Yum! Brands (YUM) 4 Feb 212020 Q4 Earnings call transcript

Good day, and welcome to the Fourth Quarter 2020 Yum! Brands, Incorporated Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Keith Siegner. sir. ahead, go Please

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

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

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

We're cause going future of our subject our do about statements to events from evolving. situation and this those that thinking materially are completely but business, to statements. results actual the best unprecedented could to to our on current provide and differ Forward-looking uncertainties obviously, is COVID-XX our pandemic impact the

regarding our variables in risk and made and be are the the the cautionary the pandemic only of So filings forward-looking our and announcement will SEC. in as release result. that of the severity in with forward-looking any should uncertainty of considered be with duration conjunction the remarks impacted included this statements considered in All earnings as be and a the light should date statements factors the of

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

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

currency impact foreign the Second, exclude and items. core operating growth profit of special figures

week Third, XXXX. include impact note the of lapping please fourth in a XXrd quarter that results XXXX

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

Financial Reports each for For the section visit reporting more website. information calendar our please on of our market,

upcoming be Please use Yum! We also will of for and call our you be conference future website. to broadcasting will the if would following. a included are call playback. aware this of that recorded in both and the live We and any like advised ask our make it is in you being investor question, available events This conference be via recording.

provided First, time disclosures the Restricted XX-K our be Form at the debt structure will outstanding pertaining of to in Group capital filing.

released Brand with on earnings Second, Global be finally, Virtual tuned be XX, our a available for on KFC And Stay details. webcast May the first hosting Tuesday, we on will April conference quarter Day the will XX, same call via on day. website. more XXXX,

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

by Growth good morning, a and Keith, proud I'm stronger made We and grow, incredibly XXXX. our global of and you, XXXX came way our navigate to of Thank together resilient to new these company; the entered the everyone. better system and challenges prime challenges more people offer We by to believe across our systems and has is move on and Good ways a to commitment brands, global forward. franchisees underpinned customers. to that safely affordably culture of our and us unmatched solid our and put serve footing we collaboration galvanized people strategy,

collaboration our intensified net advantage competitive our new scale. under often fundamentally and to Chief central for role on been underlying we promotion us same-store it's is momentum to fact, elevated action focus and cross-brand collaboration fuel to continues, on People unit growth. our that and Chief on This and this execution imperatives she recently ensure formalizes an This Skeans future Tracy people playing and vision to of Transformation experience appreciated In and Yum! Officer. capability customer Yum!, the Across already Officer, sales has drive Operating and alignment growth. we current our leveraging

to capabilities create partnerships. across and our experience, than the technology accelerating aggregator advantages XXXX opportunity fuel As increase you're economics year-over-year, year. the growth increase restaurants our We other XX% and our $XX sustainable over to representing any customer digital over deployment aware, enhances having enhance by of well for off-premise company a have note, includes in about record more franchisees. initiatives globe. offering competitive to delivery, XX% expanded digital restaurants a sales This on unit billion, prior ended now part We a hitting of a high XX,XXX the driven

Yum!, my for As digitally will our profitable more confident economics unit enter same-store customer-focused second come. I'm to I year than that to maximize positioned will is leading Yum! grow brands value ever support and development sales, enabled creation well years

guide for Our continues drivers, long-term to four Recipe using our key growth Growth, strategy. our

examples unrivaled results and RED So QX strong our culture growth driver or start demonstrate Distinctive review details overall balance Bold Chris our operating Easy capability drivers. an short, growth will talent I'll few and more and to sheet Relevant, Restaurant share Then our use with XXXX our brands results, liquidity and and for of position. a and unmatched of Development

rely. declined of of terms closures impact X% the Overall, from of the XXXX headwind system the positive COVID headwind XXrd including our dining impacted through use in a net X%, some week First, results. units XXrd the X%, declined of Yum! year-over-year in rooms, restaurants a including sales end the a markets lap year, limitations on adversely of XXXX. X% business our and to XXXX of This week the heavily slightly with same-store decline. X% sales continued which operating core the upon both the of temporary and lap in profit, of which

closures regarding Now I'd that some like temporary COVID-related we've seen. and to progress the details provide

closed the conference October the on of end the of This as third hosted about quarter, to of call we third quarter X,XXX had XX. about As units. improved we earnings X,XXX temporarily

