百勝中國 (YUMC) 2026 年第三季法說會：利潤率上升，上調展店目標

百勝中國控股 (YUMC) 儘管同店銷售表現較弱，但 2026 年第三季的銷售額、獲利與利潤率均實現成長。門市擴張仍是系統銷售額成長的主要驅動力，而租金節省、營運效率提升以及必勝客 (Pizza Hut) 品牌的收購則對獲利能力提供了支撐。

重點摘要

• 以列報貨幣計算，第三季營收年增 8%，營業利潤年增 13%，稀釋後每股盈餘 (EPS) 年增 20%。若扣除匯率影響，系統銷售額成長 3%，核心營業利潤成長 6%。
• 餐廳利潤率擴大 50 個基點至 17.8%，營業利潤率則增加 40 個基點至 13.0%。
• 同店銷售指數為去年同期的 97%，反映了與外送平台補貼的高基期比較以及 8 月不利天氣的影響。同店交易量已連續 15 個季度保持成長。
• 百勝中國在本季度淨新增近 700 家門市，使其門市網路達到 19,989 家。管理層將 2026 年淨新增門市目標從 1,900 家上調至 2,400 家以上。
• 肯德基 (KFC) 門市突破 14,000 家，必勝客 (Pizza Hut) 門市超過 4,700 家。必勝客營業利潤成長 21%，部分得益於百勝中國收購該品牌在中國大陸的業務後節省的授權費。
• 管理層設定 2027 年同店銷售成長目標為 0% 至 2%，並持續致力於實現雙位數的 EPS 成長。

關鍵財務數據

收購必勝客品牌在第三季為集團餐廳利潤率與營業利潤率貢獻了約 30 個基點。扣除融資成本與稅務後，該收購為稀釋後 EPS 貢獻了約 0.02 美元。

業務與營運表現

肯德基 (KFC)

肯德基淨新增超過 500 家門市，總數突破 14,000 家門市。系統銷售額成長 3%，營業利潤成長 4%。

同店銷售指數為 97%，交易量成長 3%。平均客單價下降 5% 至 36 人民幣，主因來自新客群與新店型的較小額訂單增加。餐廳利潤率提升 10 個基點，效率提升抵消了銷售額槓桿下降帶來的影響。

K-Coffee 門市突破 4,000 家。管理層預計至 2027 年底將超過 5,000 家。K-PRO 門市突破 700 家，目標是在 2026 年底前達到 850 家以上，並於 2027 年達到 1,500 家。

必勝客 (Pizza Hut)

必勝客淨新增近 200 家門市，使其遍布 1,300 個城市的門市網路超過 4,700 家。系統銷售額成長 1%，營業利潤成長 21%，部分受惠於授權費節省。

同店銷售指數為 97%，交易量成長 5%。平均客單價下降 8% 至 65 人民幣，這與該品牌的平價大眾化策略以及單人用餐小額訂單的成長相符。

必勝客的餐廳利潤率擴大 190 個基點。若不計授權費節省，增幅為 30 個基點。漢堡專賣店 (Burger Bar) 突破 300 家門市，為母店帶來了雙位數的增量銷售。管理層目標至年底達到 500 家以上的漢堡專賣店，並於 2027 年達到 1,000 家。

比薩仍是必勝客最大的產品品類，占銷售額的 40% 以上。2026 年前九個月的銷量成長 17%，其中單人比薩銷量成長 40%。

門市擴張與效率

百勝中國在前九個月淨新增 1,888 家門市，創下歷史新高。其中超過一半位於新城市、戰略地點或無現有內用/外送覆蓋的商圈，有助於減少對現有餐廳的分流（銷售轉移）。

管理層表示，新門市的投資回收期繼續保持在大約二至三年。下沉市場店型（包括肯德基小鎮店、必勝客 WOW 店以及肯德基必勝客複合店）占下沉城市新開門市的一半以上。

租金重構與下沉市場擴張使物業及其他費用佔銷售額比率下降 100 個基點至 24.2%。人力成本上升 30 個基點至 26.5%，而銷售成本上升 20 個基點至 31.5%。

管理層指引

• 管理層將 2026 年淨新增門市目標從 1,900 家上調至 2,400 家以上，並預計年底門市網路將超過 20,500 家。
• 針對 2026 年第四季，儘管比較基期較高，公司仍致力於實現同店銷售指數的季增改善。
• 在計入收購必勝客交易效益之前，管理層預計第四季營業利潤率將保持同比相對穩定。
• 預計收購必勝客交易將在第四季為集團餐廳利潤率與營業利潤率貢獻約 50 至 60 個基點，並提升稀釋後 EPS。
• 展望 2027 年，管理層設定全年同店銷售成長目標為 0% 至 2%，並維持實現雙位數 EPS 成長的承諾。
• 必勝客計劃在 2027 年與 2028 年將每年淨新增門市增加至 800 家。管理層預計包含收購效益在內，必勝客餐廳利潤率到 2028 年將達到約 17% 或略高。
• 百勝中國計劃在 2026 年向股東回饋 15 億美元。第四季股份回購金額預計約為 3.5 億美元。

風險與關注焦點

同店銷售持續受到去年同期外送平台補貼基期較高帶來的壓力。管理層還提到了 8 月份更頻繁的不利天氣（特別是在華東地區），以及外送補貼縮減速度快於預期的影響。

隨著超值優惠產品、單人套餐與小額訂單的增加，肯德基與必勝客的平均客單價均有所下滑。雖然這些舉措帶動了交易量成長，但也對銷售槓桿與銷售成本造成壓力。

外送騎手成本仍是逆風因素，使第三季人力成本增加了 30 個基點。管理層預計隨著外送銷售佔比趨於穩定，該壓力將會減緩，但不預期整體人力成本會下降。

管理層還指出，第四季在季節性上屬於銷售與獲利淡季，這使得獲利能力對銷售波動更加敏感。新開門市可能會對現有門市造成一定程度的分流，但公司正在優先考慮目前覆蓋有限或無覆蓋的區域。

