YUM - Earnings call transcript Q2 2020

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Operator

Good day, and welcome to the Yum! Brands, Inc.

Second Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today’s event is being recorded. to Investor conference Relations, like Siegner, to now President, Vice M&A would turn over the Keith I and Treasurer. ahead. go Please

Keith Siegner

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

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

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

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

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

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

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

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

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

following: will included our be that being be at recorded question, a group website. our We'd for if We in of make the structure to also you live will in the and Form is to disclosures playback. call events Yum! ask upcoming investor are available broadcasting via recording. aware conference and provided and any both be call this will in capital conference of debt advised our use be you restricted of XX-Q First, filing. the Please This it the pertaining future like outstanding time

Second, with the the call third XX, same quarter on October on will released earnings XXXX, be conference day.

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

David Gibbs

and our Keith, thanking in challenges remarkable of franchisees team to members and morning, want incredible the with contact start delicious, manner. have the to you, by everyone. customers bringing and Thank adapted I agility low affordable food employees, good around our globe. They recognizing to XXXX a restaurant

generate in result, we As well to the leverage sales system to capabilities customer are a environment. new growth scale profitable positioned and our

our a recipes On resilient, company model, we the good foundation of are highly stronger to and growth emerge stakeholders. our all diversified for business for driving

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

healthy a the our and liquidity our of unmatched capability with So driver of use I'll review quarter position. development power second distinctive, will an and start relevant, examples & our and our the bold Culture to illustrate more details Chris growth RED, share drivers. easy brands operating Talent restaurant Then Unrivaled and QX of results, growth overall few or

reopening of filing consistent by on as peaked X% of on First, XX closures, were XX% temporary as a primarily experienced impacted in units our XX% of quarter sales our well operating until our then when early April restaurants. We driven COVID-XX, our Overall, timing, on June impact well XX% airports the offset and primary which same-store limited sales have The our which units, severity of have decline. dependent full X,XXX of sales pace dine-in market. and the the closures duration encouraged speaking, at the of sales true X-K about our store than QX in Overall, roughly We're the now the or the system the remaining customer our decline, outbreak dispersed the importance core in a executing about our closed declines open, declined highlighting to of our with X,XXX XX% fallen approximately in system our that, units capacity. reliance results, I'm global market's XX,XXX with driver by profit sales The by stores in been and Yum! are was significantly less a net year-over-year. when of XX% that increase dining in for trust close. centers, means or business the share around is even stores closed, are balls, high. resilience remained though to off-premise rooms remained generally and demand the XX% and system model. like. business majority globe excited of are located This is open occasion transportation demonstrating each our

We aggregator on have Our delivery year. to in and even have marketing offering carryout digitally XX% and operations, brands delivery are RED we representing the more becoming part focus now by in our leveraging consumer With partnerships. restaurants by this tremendous milestones driven XX,XXX some off-premise by expanded passed options year-over-year, insights around digital, menu capabilities a across world, globe. adjust the over enabled increase

into Our sales mix digital sales XXXX. step-up billion $X.X year-over-year context, approximately billion, during To XX-point XX% digital of $X improvement. increased sales, put has system over were the to dramatically QX a from a that quarter,

agility Yum! growth a X That's our our with have concert segue perfect will and near Central long unlock the team, in over remarkable term. RED brands. shown technology to to working continue and brands, sales Our

reopens. trends unit April QX quarter troughs, KFC net closures; with peaked as a growth. stores about closed; and to declined started line mid-April store a by Division the QX XX% reopen, Encouragingly, sales XX% restaurants system was the in temporarily with in with decline early with opened. fairly start X,XXX Let's effort from KFC sales with rate of X% same-store offset improved X,XXX results. new XX% of massive about partially following ended

after the market. given strength saw government-mandated Germany and capability eased, Canada, in Our a performance U.K. the closures resiliency linked consistent we saw And primarily is We within in in open Australia. and stores off-premise to U.S.

closed for hit that particular, Western All team fulfilling and the aggregators addition and lockdown. The of took local table. markets good bundled brand's the The our serving meals U.S., a in have which fantastic restaurants coverage, travel during and per bodies at and occasion customers quarter. sales all and while quarter. KFC digital in France, due and of that bucket and for to drive-thru time, home on, families' the where members reopening among We well with first QSRs safe reopen. channels in markets right May, government needs early around been working of right the keep In these the the the recorded we average week off-premise timing have hard growth the were pickup to in with was teams led a store the our action delivery, capabilities delicious new history strong unpack early finished dinner our X% to KFC is ensure launch all way Europe, kfc.com sales to take the we robust contributed to to meals for of same-store foundations. highest

