Yum! Brands (YUM) 6 Feb 202019 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Yum! Brands Q4 2019 Earnings Release. [Operator Instructions] Please be advised that today’s conference call is being recorded. [Operator Instructions]

I would now like to hand the conference over to Keith Siegner, Vice President, Investor Relations, M&A and Treasurer. Sir, please go ahead.

operator. Thanks, and joining everyone, you thank morning, us. for Good David CEO; and Chris our Corporate Russell, call our our are today Controller. and President Officer; On Turner, Gibbs, Chief Senior Vice our Dave Financial

Chris, and David from remarks we’ll the questions. call open to Following

like started, conference remind you Before call I’d that forward-looking includes we to get statements. this

conjunction results statements statements subject from these materially our to are uncertainties should statements and factors differ considered events and the cautionary SEC. that included filings All to forward-looking with could earnings release Forward-looking in future cause in with be in our the actual risk statements. the our

may In our used call. our filings to disclosures on earnings of SEC the relevant that to find sections non-GAAP addition, be please with of and today’s releases refer reconciliations and measures financial

the to remind closing the other completed and Habit Grill to their approval expected transaction customary end to the like quarter you is is be by transaction Burger of subject We’d XXXX. second stockholders of by condition. This that

such, As call. we what in on limited can are discuss we today’s understand please that

note presentation. our following regarding basis of the Please

results sales system foreign impact the all First, currency. of exclude

year Second, the to of new quarter units Division in the XXXX the base. in reflects the sales growth Pizza unit in include with benefit prior increase and Telepizza worldwide system related Telepizza. alliance the our Hut net strategic of Same-store fourth sales, and of inclusion

special items. X, lease profit figures January of the growth currency exclude Fourth, operating core and standard impact Third, adopted was the accounting XXXX. on prospectively foreign

impact note or change. of as the balance fourth accounting operating week. include And result GAAP-required in As a XXXX significant results a on the assets in XXrd lease this last, this and change the resulting No statement a liabilities please quarter cash income our of that a is flows reminder, sheet. recognition

stated this XXrd exclude call the will However, week. figure on

ask a advised website. this of future you our question, use recorded conference both any available be be included the is Please This playback. be via also broadcasting will call that recording. We’re in for being call our live conference in if will and and it

to make at to our Form outstanding changes the time following structure be XX-K provided upcoming of events. like in We’d of filing. restricted the Yum! you group Disclosures will investor the aware capital pertaining debt in

released quarter earnings call XXXX, April XX, XXXX First will on be a on same conference with day. the

like I’d Gibbs. Now, turn to David the over Mr. to call

good morning, truly and Keith, historic XXXX you, a Yum!. Thank year was everyone. for

bold we First, completed and commitments. our successfully delivered our three-year transformation on

opening testament focused, than incredible over and who Second, a to and as of more in we sales surpassed a franchise have and two XX,XXX culture unrivaled and in more run unit improve restaurant. been economics our restaurant None this we of system stronger much are our mark that million restaurants of the franchised employ X.X scale, to globally become talent now Yum!’s the of journey without Because $XX and our billion members. milestones XX% eclipsed long-term. franchisees to we’re our efficient, position possible team and XXXX would growth over accelerate

and Officer getting helped strategic in inclusive In to Tracy more make and People transformation. who new was and Chief Officer, shape to to everyone smart, role five thank you while the uniquely investments. especially to and as made years essential led I her our I I to results Before these Transformation Tracy within our signature Greg collaborative Yum! us with working Yum! possible. direction all who Chief for blend thank thank with best capabilities and dual position expand the want share Skeans, to a family to I culture as his Yum! this want Creed, heartfelt our also massive of courage. CEO begin, who want heart talent

global critical XXXX and Nikki in example executive Officer Bell Felder Artie to an Lowings Strategy KFC Starrs Chief the to Brand Lawson to talent side, Taco Gavin Hut Tony As to Pizza on elevated CEO, growth to we role. Yum! CEO, Chief experienced Officer.