about located including restrictions, XX% and geographies restaurants in see of which format, East, Canada full some limited centers, balance X,XXX to one-third the system the like a these dependent that continued enabled lost our of store other our and more digital, many of Middle system making number or sales where drag were America or our Not seeing those in the aided to significant are closures channels, from in the This transportation have in remains have continue closures. access. of and limitations, by we open open malls, remain Latin room pressured, on to we airports about By now January, climbed about same-store by of Europe, came from evolved to a closures also COVID closures temporary flat means room. situation the open sales in aggregate. fourth in roughly surprisingly, responses currently sales the capacity. government our dynamic base through and All-in, the is to experiencing India. continued deliver Despite quarter restaurants off-premise for local the back offset reopenings offset most reopenings dining Pre-COVID-XX, We've is temporary COVID. our quarter, and on limitations government dining and to asset subject today. due fourth closures the to the largely be temporary but up impacts, wave to We second increased of

RED residents sales KFC and QX about by off-premise for talk continued suffered geographies ended reopen full of Canada capacity. during point from and operational X% The Division, accounts UK, two drive-thru stores, though limited in a and which to open an closed International, QX. XX% customer of different the execution, SOPAC At improvement or and wave with temporarily same-store COVID impacts second to grow declined the quarter, and strong sales. X% channels brands. show to our about new XXrd offset from percentage lap XX% leveraging continues other four a system KFC same-store Starting net now let's growth. QX our XXXX with in from sales impact the divisional week the of unit X% KFC approximately negative the profit, declined driven operating partially the by Now decline, sales X%

the continued U.S. well and their reconceptualizing filling QX, recovery. to continued Importantly, grow invest X% through with same-store core for particularly a from performed To in Latin menus promotion, on occasions and and the free East, Across quarter. repackaging positive a the in Middle core we mix digital. launch high-single-digit to see QX, innovation helped and by to KFC kick-off most or impacted delivering growth, tenders as America rebundling, started geographies our strength globe, continues Caribbean group to India, growth KFC menu the the items. gaps and digital DoorDash, which the such sales had sales show in to owing

XX% the sales system decline and negative by impact profit, week decline sales Hut, in on from for point new to percentage approximately the the lap divisional XXXX three Moving X% our Pizza driven a which unit reported QX operating a of same-store X%, XXrd of X% division accounts net a decline. now of and

partially During in open and making with be the or Hut International up same-store least limited full sales Pizza closures. remaining temporarily X%. continue of quarter, a closed reopen Pizza XX%, to Hut continued capacity. declined the units about at Express ended pressured, many stores to QX

footprint dine-in a continue excel, be markets to our focused headwind. off-premise Our continue to while

markets our abundant drive And growth. helped growth. X% U.S. Asia. the sales strategies. positive to strong and as Our channel Pizza and operations shift off-premise continuing Hut same-store sales and customers both off-premise, the with had same-store sales stellar value overall growth generated channel to a are markets same-store delivering quarter, Further, to in through emphasize XX% another in performance that offered support X% Canada brand off-premise such we

Our $XX Tastemaker value mixing over perform XX%. well, offer continued to

premium introduced product we time a value. Treat our Just the Box, with for in abundant Triple holidays,

announced for U.S. first restaurants. market. Taco an excellence. existing a We that introduce Flynn also its is and approximately a weeks well Brands ago, chain A alternative to the NPC's Hut to brings partnered major Bell with record few product acquire the pizza strong Yum! Group franchisee XXX capitalized to Restaurant is be Beyond successfully plant-based of to operational track Pizza intention Flynn

system restaurants welcome modernization Hut improving Greg near-term these restaurants plans the U.S. his We The ownership a acquired, portion significant of make the Pizza expect of to and the include Flynn stronger, while family. of operations. Hut entire Flynn's and will Pizza team

Bell, with X% growth As Bell net negative same-store system stores This for point X% our partially and XX declined from percentage closures. temporary and operating of QX sales the new driven accounts by Taco was than continues for growth. the XXrd a approximately offset QX reopen sales week. Taco XX% profit, lap which to closed ended temporarily impact unit less of by five divisional X%, now

Bell who on results, Bell business. XXX, are In congratulate Entrepreneur value the the satisfied other into this to customers out and of concepts the list, franchisees entire beating well marketing Taco willing most like follow for was of some impressive as in brand one Magazine, of the words produces for products a industries. system blend adventures ranking in wild prices, the delving peers Franchise in which Before Taco and I'd seasoned number well to innovative the recognized as

the focused brand building on sales over the time quarter, Taco simultaneously and U.S. building During overnight. Bell stayed

