Yum China Holdings Inc

Previous wording

Yum China Holdings, Inc. is the largest restaurant company in China in terms of 2023 system sales, with 15,022 restaurants covering over 2,000 cities primarily in China as of March 31, 2024. Our growing restaurant network consists of our flagship KFC and Pizza Hut brands, as well as emerging brands such as Lavazza, Huang Ji Huang, Little Sheep and Taco Bell. We have the exclusive right to operate and sublicense the KFC, Pizza Hut and, subject to achieving certain agreed-upon milestones, Taco Bell brands in China (excluding Hong Kong, Macau and Taiwan), and own the intellectual property of the Little Sheep and Huang Ji Huang concepts outright. We also established a joint venture with Lavazza Group, the world-renowned family-owned Italian coffee company, to explore and develop the Lavazza coffee concept in China. KFC was the first major global restaurant brand to enter China in 1987. With more than 35 years of operations, we have developed extensive operating experience in the China market. We have since grown to become the largest restaurant company in China in terms of 2023 system sales. We believe that there are significant opportunities to further expand within China, and we intend to focus our efforts on increasing our geographic footprint in both existing and new cities.

Current wording

Yum China Holdings, Inc. is the largest restaurant company in China in terms of 2023 system sales, with 15,423 restaurants covering over 2,100 cities primarily in China as of June 30, 2024. Our growing restaurant network consists of our flagship KFC and Pizza Hut brands, as well as emerging brands such as Lavazza, Huang Ji Huang, Little Sheep and Taco Bell. We have the exclusive right to operate and sublicense the KFC, Pizza Hut and, subject to achieving certain agreed-upon milestones, Taco Bell brands in China (excluding Hong Kong, Macau and Taiwan), and own the intellectual property of the Little Sheep and Huang Ji Huang concepts outright. We also established a joint venture with Lavazza Group, the world-renowned family-owned Italian coffee company, to explore and develop the Lavazza coffee concept in China. KFC was the first major global restaurant brand to enter China in 1987. With more than 35 years of operations, we have developed extensive operating experience in the China market. We have since grown to become the largest restaurant company in China in terms of 2023 system sales. We believe that there are significant opportunities to further expand within China, and we intend to focus our efforts on increasing our geographic footprint in both existing and new cities.

Previous wording

KFC is the leading and the largest quick-service restaurant (“QSR”) brand in China in terms of system sales. As of March 31, 2024, KFC operated 10,603 restaurants in over 2,000 cities across China.

Current wording

KFC is the leading and the largest quick-service restaurant (“QSR”) brand in China in terms of system sales. As of June 30, 2024, KFC operated 10,931 restaurants in over 2,100 cities across China.

Previous wording

Pizza Hut is the leading and the largest casual dining restaurant (“CDR”) brand in China in terms of system sales and number of restaurants. As of March 31, 2024, Pizza Hut operated 3,425 restaurants in over 750 cities.

Current wording

Pizza Hut is the leading and the largest casual dining restaurant (“CDR”) brand in China in terms of system sales and number of restaurants. As of June 30, 2024, Pizza Hut operated 3,504 restaurants in over 770 cities.

Previous wording

As compared to the first quarter of 2023, Total revenues in the first quarter of 2024 increased 1%, or 7% excluding the impact of F/X. The increase in Total revenues for the quarter ended March 31, 2024, excluding the impact of F/X, was driven by 8% net new unit contribution, partially offset by same-store sales decline.

Current wording

As compared to the second quarter of 2023, Total revenues in the second quarter of 2024 increased 1%, or 4% excluding the impact of F/X. Total revenues for the year to date ended June 30, 2024 increased 1%, or 5% excluding the impact of F/X. The increase in Total revenues for the quarter and year to date ended June 30, 2024, excluding the impact of F/X, was driven by 8% net new unit contribution, partially offset by same-store sales decline, resulting from lower ticket average and same-store transaction growth.