分析師問答亮點

分析師高度關注同店銷售、門市擴張與利潤率成長之間的關係。管理層表示，公司的目標是實現銷售與獲利雙成長，但在需要進行權衡時會優先考慮獲利能力。管理層並重申，交易量成長仍是核心營運指標。

關於第四季的營運情況，管理層表示 10 月大致符合內部預期，黃金週表現較中秋節有所改善。放寬的秋季學校假期可能為 11 月帶來順風效益，不過 2025 年第四季同店銷售指數高達 103，造成了較高基期的比較挑戰。

關於必勝客，管理層強調了更快的門市擴張、漢堡產品成長、單人比薩需求上升，以及擁有中國大陸品牌權帶來的更大靈活性。取消 2.8% 的特許權使用費（權益金）也使得更多潛在的新門市能夠符合公司的投資回報要求。

關於人力成本，管理層表示加強社保收繳執法預計不會產生重大影響，因為百勝中國係根據全職員工的實際工資計算繳費額。數位化、自動化、集中化支援以及多店管理仍是提高勞動效率的主要措施。

法說會逐字稿全文

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完整財報電話會議逐字稿

管理層陳述

Operator

Good day, and thank you for standing by. Welcome to Yum China's Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Ms. Florence Lip, Senior Director, Investor Relations of Yum China. Please go ahead, ma'am.

Florence Lip

Thank you, operator. Hello, everyone, and welcome to Yum China's Third Quarter 2026 Earnings Conference Call. With me on the call are our CEO, Ms. Joey Wat; and our CFO, Mr. Adrian Ding. Before we begin, please note that our remarks and investor materials contain forward-looking statements. These are subject to future events and uncertainties, and actual results may differ materially. Please refer to the cautionary statement in our earnings release and the risk factors in our SEC filings.

We'll also discuss non-GAAP measures. The comparable GAAP measures and reconciliations are in our earnings release on ir.yumchina.com. You can also find the webcast replay and the presentation there. Please note that all year-over-year growth rates exclude the impact of foreign currency, unless otherwise mentioned. With that, I'll turn the call over to Joey Wat, CEO of Yum China. Joey?

Joey Wat

Hello, everyone, and thank you for joining us. In quarter 3, we continued to grow sales and profit year-over-year. In reporting currency, revenue grew 8%, Operating profit grew 13% and diluted EPS grew 20%, partially supported by favorable foreign exchange impact. Excluding foreign exchange impact, system sales grew 3% year-over-year in quarter 3 and continued to outperform the catering industry. Core operating profit grew 6% year-over-year. We also achieved our tenth consecutive quarter of system sales, operating profit and OP margin growth.

Importantly, we have delivered double-digit diluted EPS growth year-to-date and in each of the past 3 years, excluding the Meituan investment. In quarter 3 same-store sales reached 97% of the prior year's level, primarily reflecting tough lapping from last year's delivery platform subsidy. and the impact of extreme weather this August. With our due focus on innovation and operational efficiency, restaurant and OP margins improved 50 and 40 bps year-over-year, respectively. This margin expansion demonstrates the resilience of our business and the disciplined execution of our teams in mitigating the sales deleveraging impact.

It was also partially supported by license fee savings following the Pizza Hut brand acquisition in Mainland China. We delivered our 15th consecutive quarter of positive same-store transaction growth, a key element of our growth strategy. Our breakthrough side-by-side modules are helping us capture new occasions and drive incremental sales and profit. We also continue to build our brand and attract more customers to our stores through compelling in-store offers and experience as well as greater takeaway convenience.

Dining and takeaway performance improved sequentially, bucking the previous trend. Active members grew 6% year-over-year to 278 million, and our goal is to engage them across even more occasions. We also continue to accelerate new store openings, adding close to 700 net new stores in quarter 3, a new quarterly record. Total store count was 19,989, keeping us on track to surpass 20,000 stores this year. Thanks to our team's strong execution and innovation, we delivered solid operational efficiency, which was particularly important this quarter. We proactively review our store portfolio to reduce rent and lowered delivery rider cost on a per order basis.

We also improved supply chain efficiency through menu innovation, together with dynamic promotions. This allows us to offer great value for money to consumers. To ease the burden of our frontline teams, we have been automating and digitizing certain tests and shifting some to our operation support center. By combining frontline operational experience with AI-enabled intelligence, the center supports inventory replenishment, staff scheduling as well as recruiting, training and online customer service for our restaurant teams.

All of these efforts have contributed to our margin expansion and will continue to support our growth going forward. Our innovative side-by-side modules have become meaningful contributors to incremental sales and profit. Their store economics have also improved. K-Coffee Cafe exceeds 4,000 locations. The Apple sparkling Americano saw more than 1 million cost per week during the peak summer season. Non-coffee drinks more than tripled year-over-year in quarter 3 with the addition of the popular Mango Pomelo cycle, Jansanlu and Sparkling.

KPO surpassed 700 locations. We expanded the venue to broaden its appeal, developing sandwiches as another sales growth pillar alongside energy both. We also introduced high-protein smoothies. which have been particularly popular with certain consumer segments and have generated strong repeat purchases. Keypro is now in around 250 cities demonstrating solid potential for further growth. Pizza Huts Burger Bar reached more than 300 locations in 50 cities, contributing double-digit incremental sales and meaningful profit to parent stores.

