scaling  Yum China’s three-year plan builds on a simple observation: The company still has enormous headroom. China is the world’s largest consumer market by purchasing power, yet only one-fifth of its dining industry is made up of chain restaurants.  “Even after 38 years, we’re only serving about one-third of the Chinese population,” Joey Wat, CEO of Yum China, noted. “Our midterm goal is to serve half by 2028.” The company’s next growth wave will come from lower-tier cities where income levels are rising quickly, but branded food service options remain limited. Wat is clear-eyed about the company’s historical performance there. “Market potential is here. We are not having our fair share of the market or store in the lower-tier cities yet. Yet. But now, we have an innovative store model, we have really good products, we have good value-for-money, and we have confidence we can do it,” Wat said.  The company aims to become China’s first restaurant chain to achieve 10 billion RMB operating profit in 2028. Yum China currently has more than 12,600 stores in China.  Strengthen KFC and Pizza Hut presence KFC plans to expand from 2500 to roughly 4500 lower-tier cities by 2030. Pizza Hut sees more than 3500 cities still unpenetrated.  To enter those markets quickly and affordably, Yum China has redesigned its formats from the ground up. KFC’s “small town model,” requiring RMB 500,000 – 700,000 in investment, has already entered 400 such cities. Pizza Hut’s Wow stores are seeing payback periods of two to three years. KCoffee, a coffee chain embedded within KFC locations, already counts more than 1800 stores. By 2029, it expects to exceed 5000. KPRO, a light-meal concept focused on energy bowls and healthier choices, now has more than 120 stores and is popular in Tier 1 markets where consumers seek lighter options during the workweek. “By 2030, we want to increase KFC’s lower city penetration from 2500 to 4500 cities,” Wat said.  Meanwhile, Pizza Hut’s revival has become one of the company’s most consequential achievements.  Years of repositioning have delivered three straight quarters of 17 per cent same-store transaction growth and six quarters of margin expansion.  Jeff Kuai, GM at Pizza Hut, was frank about the brand’s earlier missteps. “In 2019, our average per-person order size was around 60 RMB, higher than 98 per cent of snack and QSR brands. The market size of this price bracket is not enough to support rapid growth for Pizza Hut.” Kuai added that the company now has a better opportunity to enter nearly 3500 previously unpenetrated cities and towns across China.  “We can also expand to new occasions such as solo dining. We can also reach younger and value-conscious customer groups.”  Lavazza’s five years underground, ready to scale Coffee chain Lavazza entered China through a joint venture with Yum China in 2020. “Five years of hard work underground, trial and error, Lavazza has built a very solid foundation,” Wat said.  By the end of the third quarter, the company operated 118 Lavazza stores. Yum China aims to reach 145 stores by the end of this year.  A local roasting plant is underway, which will reduce supply-chain cost and speed up product innovation. Lavazza expects to have 1000 stores and US$60 million in retail sales by 2029. The digital and supply chain moat Perhaps Yum China’s most overlooked strength is its infrastructure. Its supply chain can cover 5000 cities.  “The supply chain has to be ahead of the business,” said Howard Huang, chief supply chain officer. The company has also been deploying AI since 2019 and, since 2023, has introduced dozens of generative AI applications. The next stage is agentic AI, which autonomously suggests actions, coordinates processes, and understands operational context. “Looking to the future, we will continue developing our AI agent and embrace the Agent 2.0 era. Agent 2.0 represents three major upgrades, from being reactive where humans seek AI, to proactive services where AI initiates interaction with humans; from single agent to multi-agent collaboration; from executing isolated tasks to empowering the entire workflow,” said Leila Zhang, CTO of Yum China.  A bet on the next decade By 2028, Yum China expects to exceed 25,000 stores. By 2030, more than 30,000. It projects OP margin of at least 11.5 per cent, double-digit EPS and free cash flow growth, and more than $1 billion in annual capital returns starting in 2027. “We remain confident in meeting our targets,” CFO Adrian Ding said. “And we see early signs of improving consumer sentiment.” But it was Wat who captured the spirit of the day best.  “It takes years for bamboo to grow its root system beneath the soil. Once the roots are solid, we believe bamboo shoots up at very fast speed. We truly believe we will be one of the bamboos in Yum China.”