Recently, restaurant chain giant Yum Sheng China (09987.HK/YUMC.US) released an open letter to shareholders. The letter not only showed shareholders its deep commitment, but also highlighted the company's keen insight into the opportunities in the Chinese market. In the current context of the accelerated evolution of the domestic consumer market, the company has achieved remarkable financial results and has continuously consolidated its leading position under the new wave of consumption through a series of strategic initiatives.
First, Yum China always puts shareholders' interests first, and this is fully reflected in its shareholder return policy.
In 2023, the company gave back a total of US$833 million to shareholders through dividends and share repurchases, a record high, accounting for 75% of the company's operating profit. This move not only highlights the company's good financial position and profitability, but also shows the importance Yum China attaches to long-term shareholders' support.
Since the spin-off and listing at the end of 2016, Yum China's total return to shareholders has reached a total of 3 billion US dollars. The shareholders' letter also stated that at least 3 billion US dollars will be given back to shareholders within the next 3 years, of which the plan is to return 1.5 billion US dollars in 2024. Behind this number is the company's strong commitment to continued growth and value creation.
Being able to continuously give back to shareholders is inseparable from the company's rapid business expansion and excellent performance support. In the past 2023, Yum China's total revenue reached a record high of about 11 billion US dollars, and adjusted operating profit for the whole year also reached a record high. This year, KFC became the first Western-style fast food chain to surpass 10,000 stores in China, while the total number of Pizza Hut stores exceeded 3,000.
Currently, with the profound transformation of consumption in the Chinese market, consumption upgrades in low-tier cities have brought unprecedented development opportunities to the catering industry. With its deep understanding of consumer needs and precise market positioning, Yum China is also becoming one of the few companies that can seize this opportunity. Through priority layout and rapid expansion in low-tier cities, it has not only broadened its market coverage, but also met the growing needs of local consumers by providing cost-effective products and services.
In this process, the “internal skills” that Yum China has been practicing for a long time have become a “powerful tool” to seize market opportunities.
On the one hand, the company's deep understanding of consumers enables it to accurately grasp the pulse of the market and launch innovative products that meet consumers' tastes and needs. In the past 2023, the company launched more than 500 new or upgraded products, while the category with total sales of more than 100 million US dollars continued to grow, continuously verifying its accurate insight into market needs and its ability to respond quickly.
On the other hand, Yum China's strong supply chain system and advanced technical advantages have provided it with solid support in the fierce market competition. The company's supply chain management is in a leading position in the industry. By optimizing the supply chain, it not only improves operational efficiency and cost control capabilities, but also ensures product safety and high quality.
At the same time, Yum China is also actively embracing technological innovation, using big data, artificial intelligence and other technologies to improve operational efficiency and customer experience. The application of these technologies, while improving the company's market response speed, also provides strong support for the development and marketing of new products.
Overall, Yum China's strategic actions and business performance have provided a positive paradigm for the catering industry. The company not only achieved remarkable success in terms of performance, but also demonstrated its outstanding strength in terms of market layout, product innovation, and technology application. Through accurate market positioning and in-depth consumer insight, Yum China has achieved significant results in the expansion strategy of low-tier cities. The successful implementation of this strategy has not only enhanced the company's market coverage, but also brought new growth points to it.
Looking forward to the future, Yum China will continue to explore low-tier markets and promote innovative practices to meet changing market demands and consumer trends. With its core competitiveness in various areas such as market insight, supply chain management, and technological empowerment, Yum China is expected to maintain its leading position in fierce market competition and continue to create greater value for shareholders.