also Technology with as as and Turner and Global as brought recently CEO, CFO, Chief Mark Bell Clay King in Johnson from capabilities Chris Digital Taco Hennessy, KFC Officer Yum! We outside fresh Yum!, Shannon as thinking and more CFO.

talent made our to addition In leverage bold moves, that strategic investments scale. we our

of plans the we Pizza For with our growth Grubhub, built started by XXXX, as on partnership Alliance our with our example, this U.S. we to acquisition Hut’s acquire QuikOrder And Telepizza. momentum and more we of Grill, be growth I’m Burger forward trend here. what casual during about and fast proud a potential. transformation time from concept where go tremendous Habit with done this excited couldn’t of announcing we’ve

share to it’s more get and than on matters you we few clear world results before. that like future to I’d a One, how employees today’s investors customers, in our our thoughts ever Now with direction.

So hear Good our Recipe on commitments sustainability and more food, you’ll outlines our us about our sharing for that people. planet

for potential one. We’ll such, and our tactics four drivers As purpose good. plan Yum! and guiding the will to committed with both be and to Brands deepen the each remain within execution the growth strategies growth unlock new for

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growth any to company, restaurants franchisees. technology with sustainable we and advantages other create Three, must our leverage than for and our competitive more scale

take this steps in seen already You’ve direction. us

experience. and customer to expand consider to to our capability. are allow effort disruptive unlock value leading and analytics transform strategic As us harmonized Gavin data employee previously innovation, embraces Clay and partnerships that that continue acquisitions emerging platform, also advanced announced, a and the We’ll cross-brand and technologies

and talent a continue the the is world. general to restaurant Four, managers advantage, competitive in unrivaled and our culture going leaders best because we’re huge developing investing around

on will unlocking lead ultimately unit parity and for focus inclusion which will our a better with to and on and experiences and underrepresented customer on employees, our with franchise our up effort summary, economics In better potential better growth. dial will We brands focus minorities. diversity our gender

details share Chris guidance Then will on update now an Yum! well our share Development of brand fourth as our as XXXX RED Bold Operating update. results Franchise and Capability. a and the of results, I’ll quarter Restaurant overall our XXXX view Unmatched for and

this delivered Taco growth. XXXX and Let’s a year system with and Overall, with results. talk X% X% KFC sales store of growth, with Bell same-store respectively. about were growth Yum! strong sales unit same X% X% sales with net growth new and standouts year X%, Starting

record all it put involved Development, a For efforts Bold of breaking recognize into Restaurant the year I’d and XXXX to was like and context.

opened this restaurants average net XXXX We represents our XXXX global a accomplish increase system units, record in on versus XXXX. when by XX,XXX opening As us gross from I Restaurant and previously transformation. per our mentioned, unmatched enabled and new which began our XX% XXXX have surpassed we transformation We on Development in combinations. achieve accelerate milestone. I nine focused unit an brand XXX a restaurants enhanced growth resulting now this believe Bold day to country our

our and growth. KFC In delivered system division three year the growth strong. with new brands. of same-store net R.E.D. Now finished sales sales unit fourth X% X% X% the for growth quarter, they

and with unit digital always X% the net growth the For XX% another sales growth. same-store remarkable board. exceptional strong their with on is X% had sales year same-store are performances system X% value, growth truly to innovation same-store around sales KFC growth. with across India new year XX% International’s attributable results Their marketing expanding quarter grew sales the with channel. momentum ending and

now add growth X% Our In Middle excited East ease for In delivery locations team provides business with grew about We the the QX same-store partner U.S. performer to unit in operational and X,XXX this same-store in sales have to in for sales the available U.S. top to KFC our we’re growth. click-and-collect. conjunction another of and was restaurants continues and launch with locations October, KFC.com Grubhub delivery XX% over members offering customers. with X,XXX click-and-collect. QX,

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new flat sales of in U.S., items growth. the of represents and X% grew profit of new net the unit quarter. For a system unit and with same-store Hut with Pizza system excluding the sales fourth Yum!’s Telepizza X% sales unallocated which and corporate year X% sales decline X%, same-store excluding declines net reported benefit operating X%

to food quality, Pizza in be made transition. in online our speed continues ordering a business for Hut U.S. years, program of improvements we’ve And and and service, loyalty technology the three for last delivery. our upgrading