Previous wording

The Consolidated Results of Operations for the quarters ended March 31, 2024 and 2023 and other data are presented below:

Current wording

The Consolidated Results of Operations for the quarters and years to date ended June 30, 2024 and 2023 and other data are presented below:

Previous wording

With respect to non-GAAP measures adjusted for Special Items, the Company uses them for the purpose of evaluating performance internally and as factors in determining compensation for certain employees. Special Items are not included in any of our segment results.

Current wording

With respect to non-GAAP measures adjusted for Special Items, the Company excludes impact from Special Items for the purpose of evaluating performance internally and uses them as factors in determining compensation for certain employees. Special Items are not included in any of our segment results.

Previous wording

Restaurant profit (“Restaurant profit”) is defined as Company sales less expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, restaurant-level payroll and employee benefits, rent, depreciation and amortization of restaurant-level assets, advertising expenses, and other operating expenses. Company restaurant margin percentage is defined as Restaurant profit divided by Company sales. We also use Restaurant profit and Restaurant margin for the purpose of internally evaluating the performance of our Company-owned restaurants and we believe they provide useful information to investors as to the profitability of our Company-owned restaurants.

Current wording

Restaurant profit is defined as Company sales less expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, restaurant-level payroll and employee benefits, rent, depreciation and amortization of restaurant-level assets, advertising expenses, and other operating expenses. Company restaurant margin percentage is defined as Restaurant profit divided by Company sales. We also use Restaurant profit and Restaurant margin for the purpose of internally evaluating the performance of our Company-owned restaurants and we believe they provide useful information to investors as to the profitability of our Company-owned restaurants.

Previous wording

Pursuant to the tax policy issued by relevant government authorities, general VAT taxpayers in certain industries that meet certain criteria are allowed to claim an additional 10% or 15% input VAT, which will be used to offset their VAT payables. This VAT policy was further extended to December 31, 2023 but the additional deduction was reduced to 5% or 10% respectively. VAT deductions were primarily recorded as a reduction to Food and paper and Occupancy and other operating expenses within Company restaurant expenses included in the Condensed Consolidated Statements of Income. Based on the information currently available to the Company, such preferential policy is not expected to be extended. See “Significant Known Events, Trends or Uncertainties Expected to Impact Future Results” session within MD&A for additional information on VAT deductions.

Current wording

Pursuant to the tax policy issued by relevant government authorities, general VAT taxpayers in certain industries that meet certain criteria are allowed to claim an additional 10% or 15% input VAT, which will be used to offset their VAT payables. This VAT policy was further extended to December 31, 2023 but the additional deduction was reduced to 5% or 10% respectively. VAT deductions were primarily recorded as a reduction to Food and paper and Occupancy and other operating expenses within Company restaurant expenses included in the Condensed Consolidated Statements of Income. Such preferential policy was not extended in 2024. See “Significant Known Events, Trends or Uncertainties Expected to Impact Future Results” session within MD&A for additional information on VAT deductions.

Previous wording

The increase in Company sales for the quarter, excluding the impact of F/X, was primarily driven by net unit growth, partially offset by same-store sales decline. Excluding the lapping impact from the temporary relief from landlords and government agencies and VAT deductions received in prior year, the increase in Company sales, favorable commodity prices and lower performance-based compensation, were offset by increased value-for-money offerings and wage inflation in the mid-single digits, resulting in decrease in Restaurant profit for the quarter, excluding the impact of F/X.

Current wording

Compared to the second quarter of 2023, the increase in Company sales for the quarter, excluding the impact of F/X, was primarily driven by net unit growth, partially offset by same-store sales decline. Restaurant profit decreased for the quarter, excluding the impact of F/X. Further excluding the lapping impact from the temporary relief from landlords and government agencies and VAT deductions received in prior year, Restaurant profit increased for the quarter, primarily driven by the increase in Company sales, favorable commodity prices, operational efficiency improvement and lower advertising expenses, offset by increased value-for-money offerings and wage inflation in the low single digits.

