Yum! Brands (YUM) 1 Nov 232023 Q3 Earnings call transcript

Hello, all, and welcome to Yum! Brands, Inc.

Third Quarter 2023 Earnings Call. My name is Lydia, and I'll be your operator today. [Operator Instructions] I'll now hand you over to your host, Matt Morris, Head of Investor Relations. Please go ahead.

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

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

be note get and forward-looking includes events forward-looking this we of materially made and conjunction considered All could only in that cause are should Before as results that to the call from to statements. are that in the differ release with SEC. subject included in call date the earnings statements please this started, future uncertainties statements statements the our factors cautionary actual these our with filings and of our risk

sections definitions filings find currency. today's sales metrics that addition, operating SEC to call, reconciliations the and used foreign of note system our the impact measures In to on and refer please and disclosures, with during of all non-GAAP our profit exclude of financial earnings call. Please other growth results and today's relevant growth release

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

We be is for and this recorded also This will are website. call being conference call via broadcasting playback. available our

earnings quarter ahead, our on same with February X conference be Looking fourth call will released the day. the on

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

Thank morning, you, good and Matt, everyone.

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expect Finally, ex-special rate at our XX%. we year to approximately full tax land

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to path double-digit a for on growth achieving year. clear are full operating core the We profit

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from Baird. Our Tarantino Instructions] [Operator comes David question today first of

backdrop in of question on the as my bit broader we've U.S. and the signs that places is the markets maybe if is you're spending more China. seeing, your and that just wondering consumer a seen seeing. environment major could what some exiting quarter getting the you're you I some David, guess, like I'm in on third challenging comment

what's address So you're talk your if about changing opine could you and in if the just on wondering that. happening anything, consumer strategy with what, also to

fifth I on Yes. Thanks, of globally. double-digit picked by you this I guess, start David. quarter haven't it, if saying, up consecutive growth our would is sales system

momentum business, when So and trading is And think good share our that also we're in QX. momentum it's I'll the you what seeing consumer that QX. environment a into us for and into continuing about obviously, that, continued pretty

that every for having consumers now rate example, market. of around pressuring about part pressures way managing there's through talked the we've The But got So some is challenges. certainly, faced the challenges that's in U.K., variable their that them. consumer mortgages with you And of lot China we're a world. the of

customers a at even they've using environment. quality which model to to our value Juan our the efficiency provide is our and a consumer product to a with of year a really have developed put place local in U.K. In Caribbean, just stores America to in in has U.K. day So of us Carlos the the really of improves that down I resonating midst good program which our commissary, GBP Colombia looking in was and visiting team great market of Latin allow having franchisee a new more consumers for the Serrano, stores with in in Chile, a that X.XX, the and they're twister strong pressured

of that lot people's there think, a but you far those It's documented our the do is most minds out U.S. I has on industry a is I there, on any if are is So than better the job most U.S. industries, pressures. by pressures at franchisees, going the due. know loan but in of industry-specific what's of well navigating certainly, data. student more certainly, industry on look softened coming little a doing our than there And consumers, pressure the payments bit, what's better

is majority Bell For us, because the of favorable the profits though, U.S. more much is sales a and our situation Taco in the U.S.

You Taco Taco results of in you'll But up quarter. the know we saw the we and I Bell remarks, U.S. see X- levels. the great transaction sales the basis, put a wasn't the for On in it really Bell down this this QX. and in X-year growth we in accelerated all prepared to United across X% income States income X% if demographic, interest, consistent stores by really find break importantly,

just trade like stores high-income transaction growth, trade good well in are our stores lower-income our performing in with areas. areas So

benefiting play that value some things think also, probably trade the Taco to those consumer little we're in income and pressured $X bit speaks I like can a environment, the areas. down with from how trade higher way a in Bell Box

thrive we're demonstrating think, demand once on obviously and is of So biased, are any strong again, can putting we consumer We're seeing up environment. I results. our the but plenty in lens we,

of question next from comes JPMorgan. John Our Ivankoe

for services kind in system doing of over Can our not the geared talk service to And maybe franchisees profitable course, you well. that, of And your earn Obviously, years, more developed stores I can as are of of think really continuing, you technology I less. more context longer we, about much actually to be in you which making should this something talk easier to a that owned as for percentage Yum! for models, the term, technology provider the future. the franchisees? sales technology as it rollouts continue start mean, and, will about programs of provider? like Yum! franchise run certainly, are proprietary and And new you're imagine platforms,

