behind, i.e., do we see some elevated competition that makes us less pressed on pricing, or have we done anything to really kind of support the pricing? So related to that, any thinking about the pricing strategy in the next couple of quarters? Thank you. Thank you, Lillian. So in terms of competition, we certainly see the restaurant industry continue to grow. And then the global players are still trying to invest aggressively into the China market, and the current players are going deeper to lower-tier cities. And we also see some players rationalize promotional intensity in recent quarters, and some aggressive players slow down store opening this year. For KFC pricing, our strategy for KFC pricing and Pizza pricing, actually, in the short-term and long-term, is relatively transparent. For KFC, we try to have stable pricing. So our quarter, this quarter, is 38, I think. And then so that's short-term. It's slightly higher than the previous quarter. No, sorry. It's slightly lower than it's 36. Slightly lower than the previous quarter, but it's higher than 2019. So it's relatively stable. For Pizza Hut pricing strategy, we are very clear from 2017 onward. We try to be a bit more mass-market-driven, so we have continued to lower the pricing so that it's more accessible. So in the short-term and long-term, that's pretty much our strategy in terms of pricing. Okay. Thank you, Joey. Your next question comes from Ethan Wang with CLSA. Thank you. Hello, Joey. Hello, Adrian. So my question is on the franchising model. I think I remember back in the investor day, we mentioned in the future, KFC franchisee store will be 15%-20% of new stores. But obviously, we are now having higher hope on the franchising model. So what makes this change? And if we expect more franchisee model in the future, does that also mean we should expect lower CapEx spending going forward as well? Thank you. Thank you, Ethan. I guess, firstly, on your question regarding what makes the change, right? I think the key reason is we're ready. For instance, for KFC, we have the new store model, KFC Small Town Mini. As we communicated previously, the capital expenditure per store for that model is lower than RMB 0.5 million, which is roughly 1/3 of a regular KFC store. And for instance, for the newly rolled-out Pizza Hut WOW, that model could have a good potential in lower-tier cities as well and good for franchising. Obviously, with recent years, the franchisee quality in China has improved meaningfully as well. Overall, the store model readiness, our QA readiness, digital capabilities, and the readiness of our franchisees enabled us to speed up the franchise opening here in China. As we mentioned during the prepared remarks, for KFC, we aim to gradually increase our net new open percentage in franchise to be 40%-50% down the road over the next few years. For Pizza Hut, it takes a bit longer, but overall, we hope to achieve 20%-30% of net new open for Pizza Hut being franchise model over the next few years. And speaking of franchise unit economics, obviously, we want to remind everyone here that for each $100 of system sales generated by our franchisee, we recognize $40-$45 as our revenue. And that breakdown includes 6%-7% of the 100 being our royalty fee collected and initial fee collected. Also, the other $35-$36 out of the $100 being the transaction with franchisees, the revenue from transaction with franchisees. That's mainly in the areas of COS and other services, including AMP and others. And in terms of our cost, franchise expense, 3% of license fee we'll need to pay to Yum! Brands. And our expense for transaction with franchisees is currently incurred around our cost. But in the future, there is a potential for us to return a certain margin in the services with franchisees because we have savings from Project Red Eye and Project Fresh Eye. And whether that will lower our capital expenditure and enhance our, I guess, ROIC, that's a real question. Over the long term, we do expect that will help enhance our ROIC. But in the near term, the impact will be immaterial because, as we mentioned, the overall pacing of step-up in franchising will be gradual over the next few years. Thank you, Ethan. Thank you, Adrian. And congratulations on the result. Thank you. Thank you. Your next question comes from Michelle Cheng with Goldman Sachs. Hey, hi, Joey, Adrian. Thanks for having the time to ask questions. So my question is still more on the short term. I think, Adrian, you earlier mentioned that quarter- to- date, we didn't see significant changes yet, even we are positive on stimulus. But considering last quarter, the base supposedly should be easier, so are we still seeing incremental sequential improvement in both quarter trends? And also, looking ahead, when we consider both KFC and Pizza Hut, it looks like KFC's same-store sales is still much more resilient and, compared with the pre-COVID level, still much closer. So when we look for same-store sales growth going forward, are we seeing that Pizza Hut's pricing trend will be gradually stabilized and KFC actually have room to see the pricing improvement next year? Thank you. Thank you, Michelle, for your question. As I mentioned in the prepared remarks, we're quite encouraged by the stimulus policies, but obviously, it will take time to influence consumer behavior and impact businesses like ours. I'd like to give some more color into quarter four performance, especially in the top line. So entering quarter four, as I mentioned in the prepared remark, we've not observed significant changes in consumer sentiment, nor in the macro situation. In terms of the October Golden Week holiday, our SSSG slightly improved year-over-year during the Golden Week. However, the consumer spending remained cautious post-holiday. I think that's a common phenomenon we observed for this year after a long holiday. The consumer spending returned to be cautious for a short span of time after the long holiday. Overall speaking, for quarter four, we still face some top-line pressure, but we are confident in our ability to outperform peers in both the good times and bad, and we are also reasonably confident that our quarter four same-store transaction index will continue to be positive for another quarter. Lastly, but