Previous wording

Excluding the lapping impact from the temporary relief from landlords and government agencies and VAT deductions received in prior year, the increase in Total revenues, favorable commodity prices, operational efficiency improvement and lower performance-based compensation, were offset by increased value-for-money offerings and wage inflation in the mid-single digits, resulting in a decrease in Operating profit for the quarter, excluding the impact of F/X.

Current wording

The increase in Company sales for the year to date ended June 30, 2024, excluding the impact of F/X, was primarily driven by net unit growth, partially offset by same-store sales decline. Restaurant profit decreased for the year to date, excluding the impact of F/X. Further excluding the lapping impact from the temporary relief from landlords and government agencies and VAT deductions received in prior year, Restaurant profit decreased for the year to date, primarily driven by increased value-for-money offerings and wage inflation in the low single digits, offset by the increase in Company sales, favorable commodity prices, operational efficiency improvement and lower advertising expenses.

Previous wording

The increase in Franchise fees and income and Revenues from transactions with franchisees for the quarter, excluding the impact of F/X, was primarily driven by net unit growth.

Current wording

The quarter and year to date increase in Franchise fees and income and Revenues from transactions with franchisees, excluding the impact of F/X, was primarily driven by net unit growth.

Previous wording

The decrease in G&A expenses for the quarter, excluding the impact of F/X, was primarily driven by lower performance-based compensation costs.

Current wording

The quarter and year to date decrease in G&A expenses, excluding the impact of F/X, was primarily driven by lower performance-based compensation costs.

Previous wording

The decrease in Operating profit for the quarter, excluding the impact of F/X, was primarily driven by the decrease in Restaurant profit, partially offset by lower G&A expenses.

Current wording

Excluding the impact of F/X, Operating profit for the quarter remained flat, primarily driven by the decrease in Restaurant profit, partially offset by lower G&A expenses.

Previous wording

The decrease in Operating profit for the quarter, excluding the impact of F/X, was primarily driven by the decrease in Restaurant profit, partially offset by lower G&A expenses.

Current wording

The year to date decrease in Operating profit, excluding the impact of F/X, was primarily driven by the decrease in Restaurant profit, partially offset by lower G&A expenses.

Previous wording

The increase in Company sales for the quarter, excluding the impact of F/X, was primarily driven by net unit growth, partially offset by same-store sales decline. Excluding the lapping impact from the temporary relief from landlords and government agencies and VAT deductions received in prior year, the increase in Company sales, operational efficiency improvement, lower performance-based compensation and lower advertising expenses, were offset by increased value-for-money offerings and wage inflation in the low single digits, resulting in decrease in Restaurant profit for the quarter, excluding the impact of F/X.

Current wording

The increase in Company sales for the year to date ended June 30, 2024, excluding the impact of F/X, was primarily driven by net unit growth, partially offset by same-store sales decline. Restaurant profit decreased for the year to date, excluding the impact of F/X. Further excluding the lapping impact from the temporary relief from landlords and government agencies and VAT deductions received in prior year, Restaurant profit increased for the year to date, primarily driven by the increase in Company sales, operational efficiency improvement, lower advertising expenses, lower performance-based compensation and favorable commodity prices, offset by increased value-for-money offerings and wage inflation in the low single digits.

Previous wording

The decrease in G&A expenses for the quarter, excluding the impact of F/X, was primarily driven by lower performance-based compensation costs.

Current wording

The quarter and year to date decrease in G&A expenses, excluding the impact of F/X, was primarily driven by lower performance-based compensation costs.

Previous wording

The increase in Total revenues of All other segments for the quarter, excluding the impact of F/X, was primarily driven by inter-segment revenue generated by our delivery team for services provided to Company-owned restaurants as a result of increased delivery sales.

Current wording

Excluding the impact of F/X, Total revenues of All other segments for the quarter remained flat and increased for the year to date ended June 30, 2024, primarily driven by inter-segment revenue generated by our delivery team for services provided to Company-owned restaurants as a result of increased delivery sales, partially offset by same-store sales decline.

Previous wording

The decrease in Operating loss for the quarter, excluding the impact of F/X, was primarily driven by the decrease in Operating loss from certain emerging brands.