Overall, Pizza Hut's burger category captured new customers especially young people and solo diners with sales growing in the high double-digit percentage year-over-year in quarter 3. As side-by-side module help us capture new occasions. Our hero products anchor our strong fundamentals, inspiring innovations to drive sales and soaps. In August, KFC launched the intriguing Oreo Original respi chicken burger, Alia Yama Hama combo, a new twist on last year's original recipe chicken burger with cocoa fun and creamy Oreo blended sauce.

Trust me, it does taste very good. On its first day, we sold more than 1.5 million burgers, roughly 3x the launch day sales of the original respi chicken burger last year. At Pizza Hut, Pizza is our hero category. accounting for over 40% of sales. We sold 17% more Pizza year-over-year in the first 9 months. In August, we launched the exciting handheld pizza so targeting solo diners and on-the-go occasions, make with our latest low-sugar multigrain cut and available with a variety of topics.

It offers a high protein option under 500 Karowe. The handheld pizza drove strong repeat purchases and attracted younger customers helping us tap into the emerging light new market. Let me now turn the call over to Adrian. Adrian?

Adrian Ding

Thank you, Joey. Let me update key financial highlights by brand. starting with KFC. In quarter 3, KFC opened over 500 net new stores and exceeded 14,000 total stores. System sales grew 3% year-over-year. operating profit grew 4% year-over-year. Same-store sales index was 97% of the prior year's level. Same-store transactions grew 3% year-over-year. Ticket average was down 5% to CNY 36. The rapid growth of incremental smaller orders from new customer segments and locations such as K coffee and K-PRO was partially offset by the increased delivery mix, which covers a relatively higher ticket average.

This offset was less than in the first half due to slower year-over-year delivery mix growth. KFC's restaurant margin improved by 10 basis points year-over-year as efficiency gains more than offset sales deleveraging. This, once again, demonstrates our resilience and strong execution. Moving on to Pizza Hut. In quarter 3, Pizza Hut added nearly 200 new stores. with total stores surpassing 4,700 across 1,300 cities, system sales grew 1% year-over-year. Operating profit grew 21% year-over-year partially supported by Pizza Hut's license fee savings previously payable to Yum! Brands.

Same-store sales index was 97% of the prior year's level, with transactions up 5% year-over-year. the 15th consecutive quarter of growth. Ticket average was down 8% year-over-year to CNY 65 in line with our mass market strategy. primarily driven by value for money offerings and incremental smaller orders such as those from solo diners. Pizza Hut's restaurant margin improved by 190 basis points. or up 30 basis points year-over-year, excluding the license fee savings. Streamlined operations and automation more than offset higher cost of sales. Let me now go through our quarter 3 P&L. System sales grew 3% year-over-year, mainly driven by store growth.

Same-store sales index was 97% of the prior year's level against a tough comparison from last year's delivery platform subsidies having accounted for the later start of the summer holiday, July was broadly in line with our expectations. August was more challenging than expected. More frequent average weather impacted consumption, particularly in East China, 1 of our strongest markets. Delivery subsidies also scaled back faster than expected.

We stepped up our efforts and the sales index sequentially improved in September. Our restaurant margin was 17.8%, up 50 basis points year-over-year. Occupancy and other improvements more than offset higher cost of sales and labor. Cost of sales was 31.5%, up 20 basis points year-over-year. mainly from better value for money offerings and investment in our new modules, including K-Coffee cafe, KPO and Bergamo. Cost of labor was 26.5%. And up 30 basis points year-over-year.

Rider costs remained a headwind, although the impact moderated from first half to 30 basis points this quarter, we kept nonrider costs relatively stable with efficiency gains offsetting wage inflation and sales deleveraging. Occupancy and other was 24.2%, down 100 basis points year-over-year. helped by these renegotiations, more favorable rent in lower-tier cities and other efficiency initiatives.

Pizza Hut license fee savings also contributed 30 basis points of year-over-year improvement. OP margin was 13.0%, up 40 basis points year-over-year. Operating profit was $451 million, growing 6% year-over-year. Net income was $311 million, up 3% year-over-year or flat excluding the Meituan investment. Our Meituan investment had a positive impact of $1 million in quarter 3 compared to a negative impact of $8 million in quarter 3 last year. As a reminder, we recognized $16 million less in interest income in quarter 3 this year due to a lower cash balance resulting from the cash we returned to shareholders, lower interest rates and more interest expense to fund the Pizza Hut view.

Diluted EPS was 0.91, up 12% year-over-year or 8% excluding the Meituan investment. Following the completion of the Pizza Hut brand acquisition, Pizza Hut was no longer subject to license fees, resulting in around 30 basis points benefit to both restaurant and OP margins in quarter 3. Net of interest and financing expenses and taxes. The acquisition was accretive to diluted EPS by around 0.02 in quarter 3. Let's turn to store openings. In the first 9 months, we opened a record of 1,888 net new stores. We are entering new cities and adding store density in existing cities to better service the customers. With our dual focus on system sales growth and same-store sales growth, over half of our new stores were open in new cities, strategic locations or trade zones with non-dining or delivery coverage.

With nearly 20,000 stores spanning Tier 1 to Tier 7 cities, a cured market playbook is essential. We developed store formats for lower-tier cities, including KFC small town pizza Hut will and the KFC and Pizza Hut Gemini formats. These formats accounted for more than half of the new stores open in lower-tier cities this year. We also introduced the Taylor Menu at KFC for select low-tier cities to better match consumer needs in these markets. It is a simplified menu featuring our signature products alongside specially designed items to deliver excellent value for money.

Food is mostly made to order to fit that lifestyle in smaller cities. Our new stores remain healthy with a payback period of around 2 to 3 years. With a lower store opening hurdle and more flexible store formats with better suited menus, we see significant opportunities across city tiers. Accordingly, we are raising this year's net new store target from 1,900 to over 2,400. With more than 20,500 stores expected by year-end, we're moving closer to our goal of 30,000 stores by 2030.