importantly, we really focus on things that are within our control, so we continue to execute our strategy, which has proven to be quite effective to capture incremental traffic and protect our margins. We believe we're well-positioned to continue to capture consumer needs with our flagship products, stunning value, delivery strategy, and breakthrough models. I think the second part of the question relates to the difference between KFC and Pizza Hut. Obviously, given the consumers are more rationalized in their spending, Pizza Hut, with their higher per-person spending, currently is facing a little bit of bigger headwind compared to KFC, which is really having a super robust and resilient model. However, I think we're doing all the right things for Pizza Hut, lowering the TAs, lowering the per-person spending, and also devising the new store model such as Pizza Hut WOW, which is even more accessible. As we mentioned in the prepared remarks for both this quarter and the previous quarter, that we do see some initial encouraging results for WOW, but particularly on the Dine In side, we see a meaningful increase in SSG there for WOW. Obviously, it's only five months since we converted the first Wow store back in May, so we're still kind of iterating and developing the store model. Hopefully, over the steady state, the Pizza Hut WOW will enable the Pizza Hut to get to a different and much larger total addressable market. I think your final part of your question is more on the midterm for next year on the TA trend for Pizza Hut than for KFC. As we mentioned, for KFC, we expect the TA to be steady over the mid to long run, although there might be some short-term fluctuations depending on macro and competitive dynamics. For Pizza Hut, it's our strategy to lower the TA, and then we have been doing it reasonably effectively with the positive transaction growth over the past quarters, and we look to continue that strategy down the road as well. Thank you, Michelle. Thank you, Adrian. I'll just add some color about the Pizza Hut same-store sales, so the Pizza Hut WOW model, good progress, but one step at a time. As Adrian mentioned, we see very nice improvement in the Dine In same-store sales, and out of 150 Pizza Hut WOW stores, actually 1/3, 50 stores in Guangdong in the south. And because of the scale of the Pizza Hut WOW store relative to the Guangdong total store, we see some meaningful improvement of the Guangdong same-store sales, which is exciting. But again, we have over 3,600 stores for Pizza Hut around the country right now, so it will take some time, but the progress is good. Last but not least, quarter four is a small quarter, so a lot of the numbers could swing either way. Thank you so much. Thank you, Joey, Adrian, for the details. Thank you. Your next question comes from Sijie with CICC. Thank you, Joey and Adrian. Congrats on another strong quarter and generous share of the return. I have one question. So we have seen some food safety cases overseas. So how do we balance, on one hand, the cost control and, on the other hand, the quality of the product and service? Thank you. Thank you, Sijie. First of all, I presume you referred to the food safety case overseas that's caused by raw onion. First of all, we only use cooked onion, so that should not have similar implications to our business. When it comes to the overall food safety versus cost control, it's always our strong philosophy and operation that we put food safety at the most important position. We are fully compliant with regulations. And also, it's one of the few issues that if there's any issue, we report it directly to myself, and then we also report it to our board. Our board, we have a food safety committee on this one. So we absolutely treat it as highest importance and priority. It's reflected in our holistic quality assurance system and our comprehensive food safety process within our entire value chain from suppliers to logistics all the way to our stores. Last but not least, I just want to reassure you that our investment in our digital supply chain in the last many years has paid off. We have very good visibility, means digital visibility of our food safety without inventory, and to the point that the store replenishment to the store is automatic. It's absolutely important. Last but not least, we have more than 300+ QA employees spread across China focusing on this important matter in addition to the technology that we have invested to monitor this particular important priority. Thank you so much. Thank you, Joey. Your next question comes from Anne Ling with Jefferies. Hey, hi. Thank you. Hi, management team. Just questions on K-COFFEE. Now, with 500, what we hear on the ground is that it's been doing amazingly good. So just want to check whether you can share with us the incremental benefit because it's a side-by-side store with your existing KFC. So maybe would you share with us what is the incremental same-store benefit and also in terms of profitability, if there's anything that you can share with us? Thank you. Thank you, Anne. Thank you. Well, long story short, the incremental sales uplift to the store we have observed is a single-digit sales uplift, and it does produce incremental profit because of our very unique operating model. So that is the short answer. In terms of longer answer, we are indeed very excited. And today, actually, we opened our 500th store in Xujiahui in Shanghai, right next to our headquarters and in a very prime area in Shanghai. The increase of the sales and/or the number of cups is 30% +, roughly, and this is very exciting, especially when we take the background of the overall market same-store sales in coffee as the background. The opportunity here is a significant majority of our members, of our Yum China members, have yet to try our K-COFFEE. In our side-by-side model, the cross-sale from KFC to K-COFFEE is amazing, so we are excited about it. It took us 10 years from selling coffee to build the first K-COFFEE café, but we see really good progress. We have 100 stores in March, and now we have 500 stores. By year-end, we expect to exceed 600+ stores, and we are expanding to campus and transportation locations as well. The food is good. We have very distinctive coffee, Sparkling