However, significant three in remains opportunity years.

consistent and experience out. our across carry execution First, more in customer delivery

are resonate with truly that and unit that with profitable promotions consumers value economic the have model. long-term consistent we ensuring Second,

relocating remodeling and base. asset Third, in

grow. our taking internally We franchisees to are working the to are urgently on to trend firmer and change with place the brand steps footing

global the and and ability brands Officer driving to opportunity. Chief Officer. talent. start, of injected U.S. added to experience both also and leadership for our talent To commitment CPG add and We’ve Kevin team capability distinctiveness team in him and President, innovation, Yum!’s partnership new KFC of Hochman leveraged and Hut a working President. he’s franchisees, as turnaround. this to are turnaround pool We’ve U.S. this accelerate Brand proven Kevin’s in whom with and Chief we’ve continue KFC deep improve to U.S. Kevin ideally capital suited make U.S. many new have closely Marketing Interim the Pizza

turnaround, we guiding with through few as clear, the work be To we our franchisees have principles. a

and can expect grow. a company should growth are our brands of that First, we and all

Second, committed an disciplined to spending. remain we and model light asset

we At net X benefit great sales deliver experience grew sales food experience the with sales Pizza X% from in unit customer with In Third, the best-in-class value, innovation, markets pizza, a distinctive growth best a new Hut Telepizza success. modern where growth assets, digital know International quarter. formula system a we flat and XX%, unbeatable the grow consistently. for we same-store including point and tasting

remained the a sales X% UK in growth. approximately sales same-store strength off-premise gap the the growth of driver business. at X% sales quarter’s between sales same-store quarter, delivering same-store and was channel performance main led the delivery Europe off-premise was X% healthy meaning performance, aggregate by dine-in The our this positive

same-store year, and showed introduction in to value, significant were Germany, the UK, Brazil, the improvement Australia growth innovation. During and aggregators primary Spain of and contributors the the positive product sales

X% power Turning with brand same-store growth. unit sales Fourth sales excellent and testament to customer is grew XXXX our by consecutive franchisee. marked our positive eighth to growth and system Bell. Taco of new quarter X% year net same-store growth, X% sales the the of delivered world-class experience a

to brand. The is delivering known that of Cheddar Chalupa quarter of Taco what solid and Bell R.E.D. example in the fourth the the generating introduced is a Toasted was new XX%. for it Taco great Bell means all be sales mix innovation

the promo box gaming box Xbox Chicken favorites, We the year brought the with the very $X and back also nachos and successful perennial Rolled fan ended Tacos.

and modern customers easy kiosk completion and that nationwide marked the XXXX X,XXX allows favorite explore restaurants. rollout Kiosks our interface a their menu of customize items. the nearly the to deliver to

We Kiosk restaurants meaningful continue over to see from to check nationwide. to Grubhub and e-commerce X,XXX utilization growing in lift delivery

more strides made Taco including our We quarter that Japan, year initiatives including strong to become in technology Europe. relevant four in adding sales in drive to in sale. with India, the have highlights Zealand. the Bell leverage continue UK, loyalty easier UK, including Spain, to continues Internationally, and markets Canada, and for all the Access we piloting momentum kiosk All this New Australia, ultimately

turn are it situation. want did that affected Chris, coronavirus over by I everyone our the I with to Before to note thoughts

are closely help this to team customers. Yum employees they ensure doing China. local officials with can her health regular to their and government that as Joey obviously in as know with she and been the CEO Wat, well protect of work following their they everything We’re I the entire contact and I’ve

supplies affected their donations and efforts the is The with and support, in fighting Wuhan. matching China in masks healthcare the assist areas relief medical will frontline that to involved Yum Foundation epidemic in provide workers

be performance the Yum! and significant is safety such people certainly health experience. model as always on as will day, companies this headwind built and XXXX. for is what will priority. At a financial be While that diversified those many business end top on business of impact of our a the This people be will the our highly won’t the