Now moving on to our 2026 outlook. Let me start with sales. We're working hard to deliver a sequential improvement in same-store sales index in quarter 4 despite its higher base. While we continue to face tough comparisons from last year's delivery subsidies, we exited quarter 3 with better momentum in September and October was broadly in line with our expectations. In November, the autumn school break is slightly more broad-based than last year, which will provide some tailwinds. Overall, we're confident in delivering our 16th consecutive quarter of positive same-store transaction growth.

Moving on to margins. Before considering the impact of the Pizza Hut deal, we expect OP margin to be relatively stable year-over-year for Yum China in quarter 4. We expect rider cost pressure to moderate and our efficiency and cost initiatives to support margins, including rent, labor productivity and CapEx. As a reminder, quarter 4 is seasonally lower in sales and profit. So sales volatility will have a more potent profitability impact. The Pizza Hut deal will have a full quarter benefit in quarter 4. It is expected to contribute around 50 to 60 basis points of incremental restaurant and OP margin to Yum China. The Pizza Hut deal is expected to be accretive to quarter 4 diluted EPS.

Looking ahead to 2027. We are confident in delivering both sales and profit in line with the 3-year growth algorithm outlined at our Investor Day last year. As we continue to accelerate store openings, we're targeting 0% to 2% same-store sales growth on a full year basis, in line with our Investor Day target. We will provide more details on 2027 when we report our quarter 4 earnings in February. In terms of capital return to shareholders, we plan to return $1.5 billion to shareholders in 2026, around 10% of our market cap.

In the first 9 months, we returned $1.018 billion, including $778 million of buybacks and $302 million of dividends. In quarter 4 share repurchases will be around $350 million or about 20% above the average quarterly run rate in the first 9 months. From 2027, we remain committed to returning around 100% of our annual free cash flow after subsidiaries dividend payment to noncontrolling interests. This is expected to be about $900 million to $1 billion plus on average in 2027 and 2028 and exceed $1 billion from 2028 onwards. Our capital return program reflects the confidence in the long-term earnings power of our business. With that, let me hand it back to Joey for future growth drivers and closing remarks.

Joey Wat

Thank you, Adrian. As we expect sales growth to pick up over time, let me walk you through our key growth drivers. In quarter 4, we will continue our side-by-side model rollout and hero product innovation, which have proven effectively. We are also focusing on bringing customers back into stores. First, our side-by-side modules tap into large, fast-growing categories, such as light news and burgers, where our trusted brand, national store network and supply chain give us a natural advantage.

K-Coffee Cafe is well on track to exceed 5,000 locations by the end of 2027. K-Pro is set to surpass 850 locations by year-end with plans to reach 1,500 locations by 2027. We aspire to be a market leader in China, promising and underserved light meal markets. Burger bar is set to exceed 500 locations by year-end. doubling to 1,000 by 2027. This helped us build awareness of Pizza Hut's burger category, while driving incremental traffic and sales. targeting over RMB 1 billion in total burger sales at all pizza stores and the burger bar this year.

This is around 5% to 6% of Pizza Hut sales. Second, our hero product platforms, chicken wings, Zynga, original RedwiChicken, whole chicken, Ita and their extensions represent close to RMB 30 billion or 40% of KFC and new sales. They provide a strong foundation for efficient product innovation. Every quarter, we launched something new and exciting, driving repeat purchases and attracting new customers. Third is to drive dine-in and takeaway. Our nearly 20,000 stores across China give us a strong platform. We are enhancing in-store offers. the dining experience and convenience to attract customers to our stores.

Being on our strong brand edit, we are also strengthening brand loyalty. Here are some examples. At KFC, CASA pickup has expanded to over 9,000 stores, targeting over 10,000 stores by year-end. In addition to drive-through options at door side pick up and curbside picked up significantly improved customer convenience and investment efficiency. So far, over 12 million members have used these services in 2026 with strong repeat purchases. We target this business to reach RMB 1 billion in sales this year. At Pizza Hut, the late September autumn menu upgraded over 20 items.

In addition to beef and chicken for heater, we add pork, shrink and dual protein options. The new menu also includes global flavors such as the bug, a Korean star rice Kadish with melted cheese and grid pulp. These items suit dine in and bring new customers into stores. Taken together, we are building brands designed to deliver sustainable growth, not just for quarter 4. Now a few words about the strategic benefits of owning the Pizza Hut brand in Mainland China.

In addition to increasing net new openings to 800 stores annually in 2027 and 2028. brand ownership also allows us to move more quickly on growth opportunities such as Burger Bar. Additionally, we are tapping into incremental opportunities, such as the retail business with greater flexibility. We see potential to broaden both categories and distribution channels. Beyond our existing pasta and stick offerings, we are also exploring new product categories.

Distribution will extend beyond e-commerce and our own restaurants to offline channels, including modern 3. Overall, owning the brands give us greater flexibility and agility in unlocking Pizza Hut's long-term growth potential in Mainland China. To wrap up, while the market remains dynamic in the near term, our fundamentals are strong, and we are confident in our long-term growth. We estimate return on equity of around 19% this year.

This is clear evidence that our growth is capital efficient. On a 3-year basis, we remain committed to the growth algorithm outlined at our Investor Day. We are laser-focused on execution. Put simply, execution is growth. Now let me pass it back to Florence.

Florence Lip

Thanks, Joey. Now we will open the call for questions. If more people a chance to ask questions, please limit it to 1 question at a time.

Operator

[Operator Instructions] And our first question comes from the line of Michelle Cheng from Goldman Sachs.

