And that was a proper because when the cost of sales too low means the value for money is not good enough for customers, and that’s very dangerous. So, our goal is to keep it relatively stable. Cost of labor, the fact is it just keeps increasing. And our job is to manage it at a reasonable level. But we have to pay our staff at a competitive price — competitive wages. Otherwise, we won’t get good staff. The area that, over the years, which we have improved quite a bit, I would say, is occupancy and other operating expenses such as rents and, A&P depreciation, amortization, et cetera, et cetera. So, 2022 is 28.6% and 2016 is 34.2%, a massive 5.6% delta. Now, that shows management team’s consistency and focus on reducing the rent, which is always the right thing to do, I would like to believe, and also depreciation, which is from reduced CapEx. So, that has been our focus.
But when we — and that’s true for both KFC and Pizza Hut, by the way, 5% to 6% improvement for both brands over these many years. However, one thing I would like to emphasize again and again, when we save all this money, we don’t just — that is flow through to the margin. We always, always, always pass on some savings back to the customer. That’s the way that we build long-term business. So I hope that helps you to think about management focus for the margin and various key costs items
Chen Luo : Yes. Yes. Thank you. Thank you. That’s very helpful. By the way, your toy is really cute. And also, I’m very amazed by the newly launched type of products. So I’m looking forward to have a thought on that, yes?
Joey Wat : You must close the bar.
Chen Luo : Yes. Okay. Yes.
Operator: Thank you. Your next question comes from Wei Xiaopo from Citi. Please go ahead.
Wei Xiaopo : Good morning. Hi, Joey, Andy. Happy New Year, . I have a long-term question. We had appreciated the great rundown of Joey’s opening remarks, showing us the journey over the past three years, how you build your identity and also keep the growth in the long-term target. So my question is, in the past three years, your agility is very visible, which will protect your margin, will capture the digital and delivery. But when China reopens, the market will be more dynamic. I just want to get a sense that whether Joey and team will be more offensive or a little bit aggressive than before in terms of demand activation, because you always do stay ahead of competition. You stay ahead of competition to reserve your cost and protect margin during the bad time. Will you be a little bit offensive in market share gains looking for upon China reopening? Thank you
Joey Wat : Thank you, Xiaopo. I think I would like to address the narrative that whether in the past three years, whether we have been offensive or defensive. I think we have been very offensive in the last three years, if you consider what we just talked about earlier with the price question. We have expanded the footprint by as much as 40% within three years. So our view is we shall take advantage of the crisis and adversity. And I think we did. So we — when we look forward from 2023 and beyond, I think we’ll continue our pace, which have been rather aggressive, I would say. But the focus is to — the focus and priority is to drive sales, focus on delicious food, new product, value, exciting campaign, while at the same time, continue our disciplined approach to capture more growth.
