There will be some new quality seasonalities and punctuation [ph] there, but if you look at our track record, we have been able to keep it around like 31% plus and minus 1% over the past few years, including last year, which is [indiscernible] 31%. Now, when we look at the overall costs, labor costs, obviously right now, soft capital economy, so, you will be probably more modest in terms of inflation increase. But more importantly, over the year, we have utilized digital and automation too in the technology, like AI assisted scheduling or inventory that we have mentioned before to enhance labor productivity and manage costs. We are also with the RGM initiative basically, we try to streamline administrative tasks and then like equipment or training et cetera to a more central hypothesis as well as centralized food processing to further improve restaurant labor efficiency.
And so, obviously there’s some fluctuation, but in the long-term, we aim to keep labor costs roughly stable in the long run. Again the emphasis here is on the runway, because in the short-term is going to be while we can buy sales leverage, Now, occupancy and others, this goal same for KFC and same for Pizza Hut. It’s the area where we will have opportunity and compared to pre-pandemic, as I mentioned earlier, we improved by almost 250 basis points Now, when our sales ratio is one, we have good long-term contracts. And then we also have optimized our stock portfolio. As we expand into lower tier cities, they genuinely also come with lower rent, as mentioned — as Joey mentioned, the rent in Changsha is a lot lower than the Tier 1 city for example.
And then we also have more flexible format, that are targeting, delivery and takeaway that are smaller and also more cost efficient in terms of rent to sales ratio. Now depreciating cost is another one. We continue to work on, as you can see, every year, our CapEx per stall has improved compared to few years ago. It was around like 2.5 million U.S — sorry, RMB [indiscernible] around like RMB1.5 million and RMB1.9 million per new store, so our depreciating cost also improved and marketing leverage et cetera. So I think for Pizza Hut, obviously, labor, potentially the improvement opportunity there, O&O definitely. As I mentioned before, KFC is already running at a very high operating level. So the room for improvement potentially will be in the O&O side.
Joey Wat: Let me give like a — give an overview and take a step back again. We’ve been very consistent with the Pizza Hut strategy since 2017 when we embarked on the pizza turnaround. Its sales first, profit later and then resiliency comes after that. Sales is and obviously you remember, we work on a product, we work on a marketing campaign, we work on the business model, we work on unit economics of each of the stores. Once we turn around the same-store sales within 18 months after we make that promise, then we really turn the focus to profit because sometimes you have to do the trade off, particularly at the very beginning of the turnaround or building a brand. The trade off is always sales first, profit later. So later on, we work on the cost line or the details Andy just go — went through with you a minute earlier and we’ll continue to do that and we want a bit more profit bit by bit on every element.
What is after? Its resilience, it’s more profit. We are going to open more stores, obviously, across all city tier to improve — to utilize the scale of our business, to get better rent, to get better cost of sales, et cetera, et cetera. And then next is resiliency. We want to build a very resilient business even more resilient than now as resilient as KFC. Well, it’s a very challenging goal, but unfortunately, when you have two brothers, and of course, two brothers compete with each other, it’s just normal. So for example, one challenge we give it to ourselves, which we got it already 2023 is we want each quarter to be profitable, because Pizza Hut is quite a seasonal business even more seasonal than KFC. So you can see that for the full 2023 we remain profitable, it’s very important because I just don’t like business and make a lot even though that’s big and small quarter.
And then we’ll continue to improve their seasonality and we’ll even continue to improve the resource allocation during the peak hour and slow hour of the day. And that’s how we improve the resilience of the business not only for the shareholder, but for our employees as well. Thank you
Operator: Your next question comes from Kevin Yin with J.P. Morgan. Please go ahead.