Current wording

The quarter and year to date decrease in Operating loss, excluding the impact of F/X, was primarily driven by the decrease in Operating loss from certain emerging brands.

Previous wording

Revenues from transactions with franchisees primarily include revenues derived from the Company’s central procurement model, whereby food and paper products are centrally purchased and then mainly sold to KFC and Pizza Hut franchisees. The increase for the quarter, excluding the impact of F/X, was mainly due to the increase in system sales for franchisees.

Current wording

Revenues from transactions with franchisees primarily include revenues derived from the Company’s central procurement model, whereby food and paper products are centrally purchased and then mainly sold to KFC and Pizza Hut franchisees. The quarter and year to date increase, excluding the impact of F/X, was mainly due to the increase in system sales for franchisees.

Previous wording

The decrease in Corporate G&A expenses for the quarter, excluding the impact of F/X, was primarily due to lower performance-based compensation.

Current wording

The quarter and year to date decrease in Corporate G&A expenses, excluding the impact of F/X, was primarily due to lower performance-based compensation costs.

Previous wording

Our income tax provision primarily includes tax on our earnings generally at the Chinese statutory tax rate of 25% with certain Chinese subsidiaries qualified for preferential tax rates, withholding tax on planned or actual repatriation of earnings outside of China, Hong Kong profits tax, and U.S. corporate income tax, if any. The lower effective tax rate for the quarter ended March 31, 2024 was primarily due to the favorable impact from the reduction of certain non-deductible expenses.

Current wording

Our income tax provision primarily includes tax on our earnings generally at the Chinese statutory tax rate of 25% with certain Chinese subsidiaries qualified for preferential tax rates, withholding tax on planned or actual repatriation of earnings outside of China, Hong Kong profits tax, and U.S. corporate income tax, if any. The higher effective tax rate for the quarter ended June 30, 2024 was primarily due to less benefits from preferential tax rates at qualified subsidiaries recognized in the second quarter of 2024. The lower effective tax rate for the year to date ended June 30, 2024 was primarily due to the favorable impact from the reduction of certain non-deductible items and the impact from fair value change of our investment in Meituan.

Previous wording

As of March 31, 2024, VAT assets of $94 million, VAT assets of $7 million and net VAT payable of $5 million were recorded in Prepaid expenses and other current assets, Other assets and Accounts payable and other current liabilities, respectively, in the Condensed Consolidated Balance Sheets.

Current wording

As of June 30, 2024, VAT assets of $99 million, VAT assets of $8 million and net VAT payable of $13 million were recorded in Prepaid expenses and other current assets, Other assets and Accounts payable and other current liabilities, respectively, in the Condensed Consolidated Balance Sheets.

Previous wording

Pursuant to Circular [2019] No. 39, Circular [2019] No. 87 and Circular [2022] No. 11 jointly issued by relevant government authorities, including the MOF and the STA, from April 1, 2019 to December 31, 2022, general VAT taxpayers in certain industries that meet certain criteria were allowed to claim an additional 10% or 15% input VAT, which were used to offset their VAT payables. Pursuant to Circular [2023] No. 1 jointly issued by the MOF and the STA in January 2023, such VAT policy was further extended to December 31, 2023 but the additional deduction was reduced to 5% or 10% respectively. Accordingly, we recognized such VAT deductions of $19 million in the first quarter of 2023. The VAT deductions were recorded as a reduction to the related expense item, primarily in Company restaurant expenses included in the Condensed Consolidated Statements of Income. Based on the information currently available to the Company, such preferential VAT policy is not expected to be extended.