分析師問答

Michelle Cheng

Congrats again for the consistent profit growth and margin expansion and market share gain. As we know, the environment is very challenging. And also thank you, Adrian talk about the same-store sales stores -- but still want to explore dissect the relationship among these same-store sales story expansion and margin a bit more. So given these volatile consumption sentiment and also the very fluid weather condition. So how do you see -- how confident do we see the same-store sales growth.

And especially, we see -- we continue to accelerate the store expansion. So do we really see some dilution on the same-store sales On the freight side, we actually continue to see the margin expansion. So at the end, should we just not look at same-store sales volatility in the near term, but we still have decent room for these cost optimization to drive profit growth. So as a result, the priority is actually profit growth, and we no matter same-store sales is flowing in the short term, we're still confident to see the profit growth. So just want to understand the relationship between these 3 factors.

Joey Wat

Thank you, Michelle. I think there are 3 points here. The same-store sales growth, store expansion and then the consumer sentiment, and I'll leave the profit question to Adrian. Same-store sales growth, as we mentioned in the prepared remarks, Michelle, we faced tough lapping from delivery platform subsidies last year and more frequent adverse weather in August this year. With that said, even with the same-store sales pressure, we did deliver solid sales and profit growth. So system sales, operating profit, OP margin all grew year-over-year for 10 consecutive quarters.

And of course, for shareholders, our year-to-date diluted EPS growth is double digit following double-digit EPS growth each year in the past 3 years. So it has been a long-term commitment. And on top of that, the same-store transaction growth, which is the absolute in our business, grew for 15th consecutive quarter. It's a very, very important element, if not the most important element of our growth strategy. We continue to build our brand and attract more customers back to our stores through compelling in-store owning -- in-store-only offers and experience. And of course, the breaker takeaway convenience. So therefore, dining and pickaway performance improved sequentially. Booking the previous trend, we will continue to drive that change over time.

One last bit about the SSG is as someone clever say, sales is vanity, profit is sanity. And we, of course, want a bit of both. But if we must do the trade-off, we tend to focus on the profit slightly more. With that said, we are still working very hard to deliver a sequential improvement in the same-store sales index in quarter 4 despite its high base and remain confident in delivering the 3-year growth algorithm in 2027 as mentioned by Adrian in the prepared remarks.

Now come to the store opening. We are both entering new cities and adding store density in existing cities to better serve customers. We have be focus on system sales and same-store sales growth. Over half of our new store openings were opened in new cities, new strategic locations or trade zones with no dining or delivery coverage to mitigate the cannibalization. However, naturally, there is some sales transfer that may impact the same-store sales growth, but it's important to recognize that we are driving incremental sales and profitable growth while protecting the margin. Point 3 about the consumer sentiment, we continue to see improving trends and believe that some volatility along the way is normal.

The sequential improvement in September retail sales compared with August is encouraging. As I mentioned in my prepared remarks, certain consumer occasions have been growing very nicely and rapidly like meals and burgers. Consumers are willing to spend when offer innovative product experience with strong value for money. We also continue to see significant opportunities from the ongoing chainification. The chain restaurant penetration in China is still relatively low, but has grown from 20% to 30%. but it's still low compared to 60% in other mature markets. Last but not the least, we continue to see some stabilization in pricing trends with more players becoming more rational on discounts and even taking price, reflecting a more supportive consumer environment, Adrian?

Adrian Ding

Thank you, Julie. Michelle, I guess, to the final part of the question on margin, you're kind of right that our margin performance has been very resilient despite there are some challenges on comp sales. And indeed, a lot of credit to the team on the strong execution, as Joey mentioned in the prepared remarks, execution is growth. Specifically on margin, I'll briefly comment on quarter 3 and then addressing your question regarding the near-term outlook. On quarter 3, obviously, as you noted from our earnings release, as improvement more than offset some slight increase in COS and COL. And among the online items, obviously, thanks to projects at price that we mentioned previously in our earnings, rental has a good improvement.

And this quarter, our rental get to approximately 8%, we don't normally externally disclose our exact rental for store, but this is a key milestone that reaches slightly below 8% -- approximately 8% for the first time ever since our listing back in 2016.

A&P, there's slight improvement as well as percent of sales, given our efficiency improvement there. And also, there is some contribution by the Pizza Hut transaction. And as I mentioned in the prepared remarks, that contribution is roughly 30 basis points of sales. So that's on quarter 3. If you look at near term, we're speaking of 2027 as Joey pointed out, we're still quite confident to achieve 0% to 2% of comp sales in 2027, in line with our Investor Day guidance. and specific on margin, right? If you think about COS, COL and O&O for all the 3 lines, I'll provide a bit more color in February earnings, but just give the high level review -- kind of preview on these line items.

For COS in 2027, we think it will be broadly stable for the group. Obviously, for Pizza Hut may slightly improve over the roughly 34% level for this year as we previously guided. And for COL, if you think about the delivery sales mix, it will be broadly stable, similar to this quarter of 54%, was only slightly up. So the overall pressure on rider will be moderate next year, like compared to this year when we lacked in last year. And lastly, when you think about O&O, the product Sacral impact on rental will be a structural impact that will still benefit next year as well. and we'll still enjoy some benefits on depreciation and probably a little bit on A&P.

So overall, let me get back to our Investor Day guidance. We think our restaurant margin for KFC will be broadly stable. that was similar -- that was consistent to what we guided back last year in our Investor Day. And for Pizza Hut, before considering the Pizza Hut transaction, the restaurant margin will slightly improve, hopefully, next year. And then we feel quite committed to deliver double-digit EPS growth. That was actually achieved in each of the previous 3 years as well as year-to-date. So we continue to commit to that next year as well. Michelle, thank you.

Operator

The next question comes from the line of Chen Luo from Bank of America..