With to Chris Turner. I’ll hand CFO, that, it our over

good Today, our David, everyone. and morning discuss results, remaining you, drivers. XXXX guidance quarter and Thank fourth and I’ll our XXXX growth

growth During net of growth the X% of X%. unit of delivered growth and fourth sales system sales same-store quarter, X%, new we

consistent year than half term in growth of was growth the model. was expected, As still first. long lighter it second the But with our the

performance growth and X% with And quarter a unit net and Standouts for the also KFC, Taco growth translated growth had included quarter. X% sales profit new Bell This of X% the operating same-store core same-store great new another growth. sales into X% X% net quarter remarkable unit growth. with for

to XXXX guidance. that exceeded component Next, I’m our say of excited achieved or we each

with and end net growth, of consolidated our same-store of new or sales David First, X% met same-store growth KFC system unit growth long Bell sales range. and mentioned, exceeded sales Yum! to our X% aggregate both high growth. and our was Taco as bringing the X%, to Figure X% the term X% X% to X%

We also consecutive year X,XXX second net development record had for units. new our breaking with

year met of core growth year low double operating growth digits. operating Core the our full Second, guidance we for was profit XX%. profit

net CapEx Third, XXXX sales target we of X.X% million, over $XX the all controls G&A year owing which of our at tight buckets below for spend. slightly XXXX. to was for generally met was Four, guidance in our system

a quarter that first factors. quarters to rate, through guidance running fourth After owing our three three above aggregate the in few primarily the quarter was G&A run below

commensurate strategic Our appointments. new our timing talent heavily with weighted, spend of back-end investment was

including Additionally, off was quarter. G&A down to the in $XXX base and largest concentrated reforms is Boiling the related discrete to it the about should you which model of projects, XXXX million. global exclude we that had non-recurring XXXX the items, spend XXrd use tax strategic week discrete was to some of fourth

goal met we in deliver our least $X.XX Lastly, in which XXXX XXXX. EPS, EPS, at to we adjusted introduced

our While reconciliation see $X.XX. our was the EPS results figure. apples-to-apples $X.XX, comparison EPS figure to was for adjusted the diluted release Please of earnings reported the GAAP our to $X.XX GAAP

model guidance, Next growth unchanged. long term our remains

growth system to growth, net growth long X% add-in to and sales should sales continue unit single-digit growth leverage believe term We profit high operating that believe be core mid-to-high single-digit. X% should for we compliment X% same-store

to it or XXXX, pertains of headwind as the represents XXrd just X%. However, first lap million week that a the over $XX

China, are adding Asia parts the Additionally, it’s uncertainty in importantly, matters in impact outlook for potential impact there world. areas and the few coronavirus and of for the year. to the Most of full the surrounding a other the

choppiness Hut to In addition, term results related near franchisee. there Pizza in at our for is potential largest primarily U.S.,

nature challenging the these moment. for are Given of fluid specific issues, impacts forecasts the at

it to business believe risks. to plan However, prudent for our we these account

such, As on as the term our likely below you equivalent are on plan we assumption We’ll we and XX-week basing currently our year long the have will a be we algorithm that basis. more XXXX information. progresses update

million in in the other items: $XXX XXXX. refranchising we of estimate few million A to first, $XXX CapEx net proceeds range

appropriate five an Second, times we remains believe net leverage and balanced target.

long of our mark-to-market. annual target dividends, XX% remains excluding special to and income to payout relation in ratio Third, net items term XX% Grubhub

are In quarterly share. fact, dividend we pleased our per to cash $X.XX XX% have recently increased to

to CapEx, plan we excess the investments remaining forward, select cash Going share through repurchases. and return dividends after accretive shareholder

with our last to guidance. note regard One

For associated tax benefited stock-based the deductions last effective from reported with our years, has rate compensation exercises. few

within of range to less a XX% are the timing versus previously. very in to be XX% because effective we While changes XX% forecast, is well our Partly rate the now exercises we deductibility of U.S. tax of range amount as to the forecasted believe, difficult to forecasting light to the Thus, exact of of benefits assume it are we prudent tax reform. going as forward. XX% benefit

for acquire we Burger January, share Habit approximately $XXX cash a announced per the In our total $XX to or agreement million. in Grill of

