And under that scenario, is it fair to say that we can actually bring our restaurant margin to a level largely similar to 2019 or even a bit higher than that. So that’s my question. Thank you.
Andy Yeung: Hi, Chen Luo. Thank you for the summary and also a summary takeaway and also know the question about restaurant market potential. As we have always said, like, when there’s same-store sales decline, generally, that will put pressure on restaurant margins, overall margins. But when there is recovery on sales, we also expect some optional leverage, too. Now, obviously, as you mentioned, we are quite encouraged by the relaxation of the COVID policy, I think, which will give us a little bit more certainty, a little bit more certainty about the business environment and our operations and then also the Chinese New Year trading period. So, in general, I think we are cautiously optimistic. The reason we mentioned a couple in terms of the market conditions and also the COVID still being a reality is really, the reality is that we need to keep a level head.
I think, if you look at the operational improvement, labor portal improvement, and then some of this margin improvement, as we mentioned before, which we expect most of them or some of them would continue. As we have mentioned, we did a lot of work to be based in our cost structure over the past few years. And so, if you think about some of our labor structure, our restaurant management versus crew, custom versus all that, and then also, if you think about, as we mentioned, the rental expenses, where we also got some favorable lease term, et cetera, I think those will carry forward. Now, obviously, over the past couple of years, because the COVID situation and the fourth quarter this year, too, right? So in the fourth quarter alone, we received about $26 million of rental relief and other type of relief.
And then, for the full year, we received about $86 million in total. So those are likely to go away. As you mentioned, if things become more normalized, and so that would also have an impact. The other one is that we’re looking in the commodity prices and labor inflation. I think, obviously, for the past year, because of the COVID and also the overall economic condition, that have been lately modern in China in 2022. Cost of sales, smaller price inflation was about low single-digits and same for our labor cost inflation. Now, we feel — if you look at the — small prices, for example, for chicken prices have been rising since the second half last year. And so we do expect probably low single-digit price inflation next year, at least in the first half this year, in 2023.
And then we also expect cost of labor inflation to return to more normal pace. As we mentioned, low single-digit is not the normal. Mid to high single-digit is the norm. So, we expect that to gradually return to a more normal pace of inflationary pressure there. So, that’s how we generally look at the sort of like the margins and the cost environment as we move in 2023. And thank you.
Joey Wat: Let me add some color here. The way that the management think about all these core costs and margins is as follows. If you look at our numbers historically, cost of sales and cost of labor, going forward, even in 2023, I think for your modeling purpose, we can expect cost of sales, of course, of labor. We — our management team will try to keep it relatively stable if we could because we have to manage inflation for cost of sales. But at the same time, it won’t be too low either. For 2022, it’s about 38%. If you go all the way back to 2016, when we start — get listed, it’s also about 29%, 30%. But the big delta is Pizza Hut. Actually, Pizza Hut, at that time — right now, Pizza Hut is on 31.5%. At that time, Pizza Hut was only 26%.