roughly Yum! just be in $XX XXXX. strategy, tremendous in sales our tremendous in we in close reengineered to John, everything dollars. XXXX, look, were sales We And launched the year, about $XX technology those has which growth. this We'll digital results XXXX, at billion digital system. in billion we like driven

sustain checks, customers, all franchisees sales more efficient higher terms strong unit transition of which the benefits Our in to help we have digital, whenever they operations, higher we frequency economics. plus get of our

is primary And the what to capabilities profitable give with to of growth leading-edge doing. priority franchisees. for That's franchisees Yum! focus our all on our economics. of So we're drive tech that course, our is focused and advantaged top there

Now we of have that. ahead invested

I December in years, last shifted Investor Day that and think technology. XX toward the shared at of we G&A X the over digital we've incremental an points

that. technologies. the of fees So fast do see we to and tied in investments. made to implement, do this we've form We've continued you implementations pace to investments as those of continuing But those accelerate, franchisees share in

course, flow are line. The business their on technologies they see these benefits strong. case to that because they do Of bottom

be provide technology but playing collect We're some and P&L. dynamic burden As of that in we to alleviate not more fees, those of investments. one that will we the that the forecasts will how P&L see the out, on more of going

today Evercore Palmer from question next of ISI. The comes David

question, mentioned where you relaunch. you a primary the margins. And new and some lifts in also areas perhaps As on biggest what beyond of be about, help a Taco technology have and franchisee I hub maybe or a see Bell, to biggest maybe loyalty wonder follow-up could you just to quantify you I think comps feeling a the from that you from think that, a give here will perhaps XXXX talked we'll

lunch agree in think a great In You if be degree to position I an be accelerating hopper. to would perhaps of 'XX. area there's about people talked think to would in then for that and that wanted past, other that, biggest lot in were gain being And loyalty, that? the an what perhaps a but with you would reasons brand, Do some the the share happen, in. mentioned things that that? you win you

Taco little wanted just So about bit to I a Bell. discuss

Yes.

and start, then we'll Taco Let me technology to share some shift thoughts to Bell. on over

I business. the broader broader But program, we're digital those progress. like feel said, mentioned, I digital digital of about still we've in innings as the as continue the as dollars impact on tremendous to getting everything maximum strategy. like we sales So we made also grow technology the early out of We've

benefits, goes easy we as we there'll in it more make just labor the the those stores. help our operations, days easy able be of a their implement more course, in multiplicative customers our team time jobs elements you and of focus example, these as really think still together, productivity, and took, together. If of across easier effect I productivity advantage more bring insights, those stores, experiences, more their franchisees common productivity bringing you're of And drive more and of together early benefits. easy in take all to technologies elements helping of Of on the of we're for these members

as of orders easier, AI you the at workload bring to of fulfillment, start the rework on which voice works back sales on and higher which end on we as payments, to burden we the take makes taking accuracy reduces taking So front Poseidon running higher the the which order get we layer POS continue things automated house. And that automation taking the which of and drive-thru, POS. with fizz reduces in mentioned terms some earlier, Poseidon then drink you digital

vision with for got a you're the You really for productivity really you've experience future that where great delivering a high franchisees. customer to see start the

focus the to brands XX% and build Loyalty, area. go program. our across is expect Taco mentioned north build. If of key a we our way Bell, the around our programs KFC We've in and the been loyalty to at the now this of this Middle loyalty all on we part to we to East. grow. and continue broadly, continuing is We've continue stores coming refine of more to U.S. year, on you program, implemented later is So of globe work. that a loyalty as

refine in time And the to that Bell. which mentioned program bringing the from first early starting to XXX, time. really is Taco program generated U.S. insights You are that together They the our of the implemented we've the we're they've days across R.E.D now brands leverage insights the over

Bell is broadly, think points use Taco lunch. a strategy, We growth. More on big a there's opportunity of massive So occasions as or that mentioned, the will be you a at focus. category driver entry

breakfast. We on focus continue to

You've probably events. sporting during seen the ads recently

of all ahead Bell. Taco part bright of future those the are for So

next Charles question TD Andrew Cowen. Our of comes from

Great.