Current wording

Pursuant to Circular [2019] No. 39, Circular [2019] No. 87 and Circular [2022] No. 11 jointly issued by relevant government authorities, including the MOF and the STA, from April 1, 2019 to December 31, 2022, general VAT taxpayers in certain industries that meet certain criteria were allowed to claim an additional 10% or 15% input VAT, which were used to offset their VAT payables. Pursuant to Circular [2023] No. 1 jointly issued by the MOF and the STA in January 2023, such VAT policy was further extended to December 31, 2023 but the additional deduction was reduced to 5% or 10% respectively. Accordingly, we recognized such VAT deductions of $28 million in the year to date ended June 30, 2023. The VAT deductions were recorded as a reduction to the related expense item, primarily in Company restaurant expenses included in the Condensed Consolidated Statements of Income. Such preferential VAT policy was not extended in 2024.

Previous wording

Our cash flows for the quarters ended March 31, 2024 and 2023 were as follows:

Current wording

Our cash flows for the years to date ended June 30, 2024 and 2023 were as follows:

Previous wording

Net cash provided by operating activities was $442 million in 2024 as compared to $507 million in 2023. The decrease was primarily driven by the decrease in Operating profit along with working capital changes.

Current wording

Net cash provided by operating activities was $843 million in 2024 as compared to $924 million in 2023. The decrease was primarily driven by working capital changes.

Previous wording

Net cash provided by investing activities was $99 million in 2024 as compared to net cash used in investing activities of $429 million in 2023. The change was mainly due to the net impact on cash flows resulting from purchases and maturities of short-term investments, and long-term bank deposits and notes.

Current wording

Net cash used in investing activities was $132 million in 2024 as compared to $598 million in 2023. The decrease was mainly due to less purchase of short-term investments, and long-term bank deposits and notes.

Previous wording

Net cash used in financing activities was $776 million in 2024 as compared to $99 million in 2023. The increase was primarily driven by the increase in share repurchases.

Current wording

Net cash used in financing activities was $785 million in 2024 as compared to $230 million in 2023. The increase was primarily driven by the increase in share repurchases, partially offset by the net proceeds from short-term bank borrowings.

Previous wording

the liquidity of the overall capital markets and our access to the U.S. capital markets; and

Current wording

the liquidity of the overall capital markets and our access to capital markets; and

Previous wording

On November 2, 2023, our Board of Directors increased the share repurchase authorization by $1 billion to an aggregate of $3.4 billion. Yum China may repurchase shares under this program from time to time in the open market or, subject to applicable regulatory requirements, through privately negotiated transactions, block trades, accelerated share repurchase transactions and the use of Rule 10b5-1 trading plans. During the quarters ended March 31, 2024 and 2023, the Company repurchased 16.6 million shares of common stock for $681 million and 1.0 million shares of common stock for $62 million, respectively, under the repurchase program.

Current wording

On November 2, 2023, our Board of Directors increased the share repurchase authorization by $1 billion to an aggregate of $3.4 billion. Yum China may repurchase shares under this program from time to time in the open market or, subject to applicable regulatory requirements, through privately negotiated transactions, block trades, accelerated share repurchase transactions and the use of Rule 10b5-1 trading plans. During the years to date ended June 30, 2024 and 2023, the Company repurchased 21.7 million shares of common stock for $868 million and 2.1 million shares of common stock for $124 million, respectively, under the repurchase program.

Previous wording

For the quarters ended March 31, 2024 and 2023, the Company paid cash dividends of approximately $64 million and $54 million, respectively, to stockholders through a quarterly dividend payment of $0.16 and $0.13 per share, respectively.

Current wording

For the quarters ended June 30, 2024 and 2023, the Company paid cash dividends of approximately $62 million and $54 million, respectively, and for the years to date ended June 30, 2024 and 2023, the Company paid aggregate cash dividends of approximately $126 million and $108 million, respectively, to stockholders through a quarterly dividend payment of $0.16 and $0.13 per share, respectively.

Previous wording

On April 29, 2024, the Board of Directors declared a cash dividend of $0.16 per share, payable on June 18, 2024, to stockholders of record as of the close of business on May 28, 2024. The total estimated cash dividend payable is approximately $63 million.

Current wording

On August 5, 2024, the Board of Directors declared a cash dividend of $0.16 per share, payable on September 17, 2024, to stockholders of record as of the close of business on August 27, 2024. The total estimated cash dividend payable is approximately $61 million.