remaining XX% X,XXX same-store In malls sales half Hut, in Pizza Express impacted temporarily diamond growth significant general, with about restrictions. representing temporary with Huts sales decline about decline. with stores to the then or with entered sales reported closed Pizza most due have have closures. on stores By the Moving X% and of in transport XX% the U.S. with system a end Pizza the were closures. unit of in with of X,XXX Express restaurants closed. to the new QX, X% that of COVID-XX open, same-store a a trending restaurants markets quarter Hut closures hubs have operate pandemic, net units over or decline mid-April Pizza by been line QX and Closures a government Hut segment temporarily division peaked

and approximately been net has partly at demand, the peaked in in by XX% April. headwind. International, a increases Hut effect the offset temporary delivery been closures has globally At Pizza impact While carryout

the Pizza Big the the Hut second I'm U.S., X large X X% innovation to such introduced U.S. deal Canada, dine-in including footprints. and recorded we quarter, of and in same-store grew U.K., topping off-premise positive include and In $X.XX in as carryout At was delivery Europe week average and the and and past total internationally. markets May, balanced markets, sales Japan the markets Asia. the Express America, this a by aggregate, in growth of and products positive early premium Those generated XX% we Same-store with highest East as value much sales Central for Australia, Dipper XX% and with markets and certain Big closed its Dinner years. offset sales the substantial select results, Importantly, though quarter represented sales share the Middle in that excited Box. the channels and

growth when including stores Our closed units. when growth excluding off-premise drag the of closed or sales channel Express generated drag of the XX% sales XX% same-store same-store Express

faster Bell During Taco through Taco up the easy of X%, with Bell, additional at-home De pick mid-April. initiative always to end At the QX, at Locos groups. XXX app and new record-breaking and reengaged party now our as been company the customers. contactless sales to an Bell net of such Rewards X.X million at contactless marketing world-class our declined the Bell with awareness million X% units dining new Since sales Bell and they offset adjust were promote orders. Bell widespread on for drive giving to our sales an packs thanked decline, on bar, our pickup also a March X% drive-thru bundles, customers world-class offerings and reopened to are payment quarter, heroes of options drive-thruns has welcomed our destination coupled the fans, to as time our pivoted end and doubled additional about RED. several operations Mayo had down through Hut launched boxes growth. to peaked further served tacos. access. of for Taco Taco established program. year-over-year. closures and group for Bell temporary Bell free XXX abundant open. And by same-store XX by U.S., Cinco an we by And served and our achieving Taco Taco and We franchise by communities customers XXXX, brand and while driven part our million At adding on partners cars redefining Taco closures, to delivery digital system the XX% unit away XX-second QX has Taco and all-new close easy this order units drive-thru, by value loyalty of Taco Pizza By drive-thru contactless Hut ability We've as which room and an cravings, Dorito partially we supported

users are new for operational on our active million franchisees, During in e-commerce driving improvements the increased an through to and X quarter, making have we and made extremely it our app mobile delivery and growth we and profitable These of platforms tacobell.com. operators added our for proud over our impact focus happen. digital

about Following details brand, Grill. an eventful I'm pleased our the as share quarter Habit to Burger full newest first

mostly With mid-March. With sales over COVID-XX the closures, cap massive quickly ended open Habit's around negative. assets decline, focus were throughout approximately the Impressively, line lows, end habit's dine-in running Habit closures as just are impacted the from QX of shifting to headwind. sales we the April from or half with quarter, majority a significantly XX% of They same-store in slightly temporary coming they trends by sales due of for in closing the being on flat typically Habit stores an and recent units, off-premise. things temporary sales and at the XX% acquisition to to turned faced

options via the of sales variety increase for the meal awareness of access month the year, entire built the new Digital between sharing made will growth for confident business. Habit to new a And None during on place team have as brand, ordering app incredibly each During $XX. with of Habit our focus of that meal seen family could the The spend that feed us the a importantly, the to I'd XX% quarter. resilience the we represented in steady and downloads. a the such the kiosk only but state imagined been how brands. agility a this marketing number QX acquire like team customer Yum!. we of the and impressed I'm the and current and this Habit, of play taking can the quarter, to have would on Habit out of more moment shifted bundles family mobile and know-how I've decision than legacy long-term ever opportunity now the when brand create

are by uncertainty outlook its course, each remains as we to uncertainty, global about implications, in vigilant. remain evidenced general the and base own sheet. encouraged Due our continued this our liquidity combinations. of we and macro to COVID-XX of brand/country the said, we health Of our and must That strong see store balance different franchisee in XXX trends our there incredible the global financial owing re-openings,

a as open And same-store for of July. importantly, room just in closed, dining short June, few majority the Just flat. sales despite stores trends of continued stabilized trends have these into points still being our

opportunity over our announced entrepreneurship inclusion, second restaurant million we and opportunity will food, promote know serve with our life. safe, on earlier Finally, it Recipe of $XXX planet. is I as over welcoming unlocking revealed our and our look to this citizenship of inclusive reality for and Recipe us our $XX which communities we million of X people and we global map Those as With But with and going turn this for familiar commitment tragedies Chris. years, June, providing Yum! built recent unacceptable must and was shown dark funded elevated updates serve have three bring further the world environment around That customers across on and recipe of and equity Yum's always for initiative, Good you we do people-first next that, unlocking we for the the to it initiative frontline for as and year, on to the road end, of forward the the I'll cornerstone end sustainability. forward. that pillars in our strategy progress the to Good key company will and have a for This U.S. employees, teams education ensuring to To have quarter. our more. employees. at committed that been a the