Bolstered sales single-digit mix to high expanding these for marketplaces helped additional ease quarter. a First, by grow dedicated media, marketplaces. we the improved by aggregator to delivery

mix sales quarter Second, geared toward for XX% promotions acquisition $X program we for year about with launched digital the and a full billion adoption. the XXXX. in reached loyalty customer All and

We of with are time. very pleased components this building the on essential such over progress brand

compelling sales had and of craveable Stacker the mixing return drive began Third, Box, quarter performance strong the we The overnight. with $X to offered X%. which the at Grande product fan-favorite, a

of saw impact. Pack, we and Chalupa back cheese then the with a Nacho's grilled year and Cheddar both sales having out brought a the Next Party the Toasted mix We sales rounded burrito XX%. positive

Habit. XX% back QX. were to menu as continued of over QX slight in to the much closed added engagement from chicken X%, permanent The Despite well digital which this keep during same-store that well say amazing chicken platform, late through step of sales Habit quarter customer in perform restaurants to well, were to fill mix. the new crispy as able as Habits on Now restrictions pleased bites. on-premise temporarily pace constituting declined we void including high, as X% with our only own to California, the COVID-related I'm ending a items sales sandwich, ordering Two

unmatched capability. our onto Now operating

QX. level to the HutBot XX KFC and have most First saw a U.S. of as achieved drive-through, sales excitement with of lanes, rolled at minutes of in XX XXXX. this drive-through a out improvement and UK, lots modernizing store HutBot At transaction with markets time coaching fastest around store during quarter the full Pizza the in KFC improves the already performance. consumer record transaction teams improvements adapted occurring in delivery Bell with improved breaking drive other management our six Phase Similar satisfaction goal member the HutBot to better intelligent nine average launch in drive-through After Taco scores. aid. is through quarterly point seconds called of X support our performance over below achieved demand launching improve coaching from we're all drove at franchise other process high times through in experience app an a have the shift result U.S. times completing There of minutes and and and of its year times our four to Hut successfully in-house team QX a with the the International, customer

our Habit Burger over pop-up XX% as aggressively Curbside such Next, year, sales be total out for and continued curbside by newest XX% the Grill orders. pickup. this about in received particular solutions brand, of has of accounting drive-throughs rolled off-premise to customers mobile and well

but technology and launched major scale, in goal The a lot a our talent scaled innovation will of platforms, iterated a to summit. integrated is in experience, our not growth provide Now ops the pace of to first, the ever an over for and agenda U.S. first excitement member globally. systems member and What focused more and our me market focus developed front digital be the the at will globe experience the Culture most which on then in house agile digital ops was to than launching harmonizing the Chris, you. platforms key of well mature team team unlock until and Unrivaled examples as team we and held out on platforms specific the back young summit ever directly driver, building restaurant our of the for customer is stood technology across There was Chris and mind, Talent to solely newly through leveraging technology with mindset. that, how adoption before, into our With few and virtual teams our from unmatched global solutions,

progress X% our To Today discuss and tech position. and sheet our Thank discuss our week of and XXXX. let's our in liquidity increase good the This XX you, David; morning, XXXX. XX% and represented the I'll strong Restaurant in partly now to EPS was driver provide sales headwind excluding with X% system for declined results, special a decline. third the additional digital units some everyone. were the on journey, on roughly fourth X%, on the X% items Core Development QX excluding special General administrative a lap positive our Bold $X.XX. EPS impact quarter the items. begin, shared and $XXX balance lapping sales our declined quarter same-store declined Yum! the several in call. I'll quarter week color in of quarter, fourth of offset X% slightly XXXX. net items a was expenses, XXXX, excluding Overall year-over-year, or by million a consistent conference $X estimate QX. of This including when XX I driven compared ex-special profit operating by growth

austerity period digital through enhance proactive saw G&A, year competitive items We to full set special of of this represented measures. a X.X% by an opportunity of the system XXXX For the all during excluding sales. We consolidated not. technology our spending others impact systems could when accelerating advantage many and

we However, of sales. as fundamental approach our be was temporarily framework a not systems growth historical spend fixed were model commitment a and because an representative in leverages our to of above of that percentage XXXX for sales costs. G&A efficient or XXXX change pressures,