Keith the mentioned, is As to transaction subject approval.

increasing thereafter. relates XXXX accretion non-GAAP per we before estimate in it beginning special to earnings share and XXXX, with to As minimal the in impact items impact

is drivers. results. perhaps discuss a let’s and how Now with Development. Bold the and improved our of generate new begin focus Restaurant I’ll remaining growth example mindset This clearest

new truly pace. During in on X,XXX new X,XXX step a basis. opened a XXXX, restaurants is and This gross net we restaurants change

units Latin Thailand than This with country America, or XXXX. our XXXX was China, X,XXX performance which year, by of KFC unit, XXX represent for the new system. led XX% among with U.S. American more over U.S., the over unit Asia, QX net closed Russia outstanding Showman X,XXX others. and In XXX the we finished out representing across QX in business XXXX restaurants net the

Bell XXX XXX and units offset opened division we for to as U.S., transition the year, the In the Cantina in our new U.S. new Hut, during opened growth. XXth the Urban-style net partially units the asset Taco the the related quarter. Pizza delivered during At international headwinds net base, XXX restaurant. quarter

net year-over-year. units the the increase Spain, Portugal and UK of new XX% New opened markets, were development year, new accelerate India, of including in pace new continues to net this we in Internationally, fourth two units the opened Internationally, quarter, growth XX saw The entry XXX and Thailand. Zealand. global of impressive an with

Next across enhance unmatched with capability, technology. changing experience our are working operating the each brands, ever of franchisee customer we to

time our and we have what know interaction adapt We learn positive a that, and consistent deliver with better it do response our with is how we each hear person operationally. important to to a to With customers interacts brands. can consumers

our and of that East we’ve New with out also in provide experience our both we’ve allocate restaurants. At Zealand to survey efficiently resources. driver drive models piloted and efficiency KFC, will focused operations and customer Pizza more comprising rolling This to our delivery integrated sequencing six customer and and better XXX in Middle At order on tracking management feedback enabling operations international, by are Hut systems ease aggregators with Africa, over enabling intelligence, franchisees business markets them units. Australia

to that in on cars through and service At results. continue ended focus faster year-over-year. and improved metrics yield pleased operations report to operations to faster Taco with while across our million experience I’m to QX the the X key board. also speed is This Great service customer XX Bell, translated XXXX. all the seconds getting drive-thru more a

restaurants, diversified uniquely and global drive to unit transformation our category-leading summarize, technology is scale franchisor business and investment. digital expanding franchise company, of and and a leveraging by Yum! healthy made delivery. stronger massive positioned growth To XX,XXX economic over well a brand Yum! the accelerate iconic With

We XXXX. you look forward updating to throughout

Now and questions. are the your happy I to team take

Go [Operator Instructions] line come David from Baird. Your the first of with will question Tarantino ahead.

on you to My choppiness good the your the business. about And related question your is XXXX. are range about and comments morning good first, that maybe congrats Hi, Perhaps Pizza around clarify business, the franchisee? Hut the XXXX of outcomes a did in could franchise contemplating you question like expect U.S. main largest just you’re with secondly, an existing the agreement? way, considering into And my Thanks. some at capital injection support point? you’re the in involves to then this there base transformation whether of that you whether what

on for on Hut are turnaround as U.S., the we the questions, Obviously, business. we David. that So Pizza mentioned, in thanks focused driving

As David But have done mentioned, to that and the to there obviously, work in their business the lot on a way the fundamental be asset we’re and we the leadership brand base. excited about both the that we translate new consumers on improvements of to there. there’s focus place on

You We into asked about typically detail specifically our largest not do specific on situations. go franchisee franchisee.

have the on in – before drive do a Obviously, and discussed of time handful some capitalized, take are the really a working asset we’ve those and committed and each choppiness are side continue with create good situations into our do to of business where the they the the we a majority get capable of partners, Pizza We of place. well are direction. right better as them as franchisees But Hut to we of U.S., the are processes result. equation franchisees