Chen Luo

On the stellar earnings. Of course, I have to ask this question because we always regard Yas as a steady compounder driven by very good expansion as well as margin management. But it seems that the market currently care all about just SSG. So as Q3 is already kind -- so now all the eyes are on Q4. So just now in the opening remarks Adrian do mention that October SSG was broadly in line with management expectations. also highlight that in November this year, we are going to see more regions adopting the all-time school breaks.

So can you share a bit more color on the Q4 SSG trend as well as our outlook. For example, October was pretty much in line with expectation. So with regard to expectation, I refer to the 0% to 2% SSG that we guided historically. And also, we all know that based on China checks, November comps were very difficult but that was partly due to the first time introduction of autumn school break last year, whereas this year, there were more regions adopting this break. So I'm very confused. November really having a tough comp or because of more holidays this year after November should be open. Any color will be helpful.

Adrian Ding

Well, indeed, I understand that the market actually care a lot about the comp sales. And again, before I answer the question specifically on color on comp sales, I would like to reiterate that for us, as Joey mentioned in the previous Q&A, sales is vanity, profit sanity, right? And so obviously, in normal times, we will get both. And -- but in special situations, for instance, quarter 3, when we faced the extreme weather in August, in those kind of situations, if we have to choose one, we kind of choose profit.

And hopefully, that's also what our shareholders want. And the fact that we delivered double-digit EPS growth in each of the previous 3 years as well as year-to-date also demonstrate the track record there. And to answer your question on comp sales for quarter 4, in October, yes, as I mentioned in the prepared remarks it's broadly in line with our internal expectations. if -- we will have to provide some -- a little bit more color, I would say, the Golden Week has a little sequential improvement over mid-autumn festival, which is a few days before the Golden Week people still remember, right?

There's a sequential improvement there. And October as a whole is in mind, so there is no surprises, no negative surprise, no positive surprise is broadly in line. November, we're only on the second day of November. And I guess, the good thing is the autumn school break is a bit more broad-based this year in November compared to last year, which could -- which may provide some tailwind but the headwind is obviously quarter 4 of last year has an index of 103 which is meaningfully higher than the rest of the 3 quarters in the base last year.

So it's a tough lapping, but we are working hard to try to achieve a sequential improvement in our comp sales in quarter 4 over quarter 3. But I think if you were to look at further down the road in 2027 I think we are quite confident to achieve 0% to 2% comp sales for full year which is actually only 2 months from now. Yes, I know I didn't give overly concrete information on quarter 4 comp sales because it's still 2 full months to go, but hopefully, that color may be potentially helpful.

Chen Luo

That's already very helpful indeed. I know how difficult or fluid situation is and already appreciate efforts to share as much information as possible and also hope that our operations can go from strength to strength. .

Operator

And our next question comes from the line of Lillian Lou from Morgan Stanley.

Lillian Lou

I have a question on Pizza Hut because on the Investor Day for the next 3 years or longer term, there should be a better growth coming from Pizza Hut. I know there should be some short-term volatilities. But based on this year so far, in particular, third quarter, I think Pizza had system sales has been slower than Cafe and I would like to understand whether it's just a one-off, in particular, because of weather because of some short-term volatilities or how do we see Pizza Hut, again as a driver for the whole group? That's my main question. And just to double check, given the comment on fourth quarter same-store sales, we don't have so-called guidance for 2026 same-store, right? Just a small follow-up track. .

Adrian Ding

Yes. Lillian, let me address your question here. Your final part of the question on guidance for comp sales for full year. Yes, given the fluid situation, particularly around the lapping of delivery subsidy. And as I mentioned in the prepared remarks, the subsidy did scale back faster than expected in quarter 3. And obviously, the August extreme weather didn't help. It's a peak month of the year as well. it's -- we didn't explicitly guide in these earnings on the full year comp sales for 2026, but we did guide on 2027 outlook.

And also, we reiterated our guidance for the 3-year growth algo on a 3-year basis, we're still quite confident to achieve our guidance that we shared at Investor Day. On Pizza Hut growth, I mean, as you correctly pointed out, near term, there is some dynamic situation Also, we are indeed working on various strategic levers on improving the Pizza Hut growth. But if you were -- looked at a bit more -- further down the road, we are confident that the Pizza Hut will deliver very solid growth. I think we gave some figures back to our Investor Day. Specifically, we guided a restaurant margin of 14.5% before the Pizza Hut transaction by 2028, and if you were to include the impact of Pizza Hut transaction, hopefully, the margin will exceed 17% by 2028.

Obviously, we will invest a bit of the margin savings from the 2.8% into new stores because new store in the first year, the margin is lower than the normal stores because it takes 3 -- around 3 years for the stores to mature. and we'll invest a bit of the margin on new modules such as Pizza Burger Bar although it's profit accretive but it's slightly margin dilutive, as we pointed out previously. But overall, we are still confident to achieve restaurant margin of approximately 17% or slightly higher by 2028.

That will actually imply Pizza Hut will get to KFC's restaurant margin level in a bit more than a year's time. And also in terms of the new store growth, we dialed up the annual open guidance from 600 to 800 stores, each of 2027, 2028. And hopefully, if you have our own assumption on comp sales for each of the next 2 years that will give you a high-level -- high top line growth figure. And then with the margin expansion, you can get to a high level of bottom line growth figure. So yes, despite the short-term dynamic situation, we are confident about the mid- to long-term growth potential of Pizza Hut.

Joey Wat

Just a few more comments on the Pizza Hut growth. First of all, we are truly excited to buy back the brand because it does give us both short-term and long-term strategic implication in a very positive way. And I would just like to highlight a few key growth drivers. First of all, pizza. We don't talk enough about it. I mean Pizza is 40% of our business. And year-to-date, we sold 180 million pizzas already, and the number is 17% up year-over-year. And that's the number of pizzas, I mean, the sales number is slightly less because these are the incremental.