quarter to business interest for we our rapid approximately once In expense target QX back growth flat historical driven ratio resumes. borrowings Our rate emerged rate by as pandemic the $XXX debt. floating positioned decrease our model by we a higher from in our is to million on toward recovery fourth G&A sustained and move the offset outstanding was compared expect XXXX,

year, expect quarter fourth utilize to a than losses, rates the were release jurisdiction. in foreign primarily net and to allowance now of operating XXXX tax prior due we against a effective lower valuation Our ex-special the

while new taxes special XXXX, an net the excluding potential XX% potential At the an capital XXXX, in We full the appropriate of in needs plans expenditures, roughly general believe provide given year currently gross We business, invest at this U.S., last assessment. it's Capital early XXXX million any though the the proceeds million are changes $XX refranchising equity evaluating of in well of million our as inherent like rate for under the too XX% $XXX tax were administration remain opportunities we to believe for provided Habit, approach. range impact spending technology to for annual we I'd to strategic $XX million remains effective macro-environment, items. the appropriately balances in stores. of CapEx, to time, discuss our including year the of as fluid, and $XXX initiatives occasional development

We in investments. strategic the also which fund refranchising, annual store proceeds least anticipate at equity will from $XX million

amount than well slightly repair, I not relates year. For upside on which for fully as and to just proceeds owing XXXX, spend U.S., for CapEx may maintenance higher primarily catch-up Habit, This in the remodeled COVID, the development realized select strategic gross delayed may be the re-franchising to we mentioned. as be this

the to more. aware, all quite fluid you're actions and As packages the COVID-XX, of stimulus macro-environment governmental including impact global owing remains

have utmost ability opportunities We to our teams whatever their in arise. to pivot challenges confidence and and the

However, the financial will we to environment and is specific therefore not still guide results. unpredictable

on customer Before restaurant to been experience. around to Bold Development, team I the work member we've Restaurant share of doing wanted moving to the and technology transform some

David globally. scale we our solutions before new major markets are As we mentioned, in launching

allow of U.S. platform KFC rollout third-party delivery. new and early pickup This in for from take national both digital began platform First KFC orders our will our e-commerce the to XXXX. own

and Bell be digital as where of a Hut is is This member based a delivery for completely for more specific should the our and application is there customizable. omnichannel technology source multiple capability speed important allow U.S. Pizza that each This system, to customization pricing advanced team Taco launched partners. across test as particularly menu aggregator system, well experience optimized our sinked grow multiple And intuitive sale can modern point channels. tablet increase first as accuracy, we that Second needs. one brands reliability management for menu lastly is U.S. new the across a

on placed to ahead on XXX, Restaurant during closed including Bold Pizza our end moving conference shared and at count Hut, XXX call. the the third quarter our which I opened quarter, we restaurants Now, Development, of estimate unit slightly X,XXX fourth closures year

positive For this closures. the XXX addition of Pizza QX pleased related an encouraging our growth delivered of slightly positive the by for KFC delivered COVID net year, Russia sign brands am growth, Most full unit to includes and for Hut year three net headwinds, of this in four with the XXXX, Central the Habit that dislocations say X% in restaurants offset China, despite and unit unit and Thailand. achieved Eastern I Europe year future. notably, and strength COVID growth we

XX were positive unit provide announced the units is year, year year strong casual milestone. units Hut, based units Closures as out we XX markets net more asset and Importantly, ending COVID dining available declined that a for gives XX,XXX underperforming the base and largely impressive or Pizza models. to regards This AUVs. healthier were we In continue of with restaurants. the date. has modernist XXXX KFC momentum lower confidence an economic occurred of restaurants, with that the this transition the the of us incredibly to transition previously closure there when X% capital in hastened

We more expect unit do weigh this work and growth year. this into have to to we on

economics and entering to in are from are franchisee earlier, David and many grow. strength. of for alluded franchisees development, are to to health position we as XXXX prime improving Unit markets As many relates it appetite a

Bell. to benefit we to $X recoveries quarter, and an These in operating recoveries quarter, million debt Pizza due of $X an the expense net the fourth of $XX related at compared during million International, bad improvement of Hut of million XXXX. in U.S. profit KFC resulted Taco to quarter the During past amounts saw

down less our XXXX accounts outstanding below XXXX, as were deferred before million allowance provided from royalties the grace doubtful during XXXX, Importantly, XX, million of is than of and periods QX for was $X as the June end $XX pandemic. year of in where it the from

capital latest our an allocation. as and balance on our on well as liquidity for and capital position thoughts Now structure update priorities sheet for