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a general that toward and feel be may hopefully, there you some for as so a And asset the why gives better base. choppiness work we situation

that there’s I In Pizza with point capital. guess your with done would I in injecting time U.S. one were U.S., a I transformation past, question. Yes. understand two what and David, know about we agreements, the gained. have I add, for exchange we Those KFC concern – certain Hut done rights at in one

marketing standards. U.S., more we and to got related contributions For other Pizza Hut rights operational

in that us, that helps – market. hands down in cases, of mentioned, and the some Chris the market a shut market better the for get hands operator the actually As

there remarks, an we of to franchisees, it So do Grill some agreement The Yum!, to as buy committed committed Habit that’s model. my with to with Burger mentioned really model. we’re or I done whether capital, the going to If kind are some but something in because asset-light prepared asset-light be benefits we out an are

please. Next question,

Stanley. of from go next Your Morgan the question is Glass ahead. Please John line with

I Thanks I maybe represent talk into ability very could. What also we you follow-up quarter? can sales model? at pressure to focused the bad much. help the did on was understand pricing. that I have Or but earnings franchisees’ in moves some he’s on – the that think fourth change in – on the And on pricing if your are or should may really change want just know brand? And ask early to he Hut? specifically to a you how what how a debt XXXX? you driving expense do about I Pizza in What as generally, baked Hut about Kevin’s things there’s Pizza what has debt done? What early specifically

Thanks. first question, then David follow I’ll on take some I’ll remarks. with let and your

bad other billion of fees the in from we debt and north $X expense, globe. of in franchisees royalties the about the around on context collect and over Yum! we step think globally, if back X,XXX So

are have that debt always expense you’re in at an So Hut. situations was working Pizza through. to uptick There some going bad we

up million Hut full Division year-over-year. for $XX fees globally. In to $X million and QX, Just And numbers division, to the which expense digital year-over-year. was up debt was the $XX for million give you year bad for the Pizza division, bad debt sense million, which was XXXX, related expense a for was royalties $X

and some debt mentioned And of as are earlier, to the I though, related And we of a those. our work of put was go for impact part this help reference gives of this. it there hopefully, through as out, through play base just you working that timing described but global steps into the helps of handful the bad that sense context a choppiness the situations. But we’ve some give it that, how some number. franchisee we you we be franchisee put To and that context in as point through may is the

we landing the brand as Hut, matter And that to in as to brand on that all for franchise the Yes. resonate talents partners. a also Kevin, that way; the things Hut consumers, working Pizza that then far know then turnaround you and he and value our his we’re playbook R.E.D. that is that U.S. Pizza industry: Pizza know, having architected is with brand And the the in that as CMO in at really using about somebody back Kevin Hut. brand going excited U.S. of of having as consumers the obviously, President offering in kinds profitable KFC appeal of our communications the with same build the but

things the years think say can on in It’s build talked the about to a that partnership programs, excited and loyalty field technology say them with that all to start concerns. we’ve the going spent the has from standpoint, Hut Pizza the last franchisees team forming good obviously a of work specific but understanding me few in lot I in they’re a in too the soon to improving calls. strengthening launching products, operational to done with that them, previous And reach have the he’s to I that joining. their brand improvements, lot deploy, getting great it’s out going them and He a of to know time tactics about and talk to Kevin

John. Thanks,

please. Next question,

Geiger Your next question is ahead. the of line Please UBS. with Dennis from go

Thanks.

wondering we puts and most maybe XXXX a about on uncertainty I to about? what U.S., Just relative globe long-term more X% called takes And talk the around Hut other on you you following some strong level takes another those thinking coronavirus year target. but of goes more potential and thoughts thoughts be your two just could that points? Thanks. at the growth, and Pizza in of development, with if that on bit any out any a high the puts updated to know presumably, development should related the