Coffee, the Float, and then the Egg Tart or the Gigantic Egg Tart. So things are looking very exciting and positive. Thank you, Anne. Thank you. Your next question comes from Walter Woo with CMBI. Hi, hello. Joey and Adrian, can you hear me? Yes. Yes. Okay. Thank you. Congratulations to your resilient results, and thanks again for all the efforts. So my question is about Pizza Hut WOW store format. So can you comment on the sales and margin performance of Pizza Hut WOW stores and also the midterm room for potential growth? And are they suitable for all the regions in China? And also, well, I remember the last time when I dined in the Wow stores, the menu looks really appealing, and there are lots of choices, and the prices are cheap. However, when I really ordered, many of the items were just not available. So this has disappointed me a little bit. Do you think this is a problem? How do you see the Wow store format now and going forward? Also, we are also aware of your new store format called KPRO. Are there any infos that you are ready to share? Thank you. Thank you. For Pizza WOW, I mean, let's take a step back. It's only really an innovation that happened only five months ago. I think our speed of growing out is very fast already. We are at about 150 stores. The breakthrough model is very exciting. As I mentioned in the prepared remark, the impact on the buy-in of same-store sales is very exciting. There's more work to be done for the delivery side. Then, in terms of the profit, we continue to work on it. Let me just bring back our dual focus: innovations and operational efficiency. Operational efficiency and innovations. It goes both ways. For our core business, we achieve operational efficiency, and we take the savings, and we invest in innovations. For Pizza WOW, we have the innovations first, and that is reflected in exciting sales. But the operational efficiency will come later, which I hope addresses your disappointment of the product availability because it does not happen automatically. That's another reason why whenever we turn around business, KFC or later on Pizza Hut, we always focus on sales first, profit later, one step at a time. For Pizza WOW, go back to our framework. We have the innovations first, and then operational efficiency later. So I believe that things are in good progress, and I'm very happy to see what have we achieved so far Pizza Hut WOW, but a lot more work to be done. It's only five months. Regarding KPRO, we have been opening a small number of KPRO stores in Hangzhou, Shanghai, Guangdong, Guangzhou actually. And it's still small right now, and obviously targets health-conscious consumers with products like energy bars and smoothies, very healthy choices. And it's still in pilot stage, by the way, so there's still a lot to be learned. But there's one thing that we already are doing, which is sharing the learning from K-COFFEE, is again, it's side by side. The new stores are side by side with the KFC core store so that we can share staff, we can share some investment of the campus. But still early days. Okay. Thank you. Thank you. Your next question comes from Linda Huang with Macquarie. Hello. Yeah. Hi. Management, can you hear me? Yes. Yes, Linda, please. Yes. My question is regarding our capital allocation. We appreciate that the company stepped up the total return to $ 4.5 billion. And please correct me if I'm wrong because based on your cash flow, right, I found that every single year our free cash flow will be around $700 million-$800 million. But if we return back to $ 1.5 billion, that means that probably in three years, we can use up all our cash in our balance sheet. So I'm just wondering, based on this, the capital return, does that mean that for the next three years, we will just purely focus on the organic growth and we never think about any big M&A will happen in the next three years, or we can strike the balance if there's a big deal coming up and we are willing to take out some debt to take any M&A opportunity? So that's my question. Thank you. Thank you, Linda. I guess there are two parts of the question. Firstly, regarding the sustainability of our capital return, obviously, we're very confident in our ability to generate our cash. And as we mentioned, we have a dual focus on our business growth and return to shareholders, dual focus again. So for 2024- 2026, we plan to step up our return from $ 3 billion -$ 4.5 billion. That includes the $ 1.5 billion for this year, 2024. And as a question regarding the longer term, right, obviously, as you correctly pointed out, we probably cannot do $ 1.5 billion every year forever. But I think in terms of our company's philosophy, we have always been shareholder value-conscious. So we'll continue to evaluate how best to deliver long-term shareholder value. And obviously, I will not be surprised down the road, we will be able to return a meaningful portion of our free cash flow generated each year to our shareholders beyond 2026. Obviously, we have no concrete plans yet, but we'll provide some more concrete guidance down the road at a proper time. On your second question regarding M&A and strategic opportunities, we have been very prudent in terms of our M&A approach. Obviously, we prudently and proactively evaluate potential M&A opportunities, both historically as well as in the future. And we'll only go ahead with M&A to the extent that it makes sense and creates value for shareholders. So obviously, for each of the M&As, as you know, we'll actually have a robust discussion with our board as well. To the extent if a very major M&A comes out, and then to the extent if it makes a lot of sense to Yum China, then we may or may not adjust our capital return plan. Obviously, we may or may not take on debt to fund an M&A depending on the size of the M&A. But again, we are very prudent in terms of our M&A approach. We'll only do M&As to the extent it's super sensible to our shareholders. Hopefully, that addressed your question. Thank you, Linda. Okay. Thank you very much. There are no further questions at this time. I'll now hand back to Ms. Lip for closing remarks. Thank you. 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. Thank you. Thank you. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.