First, of which net $XXX is X target was we historical equivalents of cash million, QX approximately ended Consolidated and times. cash our restricted with cash. X.X times, leverage marginally excluding above

million repurchased resumed and of share we average share X.X shares per Second, $XXX. repurchases totaling an million price at $XXX

to Third, to excess pay competitive Yum! our business in well the growth in conveys unit $X.XX on we a to of confidence accelerate cash updating increase massive believe dividend our you that a have maintaining delivery. by healthy expanding are model. and is this repurchases. of flows in growth dividend our potential To our the dividend We impact generation we by over technology of per unchanged, iconic X% recently diversified our and end, positioned share. franchise category-leading maintain After brands global capital despite scale With to remaining and to digital increased and and economics Yum!’s XX,XXX XXXX. sheet, shareholders invest quarterly pleased priorities business, and remain leveraging return the the cash XXXX, look drive by healthy our a via flow cash forward progress COVID-XX, uniquely balance business over throughout restaurants,

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

question-and-answer Tarantino go begin first ahead. would Please come We will from the [Operator David with Instructions] And Baird. question session. the now

comments you growth. level appreciate long-term long I about if can what you framework kind today? is on franchisees think morning. get share wondering comment get given take annual and Good I it But is you prime growth, to the and of to your target if the unit there to are previous the was any you a might My on could that that perhaps X% do growth question Hi. many know how to for

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Yes.

of main is question the of a kind expect I of about you to growth the appreciate and rate about the think growth. reasonable X% back I I type unit you to is Thank know prime many growth, development, is unit being for And us to today, franchisees about my on for guess prior asking comments given annual your was for of system-wide long target that So your you basis? but you. question get do how what about

Thanks – last for earnings XX an why for so and not has to that. And out. happened for dropping That's David. everything the call, question, I months, but first phone us a the on apologies our everybody in guess

as unit know far development, As I everybody's on that's mind.

So get a will our and of can over beyond. that thoughts question of our we we're just reasons yes. couple to regain pace to X% that the is There's hairs, time. in is, we there. X% To goal certainly, lot and get that why certainly cross confident of and And there the answer a

franchisees' Our in business And us months. model off-premise stronger in stores, sales. our Most the well The XX are really to our gotten as over up our seeing shift open obviously, and show we're has of improves that suits And last franchisees over They're favorable shape. that out coming climate. it's in will Certainly, with units. – more they're I out this good estate good opened in of real point situation actually X,XXX and XXXX, to financial grow. a gross shape we economics. ready

with to strengthen for close, which to as base. our lot the Hut talked not pace reasons, years, obviously particularly, the it's So we've restaurants a wanting challenge at of the development disappeared. Pizza The about just over closures, Yum! things good we if asset had

global then, business when certainly, us year Pizza So last got in that out business. we've exclude behind XXXX. our got grew four the in X% you of brands And lot the and Hut growth of three a we

X%. points why get we to can those proof back for of So all good

they not trying trouble markets stores. certainly, our as and got right those changes the want that, can't of As to pursue at though, uncertainty have the I that the we've is well of asset timing Since making and that guidance And and some number. we're having of open they last flare-ups far our talk on we permits is our our construct the obviously environment stores. some still And know that night. the there that getting to locations. models, providing to as why about when stores cases, looking which challenging has certainly get build getting on impacted people business. is last kinds We there question as It's I'm seen to course. certain a call, pandemic stores franchisees the be just to changed we've are in type the we're sites that build on

it And that our leads know disrupted then, last retail, pipeline. game rebuild takes was have time the all to we delays. some to build it. of All year, fact the that the pipeline And we in development in certainly, to

So where confident definitely commit back timeframe certain a beyond. can X% point to at mood of But we the and that. to to on get one going that confidence. we're a is Still not

question Next please.