Previous wording

As of March 31 2024, the Company had credit facilities of RMB7,289 million (approximately $1,009 million), comprised of onshore credit facilities in the aggregate amount of RMB5,700 million (approximately $789 million) and offshore credit facilities in the aggregate amount of $220 million.

Current wording

As of June 30, 2024, the Company had credit facilities of RMB8,080 million (approximately $1,112 million), comprised of onshore credit facilities in the aggregate amount of RMB5,900 million (approximately $812 million), offshore credit facilities in the aggregate amount of $100 million and a credit facility of $200 million that can be used for either onshore or offshore.

Previous wording

The credit facilities had remaining terms ranging from less than one year to three years as of March 31, 2024. Our credit facilities mainly include term loans, overdrafts, letters of credit, banker’s acceptance notes and bank guarantees. The credit facilities in general bear interest based on the Loan Prime Rate (“LPR”) published by the National Interbank Funding Centre of the PRC, or Secured Overnight Financing Rate (“SOFR”) published by the Federal Reserve Bank of New York. Each credit facility contains a cross-default provision whereby our failure to make any payment on a principal amount from any credit facility will constitute a default on other credit facilities. Some of the credit facilities contain covenants limiting, among other things, certain additional indebtedness and liens, and certain other transactions specified in the respective agreements. As of March 31, 2024, we had outstanding short-term bank borrowings of RMB1,195 million (approximately $165 million), mainly to manage working capital at our operating subsidiaries. Such bank borrowings were secured by $78 million short-term investments, and are due within one year from their issuance dates. As of March 31, 2024, we also had outstanding bank guarantees of RMB257 million (approximately $36 million) mainly to secure our lease payments to landlords for certain Company-owned restaurants. Our credit facilities were therefore reduced by outstanding short-term bank borrowings, adjusted for unamortized interest and collateral, and outstanding guarantees. As of March 31, 2024, the Company had unused credit facilities of approximately $885 million.

Current wording

The credit facilities had remaining terms ranging from less than one year to three years as of June 30, 2024. Our credit facilities mainly include term loans, overdrafts, letters of credit, banker’s acceptance notes and bank guarantees. The credit facilities in general bear interest based on the Loan Prime Rate (“LPR”) published by the National Interbank Funding Centre of the PRC, or Secured Overnight Financing Rate (“SOFR”) published by the Federal Reserve Bank of New York. Each credit facility contains a cross-default provision whereby our failure to make any payment on a principal amount from any credit facility will constitute a default on other credit facilities. Some of the credit facilities contain covenants limiting, among other things, certain additional indebtedness and liens, and certain other transactions specified in the respective agreements. As of June 30, 2024, we had outstanding short-term bank borrowings of RMB3,025 million (approximately $416 million), mainly to manage working capital at our operating subsidiaries. Such bank borrowings were secured by $57 million short-term investments, and are due within one year from their issuance dates. As of June 30, 2024, we also had outstanding bank guarantees of RMB239 million (approximately $33 million) mainly to secure our lease payments to landlords for certain Company-owned restaurants. Our credit facilities were therefore reduced by outstanding short-term bank borrowings, adjusted for unamortized interest and collateral, and outstanding guarantees. As of June 30, 2024, the Company had unused credit facilities of approximately $719 million.