Kevin Yin: Thank you. Thank you Joey and Andy. My question is on the ASP, okay. So good to see the ticket size went up from 39 to 42 which is very good, but we’d like to better understand if the fourth quarter ’23 give it a bit of different versus before. So for example, like-for-like basis, KFC average ticket size down what percentage and traffic coming by what percentage of points. So just try to quantify, in the fourth quarter ASP down and the traffic are back, okay. Secondly, also like to know your thoughts for 2024, your conviction level to maintain flattish same-store sales growth in 2024. And if we considering the contribution from the G&A cost cutting et cetera, what’s the minimum same-store sales growth level for you to maintain the restaurant margin in 2024? Thank you very much.
Andy Yeung: Okay, Kevin. Thank you for the question. So a little bit clarification on the TA and 4Q difference, right? So for KFC, we have same-store sales growth of about 2% and transactions, the TC can increase by 16%. And then the average ticket size was down to 11%. For Pizza Hut, the same store sales growth was about 6% and then the traffic growth was 15%. And then the average ticket change was about 8%. So — but as I mentioned before, the TA trend, the average ticket trend is pretty consistent with our overall strategy and it’s important to our market reach. And, as Joey, you mentioned, the strategy approach is to expand our store footprint, especially in the small city, expanding our pricing point, and then offer consumer more product options to drive incremental traffic and sales.
So, there’s significant growth that we have observed, both in transaction and overall system sales — well, remind everyone for both KFC and Pizza Hut system sales grew more than 20%. And on both — in the fourth quarter, but also for the full year. So obviously if you look at the sales number, our strategy is working effectively. Now, when we look at the ticket average changes on a year-over-year basis is worth noting that 2023, obviously, was the first year of the opening. So this is a important context to keep in mind when we look at the TA movements. And as we have mentioned before, KFC, we’re seeing very robust ticket average in the fourth quarter, RMB39, which is consistent with the third quarter and about what we have seen in the pre-pandemic.
In fact, ticket average, as we have mentioned earlier, have been pretty consistent and over the past 5 years. Obviously, with the recovery in dine-in sales was strong this year, coupled with strong performance in our breakfast and coffee sales has contributed to the year-over-year movement of the average ticket size for KFC. It’s also consistent with our cost to expand the pricing range, and are part of options that, again, effectively drove very robust traffic growth.
Joey Wat: Let me just add a little bit here about the quarter for ticket average and then anti trend to wrap up this question. Kevin, the ticket average for quarter four is not that unusual. As Andy just point out, 2022 is the unusual year because it was still lockdown, its 42, that’s very hard. If we go back to 2021, quarter four is 38. Like this, the 2023, quarter four, is 39. But 2021 quarter four is 38. 2020, quarter four is 38, 2019, which is one of our best year, the ticket average for quarter four is 37. So it’s not that different. I mean, the over feeling is the market is getting more promotional etcetera, etcetera. But as I went through in great detail that we’re the market leader, and when we deal with challenges, we’re just not new to us, by the way.
We always have a combination of good promotion, but good product, good, mechanism to protect the TA et cetera, et cetera. Therefore, we are able to maintain the TA even during the quarter four across multiple years. Thank you.
Andy Yeung: Right. Thank you, Joel. Again, like your starting point to keep that context in mind, because, as you know, remember as it seems like a long time ago, but it was only fourth quarter 2023 — 2022 that we have this reopening a big surge in infection. At that time it will be also experience some labor shortage because of the infection, right. So — and then the ticket I think the delivery makes at that time was 45%, which is very high. And so those are the contacts with that. And then turning to Pizza Hut, right, if you look at Pizza Hut is a very consistent strategy for us. Since 2027, with the turnaround strategy, which is to — as Joel mentioned earlier, dry customer traffic first, then sales, and then finally, enhancing profitability.
So we have successfully mapped those three goals, if you look at our results. Moreover, this approach is very much in line with our latest strategy, which is aimed to reach underserved customer segments by expanding our price range, especially for pizza that is less than RMB50 per category. And we also want to offer more options, for consumer that are suitable for smaller size or individual type. So thank you. Thank you, Kevin.