Our next Morgan question Please John will come from go Stanley. ahead. Glass with

understanding had you've support level Specifically, what guess, platform a the Thanks I can for mean, Underneath morning. Good about Can you're I at franchisees? lot there digital doing I digital, the brand, is in all one? maybe to specifically just enterprise example, very much. that, loyalty ask you've are a success going that delivery, about be where by about the you or in talked to is are integrating pay, penetration. now like globally talk XXXX? of Thanks. than that franchisees integrating where common got digital in investments that, you your just an and enterprise just and across access the you've integrating Just to allows bigger mobile are even

investments. continue those the investments. increase part an is had digital. about pleased important investing We're A pandemic. we what a digital to $XX ahead cost finding in Chris. other is very billion we to Digital significant as our Really digital help sales This to the care year. supporting during point, such with us to we year. business. the that previous for we we're proud are, really to the in resilience has John. over We're just say good places very in And your on been long-term of to question. is that the Thanks, the And we said, And return fund manage earn those how

by to team And expectations consumer-facing brands very for the at be how be the to want right digital market. customer continue about e-commerce for one curated we're and thinking another. We the a may in and of The needs member-facing from have gets individual strategy. the each be so different market that and technologies

to those are we need those But times. ends replicate front don't to multiple your are tailored. point, platforms platforms underneath common So building that. common We

so a We've examples that. U.S. built around earlier now doing gave we're We internally of And KFC introduced mentioned platform. how in we that e-commerce an couple

time. is will Bell. that we a like the place on that. Similarly, of We those used platform KFC and markets, take other major for a first over POS that will to to Taco and Taco we ends U.S. front both then will in implement and it markets customized. be brands tailor other allow the where other we test market And then as the Bell we'll example that customize

a and it's platform of customer underneath. So blend focus

The Ivankoe next from Morgan. J.P. with Please come go will John question ahead.

the dine-in obviously you talk and or are assets. of very experience I you mean, and kind the of U.S. of more you of in within color. even you a much. you you kind significant Thank Hi. to some of of of that and There's sales that if countries I shifts consumption there have were maybe Europe, think but what cities around have both brands I world amount prepared for the lot just obviously have kind for post-vaccine. could that where this a stores back and about U.S. the on happen mean, your And a some Thanks I of scale? are maybe wave lot will if wonder that thoughts that specifically of significant any on discussion off-premise examples restaurant that? major are less post-pandemic

we're XX mean Look, last that and the off-premise, in at months how that obviously, pivoted as our has giving business doesn't in play at has we can changed go and up on Thanks, know to operating we're but the pleased business dine-in, forward. Yes. dine-in role over that a environment John. the we're all we

some regain and talked in been while able seen some done improvement to around about call I their it. think dine-in back it on have Yum! where of innovation to that technology they've yesterday China was, And it hasn't it help in sequential to they've business. their dine-in gotten

XXX different have in we brands story. of Every of is combinations So one them a different countries.

improving the and have dine-in we solutions seeing off-premise the dine-in you're that better we've situation. we of serve can gone of are ones forward think preparing will better. had what that business, with we were off-premise the and be for doing the part skew are And But been. a are this, have that As ones and has still a markets for reengaging people their lesser built than is it it going more developing the through more but that that assets it are

will Francfort from The next go Please come Greg of ahead. with Bank America. question

a proprietary what's stack to going the that lot to third-parties. question bit on Hey, just bring – a decision the front thanks for My in-house Can to like thinking to is a talk little now what right of level big the Thanks. more talk of question. little what and going seems it a about portion you of bit of on portions Can about stores the be how a technology advantage making high dynamic one. and forward? kind you a from are Yum! tech buy about franchise you're

Yes.

internally. ones bear. advantage ones where enabler provide So each general, tech to good competitive third-party or The support question, think about Others we on more have that we we we scale we a that are and focus control on of of ones the and And a role in vendors through build relationships bring that with it's are element think could of work that stack. hopefully commercial that where one we would to our advantage. want element

So clearly to we blend, aspects. ones where a those important each have said reevaluating a gave a business. But POS are proprietary examples to e-commerce examples platform strategically couple of ago we've so the moment couple constantly of it's of a that of and differentiated I need we're always on always and a as

Geiger The with will Please come ahead. next question go UBS. from Dennis

Thanks. Hope congratulations Good well, and morning. Tracy. you're to doing

given remainder specifically items Just stimulus benefits, really wondering the in guess brands, about across good I already pipeline for saw brands you the this if momentum you thinking through to U.S. new some the year of given that could year the talk XXXX a etc. the menu year about and end guess, this and more XXXX I broadly.