Previous wording

Risks related to our business and industry, such as (a) food safety and foodborne illness concerns, (b) significant failure to maintain effective quality assurance systems for our restaurants, (c) significant liability claims, food contamination complaints from our customers or reports of incidents of food tampering, (d) health concerns arising from outbreaks of viruses or other illnesses, including the COVID-19 pandemic, (e) the fact that the operation of our restaurants is subject to the terms of the master license agreement with YUM, (f) the fact that substantially all of our revenue is derived from our operations in China, (g) the fact that our success is tied to the success of YUM’s brand strength, marketing campaigns and product innovation, (h) shortages or interruptions in the availability and delivery of food products and other supplies, (i) fluctuation of raw materials prices, (j) our inability to attain our target development goals, the potential cannibalization of existing sales by aggressive development and the possibility that new restaurants will not be profitable, (k) risks associated with leasing real estate, (l) inability to obtain desirable restaurant locations on commercially reasonable terms, (m) labor shortages or increases in labor costs, (n) the fact that our success depends substantially on our corporate reputation and on the value and perception of our brands, (o) the occurrence of security breaches and cyber-attacks, (p) failure to protect the integrity and security of our customer or employee personal, financial or other data or our proprietary or confidential information that is stored in our information systems or by third parties on our behalf, (q) failures or interruptions of service or security breaches in our information technology systems, (r) the fact that our business depends on the performance of, and our long-term relationships with, third-party mobile payment processors, internet infrastructure operators, internet service providers and delivery aggregators and third-party e-commerce platforms, (s) failure to provide timely and reliable delivery services by our restaurants, (t) our growth strategy with respect to Lavazza may not be successful, (u) the anticipated benefits of our acquisitions may not be realized in a timely manner or at all, (v) challenges and risks related to our new retail and e-commerce businesses, (w) use of GenAI technologies, (x) our inability or failure to recognize, respond to and effectively manage the impact of social media, (y) failure to comply with anti-bribery or anti-corruption laws, (z) U.S. federal income taxes, changes in tax rates, disagreements with tax authorities and imposition of new taxes, (aa) changes in consumer discretionary spending and general economic conditions, (bb) the fact that the restaurant industry in which we operate is highly competitive, (cc) loss of or failure to obtain or renew any or all of the approvals, licenses and permits to operate our business, …

Excerpt shortened here; the source contains the full paragraph.

Current wording

Risks related to our business and industry, such as (a) food safety and foodborne illness concerns, (b) significant failure to maintain effective quality assurance systems for our restaurants, (c) significant liability claims, food contamination complaints from our customers or reports of incidents of food tampering, (d) health concerns arising from outbreaks of viruses or other illnesses, (e) the fact that the operation of our restaurants is subject to the terms of the master license agreement with YUM, (f) the fact that substantially all of our revenue is derived from our operations in China, (g) the fact that our success is tied to the success of YUM’s brand strength, marketing campaigns and product innovation, (h) shortages or interruptions in the availability and delivery of food products and other supplies, (i) fluctuation of raw materials prices, (j) our inability to attain our target development goals, the potential cannibalization of existing sales by aggressive development and the possibility that new restaurants will not be profitable, (k) risks associated with leasing real estate, (l) inability to obtain desirable restaurant locations on commercially reasonable terms, (m) labor shortages or increases in labor costs, (n) the fact that our success depends substantially on our corporate reputation and on the value and perception of our brands, (o) the occurrence of security breaches and cyber-attacks, (p) failure to protect the integrity and security of our customer or employee personal, financial or other data or our proprietary or confidential information that is stored in our information systems or by third parties on our behalf, (q) failures or interruptions of service or security breaches in our information technology systems, (r) the fact that our business depends on the performance of, and our long-term relationships with, third-party mobile payment processors, internet infrastructure operators, internet service providers and delivery aggregators and third-party e-commerce platforms, (s) failure to provide timely and reliable delivery services by our restaurants, (t) our growth strategy with respect to Lavazza may not be successful, (u) the anticipated benefits of our acquisitions may not be realized in a timely manner or at all, (v) challenges and risks related to our new retail and e-commerce businesses, (w) use of GenAI technologies, (x) our inability or failure to recognize, respond to and effectively manage the impact of social media, (y) failure to comply with anti-bribery or anti-corruption laws, (z) U.S. federal income taxes, changes in tax rates, disagreements with tax authorities and imposition of new taxes, (aa) changes in consumer discretionary spending and general economic conditions, (bb) the fact that the restaurant industry in which we operate is highly competitive, (cc) loss of or failure to obtain or renew any or all of the approvals, licenses and permits to operate our business, (dd) our inability to adequately …

Excerpt shortened here; the source contains the full paragraph.