It from Thanks, development responsibility. really the building back equity do Dennis. to and been team able Yes. stores picked remarkable development up we with what is have the pulled franchisees the has as

what year, mentioned X,XXX think quarter. all incredibly units think, in remarks, fairly net of. numbers, right? are it’s I I And widespread, passing you’re this X,XXX These seeing is over proud the As new my fourth in we’re I

Bell year widespread. opened for over growth, and internationally base new pretty new net Taco getting of Taco impressive and first of At very XXX. this numbers. Bell U.S. time That’s And units for off KFC, XXX the hitting stronger was roughly the stronger. a that’s

internationally. alone. You’re seeing development, about a I quarter new XX – the think, new in we’re then And gross like over at with units last number even countries, units Pizza year but building fourth units new XXX Hut International, XXX net

development those into to our and the is expect and trends to growing, when healthy continue comes we vast XXXX. So business of it majority

we’ll and that a negative short-term offset as the we of have very need U.S. about below this to to as may commitment specific and on that Yum!. the Hut in another that comes term about around X% talk that get long grow for obviously, we and And when you Burger the teams Habit know And development lot we’ve But development. far excited As it that’s tell pace still The past on have talked but are able when world that, our closing, Grill basis, a things about, positive are assets being of could, at about we standards we I a close, development. good transaction pace. can to impact Pizza feel our

you. Thank

please. question, Next

of with John Ivankoe the from Please is go question JPMorgan. next Your line ahead.

think to that some exists of with Yum!’s drive opportunity of comments. recent also obviously just on are the question these learning you’re markets around this and third-party and delivery to businesses in you in markets opportunity Grub’s various U.S. businesses these developed context an kind Hi, what is and whether you. types around developed thank seeing The be order whether markets, some how continue of point overall at world also in the evolving aggregators,

Look, is growth our industry. delivery in obviously, area an of

context, X.X% are Just of to some occasions restaurant I it saw put recently. data delivery. NPD in

growing is a around part and really it’s But of – the it still it’s benefiting growing, would it all headlines while the So imply from it is is. bigger business, that than the world. business our something it probably is

partnerships forming make that tailwind Yum!, marketplace. seeing market our in would little a makes sense the for are a it the our done with sense obviously with that cloud for aggregator on bit and by terms We the And of scale somebody you’re be for right us.

it point to when I out all I delivery. it’s is think the thing digital, not comes would other

data that majority seeing actually carryout. digital we’re the the are orders vast Actually, is for of

I So think just not delivery very per-eater costs out, cut as that to model. to is left you today teams working sure are to us the our cost. matter delivery the not on no well, that There click-and-collect making how are model adds for the focused it be significantly

delivery our for not are particularly known entire that occasion brands, which very for appeal much the And makes base. value, our to customer

are the they So do, as we giving and want. always about customer them what always we

them, delivery, carryout we’re And that there. programs dine-in focused or leaning focused, more have that in for So those too. customers those for want are we

Thank you.

please. question, Next

Sara of Your ahead. next the Bernstein. with question line Please from go Senatore is

there’s stores XX% a question being talking just outlook understand then last and in quick we night a Pizza visibility closed your the you. I who’s from but about the about China of XX%. on Thank have heard in Hi. of just the down rest U.S. comping Hut licensee the I China, China follow-up and lack on

EPS. and if numbers can something implications. I full your So estimate EPS it’s like help of globally of Pizza it’s if of – year to around Even some out maybe put point comp maybe X just $X.XX you KFC Hut, just

help of kind any kind the implications decline quantify of think or of about If of how closures, comp X store you point just numbers. could we

just on then And Hut. a Pizza follow-up

You mentioned Hut. agreement referred – an you acceleration to with Pizza

I concluded. think it’s controls how last the about of franchisees. the anything strategic Are and now one year, any whether at Just change the of closed end or lot of last kind out revert closures? kind agreement seeing to you they’re that advertising now back transformation different a has that the store of approaching

questions. So thanks. Good

with start China. me Let

most this and really members. there team importantly, the that Yum focus. how think, authorities we with focus as I priority. That’s and appreciate and health Joey team they’re the that the So have safety on China top on the China and the And of their working situation, customers

our that top remains So priority.