A lot of it is incremental, like smaller orders, the smaller pizza, solo diner but that's fantastic because this is 40% of our business. And particularly, the 1-person pizza, the smaller one. increased by 40%. I mean in this market, like anything double-digit, not to mention 40% is something that we are excited about. Secondly, the burger bar that we talked quite a bit. We expanded to 50 cities in just 9 months, 300 locations, and we are targeting 500 by end of this year and 1000 location by 2027. And the investment rather sensible and modest really, but yes, it delivered double-digit sales uplift and incremental profit to the parent stores that's something to be excited about for the Pizza Hut business.

And then the third, while Pizza Wow is still going very nicely, and the store count double year-over-year to 490 year-to-date. And then we -- so to -- and we're going to do more by end of the year. and this is very effective to help us entering new cities. For many years Pizza Hut business stuck at 900 cities. But now with the new modules and more store formats, we enter 350 new cities this year, which is fantastic breakthrough a milestone for Pizza Hut, so all these are something that we are quite excited about.

And then not to mention -- but that brand allow us to do something strategically much faster, for example, retail, I don't know what some of you guys have tried already. It's just this week, we start to sell frozen during which is just retail, right, sold through retail. I tried myself. It's more fantastic, it smells and taste like during ice cream, but it's real during a frozen. I mean now we own the brand, we can make this kind of decision try new things much, much faster. So quite excited about Pizza Hut growth prospect in the short term and the long term. Thank you, Lillian.

Operator

And our next question comes from the line of Anne Ling from Jefferies.

Kin Shun Ling

Just a quick one. I just wanted to check regarding last year, 4Q, how much of the 3% same-store is coming out from the delivery subsidy and how much has come out from the autumn like spring -- the autumn break. So just wanted to check like -- like if we are trying to the base impact. And regarding like the 4Q outlook, is like we're expecting a sequential improvement versus third quarter, right? So I do -- right. Do you expect that -- you will also be at this point, able to gain some share from the peers. So some of the same-store sales essentially come out from the peers rather than the industry growth. .

Adrian Ding

Yes. Thank you, Anne. Well, I think this question is -- it's very hard to break down the impact of the delivery subsidy back in quarter 4 last year versus the school break in quarter 4. But what I would say is given it's the first time for multi-provincial school break in quarter 4 last year. The impact was actually a little positive surprise to us right back in quarter 4. And that's why when we reported our February earnings, we also mentioned kind of the same comment. And then hopefully, the 3% positive comp sales was a little surprise to the market. .

But yes, I didn't give the exact breakdown, because it's hard to break down that way. And this year it's the second time with the ATO school break in November. It's slightly more broad-based compared to last year. And we look forward to seeing how the trading goes in November. And I would encourage people to also focus equally importantly, October, November and December, right? So December is important as well. We have a lot of campaigns signing up in the coming 2 months. So yes, I mean, at this point in time, what we can say is we're working very hard to try to achieve sequential improvement in comp sales in quarter 4.

And your second part of the question is whether we're taking -- if I remember correctly, whether we are taking shares from competitors, I would say the market is not large enough, right? And I think in our previous earnings as well as -- earlier in the Joey did comment on the fact that the chainification rate here in China is still quite low. I mean, for restaurant, it's 20%, 30%; for beverage, it's much higher, right? If I remember correctly, it's around 60% for beverage chainification rate. So that's why you see a lot of new players and existing players are actually in the catering space and opening stores in a very fast fashion.

And so the market is large enough to accommodate a lot of successful players and if anything, if you're thinking about the consumer sentiment, right, as we mentioned earlier on the call, we think overall speaking, the overall consumer is more open-minded about the rational discounting -- more rational discounting as well as a little bit of pricing, right, that we all observed throughout the year.

Although arguably week-over-week, month-over-month, there is some volatility in the overall promotional environment. But if you compare this year over next year -- sorry, this year over past year, I think arguably, most people would believe that the whole consumption sentiment is more rational. And all I'm trying to say is that the market is still quite favorable for a chain restaurant like us and also, it's not favorable to us.

It can accommodate and support multiple successful players in the space, and we look forward to growing our market share, continue building our brand in this part in China. And we give quite a bit of color in how -- in terms of how we think about the store opening strategy in our prepared remarks as well as earlier on the Q&A as well. So that's, I guess, the response to a question, Anne.

Joey Wat

Just 1 more comment for your question. Anne, last year, with the platform subsidies, Yum China, in general, we are quite disciplined with our trading particularly in food because the cost of sales in flu is quite high. So we are very disciplined. We do take some subsidy and invest in the emerging business. like the Lavasa and the smaller emerging business and drinks. Training for us -- for KFC is about mid-teens in terms of mix, is about low teens for Pizza Hut in our mix. And both drink business actually for quarter 3 grew quite nicely, actually have positive growth because we have quite a few new drinks launch, which were proven popular among customers. So I think that is the context I can share with you, Anne. Thank you. .

Operator

Our next question comes from the line of Christine Peng from UBS.

Christine Peng

For the comments given by the management so far. So I have a question specifically for Adrian in terms of your earlier comment about labor cost. So basically, your comments point to a steady cost of labor as a percentage of revenue in 2027. But having said that, we do notice that the Chinese government is putting into place a stricter enforcement of social insurance collection, especially in recent months. So I just want to understand what are the assumptions behind this cost of labor stable kind of trend you are foreseeing in 2027.

Are there any specific measures you can share with investors. And 1 thing I also want to clarify with you is that you are mentioning the Pizza Hut China acquisition is bringing 30 bps margin expansion in the quarter alone. But when I look at the details, the cost of class and others set revenue for Pizza Hut actually as percentage dropped more than 200 bps on a year-on-year basis. So I just want to understand the 30 bps margin expansion, how that compared with the more than 200 bps of margin savings in the cost of occupancy for Pizza Hut in the third quarter alone?