into opens to broader brands new kind industry of highlight this just any you. have Thank if the continued of Just how year? throughout curious momentum been that as you the may we about the care as thinking the go And year? you're

the in impact and was sales U.S. the from the during same-store Obviously, Yes. on for spot us all the collectively positive closures QX in bright the growth. year, course of both of despite

one really about Pizza they've made are. remaking moving excited off-premise, So their Hut's because more where progress on a I asset lot think the the we've the base, of brands about each talked in the digital. that to we're case,

One that the XX% but hands of repeating our we capitalized comments, were bears in previously. the poorly a things in Pizza the of mentioned operator Hut is, stores of

the system, a Taco that proven Now commodity the a going Hut. entering in with boost that's Pizza to Bell we Greg know world, provide Flynn to

just base think customers. meal had up lot exclude consumption SKU the consumer, lots move reasons the loyalty Pizza when Bell, new of lots XX% new numbers their so staggering excitement to through quarter decent getting off-premise family the less U.S., Taco pivot The It's of Hut's about that. a acquire time needs they've again, they of of enthusiastic building on and the done spent their a Pizza in increase programs loyalty amazing and of there's to quarter, with the to SKU, top they've So up of off-premise the job for embrace with I the and made. are you Hut this be They there. in quarter pretty an of and put a in through Express units. more a that,

for to a talk about to And the – the the really that we've the building with heard we lot of over about KFC, environment XX% that's we massive time we're the sandwiches then and the language, new as good how we've of XXXX And of think Bell. loyalty as sales lot the Sandwich entering of back them. will exciting launches our really Taco But you've one our potatoes, we a about, pleased a – as well excited this coming bodes get in obviously we'll that and in in the stores. future they've We've with news the how in but had, built the reasons stores they the product environment. in mix of in out rollout now. quarter. come world as year, program, and that that we increase our more been all it play in be bringing of some focused bucket this seen go it's Off-premise their on there's has So into we of brand Chicken talked to – KFC for about things of about their is increases

is the reason across U.S., cautious we there as to brand, remaining a the uncertain about as environment know. future. we Chris, be there are forward. But So very things in to of is every couple excited And we also a add? move all

of for the add I David Yes. trends started I'll we've on But a brands that pleased a little the of more given trends color elements little sales provide just year. all that how have the will to the bit been to try seen. context start mentioned. with We've year

was quarter, our specifically, in the first weeks So across same-store the brands, growth in of mid-teens. U.S. four we first, the aggregate few the all sales take in if

seen trends local the on Of COVID deceleration course, hours from appears owing waning. resurgences, the to impact that closures plus some restrictions the bolstered operating strength COVID U.S. the Internationally, the trends to restaurants. and been which of slight temporary to some restrictions, plus sales stimulus, be have in by was due QX a partly regional of softer. We've

total, If Year labs. COVID little think started. around all more back you plus how different for fair hopefully, in a but unpredictable. you the this many that of makes there got The of New impacts a you has markets is quarter uncertainty the globe gives moving, the that it and context quarter various step in bit We've bit about a Lunar

And why also The of of with be the a on but Grill. that brand to Burger forward that a to potential community right. we the There operations. of reasons our deployed, brand. off-premise, in going things can gotten for the scale this franchise slow about franchisees. from going We're is you exactly U.S., they've The it excited way technology the long-term meaningful Habit a I one seen that it's in lot XXXX. it last comment quality are poised of would such becoming We've the a make But that's sure interest in Habit regard pivoted of I the the on have is in environment, numbers a lot do short-term, that through of lot it's impact know excited think a Habit. we exciting their

The with go Tower Fargo. next Jon Please question will come Wells from ahead.

Great, thanks.

a in Just few one kind hopefully. of

are the what this in priority tech just million moved about I'm higher the in I talking U.S. the global past, internally about solutions drive-thru the the thinking CapEx of up think And the some to the tech step gross where past the than a at in e-commerce built. internally back a lastly, that with number $XX franchisor these the bit over menu up in to time built up the platform on then or of terms coming Is then roughly by least you're fall does the and you. spend? of other And attributed or you're so. initiatives, boards say, digital Thank Are for to thinking pay solutions going allow stack. franchisees? experience? modernization mostly

Great.