the Cantina encouraging and today. XQ. to noted success driving Obviously, that was more U.S. was you XXXX. Another you consumer elaborate start XXXX, item I commentary XQ very could Taco on in the in about is this value upscale performance menu recall Bell guys hoping compared of increasingly seeking but I coming question. Menu

versus the So launched a the decade can better one the difference you menu help upcoming us ago? between understand

the Cantina think Cantina Cantina industry launching evolve exact Sure. chicken or that Menu to is Taco us can parallel incredibly the wouldn't This past the is of Look, terms our does consumer I chicken a version Bell well constantly thing chicken. different and I in draw an Menu. one in the protein more space. change do and what about of for

reasons XXXX. to of Bell have. But they in can Taco team's So about about lots I think what the be excited there's is doing the impact excited

loyalty. As established that we've can going now from all data; we to the can if in last business tech do obviously on the a those you Tuesday, the that with leverage we're momentum what and Taco mentioned look that breakfast; I somewhat glean getting continuing. Chris at the is mentioned, trends that forward; can that are we we're going from the the roll, The in the impact results insights way have, quarter,

have Bell. Sean Taco next taking you've actual if team over, back great as Bell. is so I a seen talent And And place. gets But and a that the at for be the of got lot much to we up Tresvant he's a strong great right things that proprietary line of for excited the obviously, share going XXXX detailed to I'm, as well not you'd Taco stuff. am. plans year, for in

from The next of Sandler. Brian Mullan question Piper comes

as Taco case do there, would level international get can China, that the you you Related opportunity specifically, you what Day X,XXX talk think can. to for this a your comment could I'll just to is business. to quickly over be a Investor to if year, openings one to get of perspective? And great annual kind as from locations year, thinking. look optimism current next that, hear just you maybe Bell you about, of on At in one to then your gross the specific Another the but we as shared out the last goal

we an not don't are hour so set quarter you Obviously, up development the Bell around as unit overall Yes. Yum! we're that. development International a record this new the of And growth targets, We can for on Taco opening part brand-by-brand quarter. this But waver from is from see every exciting development and equation that ambitious, other incredibly world. provide going goals a to know you our

you're of various back differentiated and benefits that to time as a adopters early expansion. But with the a brand global Taco can in aggressive reaping brand have world, a franchisee got just going to now other As be quicker ups when the the he's markets you markets I a take -- top. you're much Spain, great any far even our an that's Spain, like in the Bell traditionally way amazing brand, going take to going the off, that very building to taking the to some than spent markets. the downs, And Taco they're U.S. been yes, where and And U.S. around some to a path in time other not a I There's moat done one be from around and pause. it's markets all an creating Bell got the from trip scale business of job of see,

in meaningful brand to way, the our about we opportunity we're the our in the we're long-term So going that the go, we establish I the Taco Bell right for everywhere U.K. But build takes world. think in we're brand very it Spain growth take time like be driver helping the whatever make can aggregate, way equation to its success. did and long ensures term. think in franchisees that We a sure a that excited around

comes question next Citi. from of Our Tower Jon

Great.

curious David happen you could over light on think year. ruling. time what set employer P&L. it relationship potential what might or Chris, the and Just effect the on are, perhaps some own you shed of to franchisee, whether could how on go into go not does between in thoughts or your curious, to U.S. It's this impacts either And joint with effect the know XX/XX and recent impact your into franchisor it NLRB

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today Our of UBS. is next question from Geiger Dennis

you in little go teams years KFC have Pizza solid could think the to U.S. a wondering Hut are gains the the But if where of and you from frame the within the how given right positioned both they work in brands now and done. up can if just some could you've comment over about the opportunities how U.S., their the bit Wondering respective more on general highlighted. that categories in

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more one we Operator, time have question. for

Harbour Our final today question of Morgan from Stanley. comes Brian

party performance, I third Pizza know by the carryout to significant kind delivery is then U.S. and going do was that well. you? And if what explains And year? disparities but year, channel market, a growing Hut that I on in you I that of grow -- comments -- some could next also as still there's can next versus on And kind And is a faster. any it's think that? of do you now a say about of competition to right for if ask you which same-store the provide basis how will into be think think fair is U.S. quite growing

sales. Hut Yes, Pizza and obviously, can we will believe grow

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results take I think grow way going like continue have of to the up our our franchisee market plans adds that share, been you never And and thought term to up long forward businesses all partnerships put to what I were saw better. incredibly the inspiring for this right quarter.

to everybody, incredibly next about about call for Thanks, talking about We for your we're on So to a look excited the XXXX. the you today. forward detail little plans future. bit time more

today's Thank you call. concludes joining. This for

lines. You may now your disconnect