Adrian Ding

Thank you, Christine. The final part of your question, I think the 30 basis points margin expansion is for the group. And then if you were to calculate the impact on Pizza Hut, I believe it will be around 170 or 160, 170 basis points for Pizza Hut. So that kind of is the difference there. And the second part of the question, I guess -- I'm responding in a reverse order. Please bear with me. The second part of your question is on the assumptions on COL, so the reason stricter compliance or requirements by the government on social benefits and social security has no impact on us because as you and hopefully, everyone else call know that we are super compliant in terms of -- for the different regulations. and specifically on social security, right? Our social security base for our full-time employee is calculated on the actual wage, which include the base pay, the bonus, the overtime, et cetera, et cetera. is not calculated on the minimum wage, right?

So hopefully, that's kind of the core part of your second part of the question. The first part of your question is on the COL outlook for next year. You mentioned broadly stable. I think yes, that's kind of what we mean. But more specifically, what we mean here is the pressure on COL, and the pressure on rider cost will be much more moderate next year compared to this year, right? Because this year, we're having mid-50s delivery mix for the full year -- last in last year, especially in the first half of last year, it's around 40% in the mix, right? So that's a significant pressure on rider cost.

But coming into quarter 3, if you look at the rider cost, it's only 30 basis points of cost increase. So the pressure already meaningfully moderated compared to more than 150 basis points in the first half of the year. And then -- so hopefully, that moderation rider pressure will last into quarter 4 and next year because next year, as we mentioned in the earlier part of the Q&A, the delivery sales mix will be broadly stable compared to where we are right now. And if you use the broadly stable figure, the mid-50s percent of the resource mix lapping this year, which is, let's say, 54%, I believe, for full year. It will be only slightly increased or broadly stable, right?

And then if you take into account the wage inflation and all that, the COL, hopefully, the pressure will be much more moderate. And the key levers in driving COL efficiency to mitigate wage inflation is really the digitalization, the process optimization and centralized of many of the tops, including recruitment, training, interviewing inventory replenishment, labor scheduling and even some of the preparation work, the raw materials, we centralize some of those, right? So these are the measures as we mentioned in this earnings previously to drive our COL efficiency. But overall, COL, that will not decrease, just to be clear, it's just the pressure will be much more moderate compared to previously.

Joey Wat

Just 1 comment on the other side of the cost. While we'll maintain the stable COL with all the factors, Adrian talked about, I just want to highlight that our store managers really are the hero to help us managed COL because right now, between cash somewhere between 70% to 80% of the stores are run by what we call mega GM, mega store manager, who run 2 to 4 stores with the help of the centralization, digitization, automation. The other side of the equation, I want to emphasize is, one, these metal GM, their take-home pay has been increasing by mid-teens in the last 2 to 3 years. despite we keep the overall labor cost stable and the turnover rate is somewhere between mid- to mid-single digits for the metal age. .

So not only we capped the COL stable, but we are retaining the best store manager and we continue to give them a very nice area increase so that we have the best people to run our stores, which is the best way to protect the business in the short term and long term.

Operator

Thank you. In the interest of time, we will take our last question today from Sui Yang Wang of CICC.

Unknown Analyst

Congratulations on delivering Brazilian quite. My question is on new store openings, you have raised the year's late opening target to 2,400. What's new market opportunities have led you to increase the target and how do the sales and the profit of new stores compared with those of major stores? That's all.

Adrian Ding

Thank you, Sian. So indeed, we raised our target from 1,900 to over 2,400 for the year, which represents roughly 13% of the store base end of last year. And we do see most opportunity, ample opportunity and white space here in China. And as we mentioned in our prepared remarks, over half of our new store openings have been in lower tier cities, strategic channels and areas or trade zones with no existing dine-in or delivery coverage, right? So those we call the Hong Kong bank double white space. .

So that's actually incremental opportunity for us, and it's important for us to open store there quickly to better service our consumers there and build our brand equity because we firmly believe the strong brand equity and 1 of the leading brand equity here we enjoyed the Western U.S. space here in China is with past 4 decades hard work building a lot of our stores in high-tier city followed by a mid-tier city.

And now we are actually quite expanding into lower-tier city in a fast fashion, leveraging on our new store model like KFC more town, Pizza Hut Wow and KFC and Pizza Hut Gemini model. And we are conscious of achieving a balance of comp sales, i.e., limiting the sales transfer at the same time, grow our top line as a whole and profitability as a whole. And that's why we give the color on over half of our new store opened were in locations with limited or no sales transfer.

Yes, so that's kind of how we look at it. And it's exactly because of the ample white space that we see here in China that we believe this step up pace of store opening is something that we'll continue to do over the next few years as well. And hopefully, with that, coupled with the solid comp sales, we will be able to deliver our full year guidance as shared at our Investor Day for both the top line and bottom line last year in November.

Joey Wat

For both --, we still have 1,000 or 1,500 cities that does not have our stores particularly for pizza. There's still 1,500 city plus that has KFC, does not pizza. It's very, very simple math there. And 1 last comment of our new store openings Above all the new store target or new store openings, we are very disciplined, very, very disciplined. We want our new store to deliver 2 to 3 years payback. And that's the quality requirement before we talk about the numbers. So therefore, buying bad the Pizza Hut brand helps Pizza new store opening because we don't have to pay 2.8% royalty anymore and expand the margin, allow more stores to meet our requirements, and we can up the target. And now we also have the modules that is very suitable for entering the lower-tier city, it really helps.

Florence Lip

Thank you, Joey, and thank you, in as well. This concludes our Q&A session. Thank you for joining the call today.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.