call their heard last you mentioned, night. you As

it, you thought would helpful I very to review of their summarizing We go think haven’t who really situation. comments. a those the be it seen did job of For nice they

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Pizza comment permanent franchisees, question that agreement, reality And was back about Yes. I to Hut acceleration changes there in to the reverting controls on franchise a but what was the agreement. acceleration about is the agreement the made know

of increase, marketing of contribution the stayed all standards So stayed the have, to that and the technology in operational loyalty royalty commitment all agreement. those increase, now some the – we part some

think, the I’m that as work doing in go, mentioned joining, a but Pizza we’re of business mentioned continue Hut happy term, And same-store as pleased repeatedly we’re is about of the earlier. to on the change I that turnaround to partnering short a we’re and I they’re excited business term. build franchisees business, not growth nobody’s we they’re U.S. long far I with And obviously, we which counting together the say negative, stronger think Kevin proud seeing the in constructively they’re sales something working dramatic in as As this Kevin.

Thank you.

please. question Next

go Bittner the of Oppenheimer. Your next line is from with question ahead. Brian Please

morning. Good you. Thank

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Yes.

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Yes.

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Thanks, operator.

more for question. time have one We

Your Palmer question the Evercore will with final line come of David ISI. from Please go ahead.

ex-China. – XXrd which are And in parts were Thanks. year, health like crisis obviously about is Asia algorithm? were Hut about what a and that of U.S. comment your way with coronavirus, terms – squeezing we and your your that versus about how in me what algorithm said this Thanks for of some you year touched to some What you excluding through sort something is if discrete in is week, of the already impact wondering, of to Asia XXXX course, – talk versus in. thinking seeing an then important Pizza that. you in I’m Thank you’re going business. you. you other coronavirus And

to all store an put actually close any taking prudent sort. David, haven’t coronavirus people We seen everything were we that impact impact. at be different of trying and or for But planning to first. at the haven’t we’re imply eventualities. we obviously, just to to that looking seeing trying that weren’t Yes, anything ease of last any related we’re we and seen that part

as can good or Hut long-term our we of anything to algorithm felt that on we goes, might As you tell far the XXXX about the Pizza noise we entered else. XXXX I deliver all plan have algorithm U.S. despite with a from all

mean going restaurants the you the to China algorithm. Hut Pizza on humming We account plan has the have I performance it XX,XXX and the the time, feel impact and that’s we always enter than within are taken us the franchisees on has large about that hit think X,XXX with, and challenges parts year combinations, as good, country I business. in a you all ability good the feel long-term all Obviously, and of of through into into XXX coronavirus great have and not about that, always business we get health are a we’ll But our our actually about and U.S. year. brand related felt impact the year. the the and franchisee, business. we’ll deal business really which significant good this to financial we other But obviously when feel

have we successfully didn’t getting about that. what we Yum! the forward, XXXX to really, about past system with hey, sales. goal us. go out close team we the by back lot milestone Even and of I’ll in talking call on we just journey started the We as talked of believe sales, I’m So XXXX system we’re but that accomplished. X% We Well, delivered was delivered truly the all people year a that, that, Telepizza, and bold XXXX, in for do X% just a saying it X%. year a incredibly was that which out could looking fact commitments concluded we’ve that know of we if where a I now proud you

hit of that incredibly and that. we’re goal, proud we So bold

growth XXXX. X% and representing year, last the than in sooner restaurants we anticipated had X,XXX over opened We back mark. crossed XX,XXX unit That’s

we this call to aspects talked much all I’ve team strengthened culture. business. promoted. the really about transformation entering stronger across this been you all on We’ve folks the were that we’re it’s given of the the So We’ve of it, and people than added out we’ve and have certainly coming that really improved

collaboratively. during We’re to is And of turmoil operating that do all think special the transformation, truly a I more accomplishment. the

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the summary, is model business in working. So

about than And excited operator restaurant anybody that, today. units everybody’s future. be else, I with we couldn’t more largest world’s the more time with diverse, We’re and appreciate

joining again conference Thank for you Thank call. you. today’s

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