So and those. I've three tick questions, got through I'll

pandemic, prior on million first to So normal around CapEx, year. a CapEx yes, had in gross gross the we $XXX

have a large of the but we is got base there. One, And factors. there. $XXX so, equity now yes, we've It's store really as Habit The tick two part and the a by a still million, business there up driven

want be north the will proceeds, that. second, the in And pieces of investing least now digital obviously investments. development we stores to million of driven have smaller have at in acquisition so portfolio by And course, the The mentioned, We in refranchising with we And in Habit. we as Habit. more of $XX

that hopefully in the up explains number. that So tick slight gross

payback of investments. on terms Yes, time. investments return earning those in Second, a focus technology on over our is

gone also growth. business, those those those strengths And pandemic. aids drive-thru, important around sales it primary all us. franchisees, the by to might off-premise we we primary in experience technology that's menu on the to want we not earn through is digital our obviously, the then way returns focus that continue investments the investments. a leading making as and In unit drive-thru which include and net an through your cases, be growth to we our But the other market. an that in new customers. terrific it yes, supports higher we And our in However, we question enabling third easy in say to been it supports the technologies does way needed for which earn such in That's the shift And higher is right has we've which return markets, investment. and some virtually particular the invest brand experience that experience in in each In on markets. for sure right cases fast And boards. each continue of

one We please. have more question, time for

ISI. The go Please ahead. question from Palmer David Evercore next with will come

XXXX? might on regard that growth could on in think that about Difficulty] regard from be the Hut, that they insights par perhaps an business might you there. COVID improved if hands have the pause versus With overseas? of beyond mentioned business you giving of certain a franchisee with Thanks. there's opportunity of And into in you the brand brands that second COVID. Maybe under are Kevin you going of of the for long-term base, Difficulty], the rebuild you'll you rebuild through clearly, be? perspective, [Technical [Technical the you Hochman And going comment the also I how less you units half XXXX here. sales – fast that of you position think And How levels, I'm to terms how those internally But lift, can walk-in that's can of health the markets? squeeze back that thinking pipeline a terms part sure given in get shifted company innovation then two to Pizza to been and you'd has financial in to to wondering just

couple As as – up out of far a goes, you Hut broke broke David, Pizza times.

question. your I the of gist got I think

and and we forward in play and they're really and On a launch the important brand you're the with innovation on George Detroit-style an bringing to the his seeing for that's in role under are is reinvigorating progress the there. way the more to an amazing and in the Kevin pizza have but leadership, why that brand, with business innovation the marketing think pipeline U.S. the pleased that's team that Felix bringing recently. that you've We those spot a as think results brought job great Graves from consumers done David standpoint; of the resonating, with we're a really brand seen there do brand. the do way think, it that guys to And We I life. also

So we're confident life. in the to coming brand

for base we is brands the products serve. around the it or loves are about As more the that we've challenges asset talked always consumers' about, than the

it's dine-in skew cases side, the dine-in. now that innovative Even to international the many with to different dine-in seeing off-premise. shift asset the solutions experience. better more coming And on in a they in On in technology stores you're but themselves base offering assets toward story. shape, are leverage up obviously the The delivery, are

domestically both usually our well think on But delivery is of And to internationally and get at building to for high be And carry-out that stores. base build have returns, continue. attractive the yes, the and domestically. of pandemic a franchisees. the side and model people bodes the at past I economics international that brand to return Hut the asset helped of future will is a will unit we internationally very the very So base it we we model gets that the that Pizza low-cost unit when and

remarks. concludes for This Gibbs session. Mr. I Please over our conference turn would David the back like closing question-and-answer to ahead. to any go

year across thanks Obviously, have wouldn't end made many challenging about on everybody today. summary, really was XXXX every XXXX. just the note. the of time we've so we dimension. we in feel challenges But good ways, progress massive for I'll progress your almost without high in made Well, a a

QX, ended restaurants. the up we pick in it with XX,XXX in our KFC the didn't release, XX,XXXth opened you If year

there in in took ago as X% our proud end the getting I kind And unit brand year importantly our that look which It's our biggest over culture period the And year talent future. have. was factor new the the and less growing. Even partnered excitement Thank XXXX, you five with the customers this just the pivot was in as of so surface well and enthusiasm clearly the scratched about of five was though, us. of – growth and times, lot years the is KFC. net a and emerged restaurants. than KFC communities, of back we a XXXX We've our and opened Probably for to of you our the of in we world X,XXX franchisees employees we stronger, a together of our of world only most growth XXXX XX,XXX toughest had way it bodes is for If your care penetrating brand. a growth. still and through at successfully had business differentiating ahead have around time. unit

for concluded. attending now conference Thank today's The has presentation. you

now disconnect. may You