Joey Wat: Brian, I’ll just to add some color to your question. The theme here of the aggressive new store openings is resiliency because while we emphasize how many stores we have opened in the last three years, how many — 3,700 net new store, but actually 4,800 growth new — growth store. At the same time, what we did not talk about but also important how many stores we have retired. So when we open the more productive new store, we, at the same time, retire the less productive assets. And thus, the quality of our assets for Yum China has improved in the last three years. So just have a bit of highlight here. For the new store we open right now, we are talking about 90% of the stores have — the new store have flexible rent, which make us more resilient.
And we talk about lower CapEx even more, if you think about our CapEx, roughly 40-60. 40% is equipment, which we can move around; 60% in some cost. So the reduction of the CapEx in terms of some cost is even more than just the total reduction of the CapEx. And the size is smaller. So the productivity of the new store is better actually. And the location of the stores matter, too, because they’re both in higher tier city and lower tier city, it’s about 40-60 spread, too. So for lower-tier city, 60% new stores are — they’re very, very effective in entering new cities. For KFC, 2022, we actually entered 200 new cities. And these are white space. And you can imagine, it’s a pretty good market to grow. For higher-tier cities, our focus is on filling the gap or the distance between the stores to increase the density of our store in high-tier city, which is incredibly important if you think about our focus on our delivery business.
So I hope that gives you some flavor about the new stores in terms of the quality and in terms of the resiliency for that business. Thank you.
Brian Bittner: Thank you so much.
Operator: Thank you. Your next question comes from Chen Luo from Bank of America. Please go ahead.
Chen Luo: Thank you, Joey and Andy. Happy Chinese New Year. So before I raise my question, I’d like to highlight three things, if I may. First, out of the 12 quarters during the pandemic period, for five quarters, we actually reported restaurant margins better than the pre-pandemic level. And despite the fact that for the four quarters, we have seen stores like mid- to high single-digit same-store sales decline versus 2019. Whereas for Q3 last year, we actually saw more than 10% same-store sales decline over the same period in 2019. Apart from the one-time cost relief, we have significantly rebased our cost structure and innovative store formats, as Joey and Andy just elaborated on. And meanwhile, we also consolidate Hangzhou and Suzhou KFC in the past three years.
Supposedly, this portion of business carries higher margins than the group average. So I think the market, in general, would expect pretty meaningful margin — expect recovery of expansion going forward when sales start to recover. And for point number two, I also noted that our priority this year is to drive sales. But meanwhile, the market generally believes that the company is very good at balancing top line and margins. And point number three, just now, we also highlight that we will be planning for multiple scenarios in a very fluid situation. So after highlighting all these three points, now let’s come to my question. Sorry if it’s a bit long. So I understand the situation is very fluid, but let’s assume that for 2023, our macro environment is kind of okay so that the momentum could be similar to that of second half of 2020 and first half of 2021, so that we might see some pretty okay same-store recovery, but may not be fully back to the 2019 level.