Chris Turner

begin, bold I'll Thank Yum!, the model. the of results. I competitively appreciation with sheet highly my our and me and for an COVID-XX have restaurant and second generated balance globe resilience to even to has our Yum!'s That, delivery, you, David, presented and the innovation greater and a combined It industry give our liquidity and digital results, quarter strides discuss focus and like appreciation since has I'd was, now will for stakeholders. good confidence attractive of entire restaurant our joined and QX. express remain me first, who and But everyone. generating Today, Yum! that around returns strong year given morning, unique and power operations, for execution rose development and tremendous position. in discuss superior the the diversified been is To a business the high-growth occasion team company let's members challenges all to

increase As year-over-year. was The a brand declined X% profit overall David versus This approximately most the by closures, sales partially net unit in company during and decline, mentioned, part same-store core partly impacted lower XX%. operating declined quarter, debt system year, restaurant driven FX, XX% a XX% same-store driven growth. sales in by offset large higher sales Yum! and to where due KFC, expense decreased operating by temporary margin, prior bad lower X% offset was new net excluding margins, units by

higher expenses and COVID-related Habit, from by P&E, were expense $XXX value balance, our as related The increase pretax approximately revolver change special which onetime million prior over interest $X.XX items, efficiency second expenses, FX flat driven debt other quarter. the resulted income investment recorded debt. benefit general were onetime million, on quarter EPS XXXX excluding Interest in reduced to to Excluding a lower a by the approximately and was year, of administrative We and XX% rates actions in the offset of balances, including rate investment in Grubhub, in outstanding $XX offset partially floating fair by our our second savings.

our impacted $X.XX. benefit million As a second favorably the $X.XX investment for $XX year-over-year investments EPS by quarter to income we recorded of EPS, XXXX growth pretax of in Grubhub

driven was excluding rate EPS, special Our up, to quarter quarter, the was benefits XX.X% This the of share-based compared a Adding items, decrease this XX% EPS special second the ex from from effective represented compensation. tax in by prior XXXX. decline a XX. during of $X. tax $X.XX year,

On by growth second new growth X% quarter delivered we the benefited bold the This the of net the had addition of half stellar unit XXXX. development restaurants this second of in XXX the restaurant year and front, was Habit over we XXXX. of unit in QX

year-over-year lower-than-normal uncertainties somewhat restaurants and recent quarter the COVID-XX unit XXX the quarter, XXX, should X%. closed These openings and unit growth to Thailand. long-term Russia drove run Asia, unit confident with for remain put context, growth outlook To we level by in led in uncertainties closures the rate abate U.S., to led impact backed time, our combination, opened into net During we to X% in gross net compared strong which, by and and and China, higher-than-normal economics. the openings of

the majority we to of and unique the Next, impacts few some closed. economic each may and the restaurants temporarily these and of already to COVID-XX to closing due areas hard our world possible, recoveries restaurants we to have it's those predict. have pandemic restaurants partially of closed up reopened, end vast Therefore, monitor while remain that are where permanently. country continue temporarily

too is As to with of forecast now, early accuracy. outcome it that

partner acquire cannot to a new operate assist having and to distress, due with As franchise grace restaurants. to capital is we so have operate royalty pandemic. preference months, are deferrals or primary XC over the we've their highlighted franchise franchisees. and our franchisee helping doing few continue for the supporting been in include deep during which partners our financial periods, The past successful our a tools existing Where obligation largely

the pandemic. health supporting the well majority resilience franchisee of crisis franchisees positioned vast for encouraged ensuring our during with system. our growth. the global strong course from are highlighted the David mentioned, the Partnering pandemic the by good base of the is we emerge future general As a them through of have expected been of to The and importance and

system short-term strength. shifts our into crisis our committee from health ensure enhance recently our focus long-term health management to our As maintain to growth, long-term to financial visibility global is the of working our formed franchisees franchisee and

as and As owned expected overall restaurants Hut NPC it a of NPC, one in this relates was Pizza Pizza view future we the it by filing XX better Hut development, therefore, U.S. U.S. opportunity of to for franchisees, and to Chapter our an the create system an the

continue, to in sales the profitability and proceedings the temporary quarter was a to well some the first Hut, more sustainable as and This to As resolve due closures, require can lower, that focus bad a QX, franchise but of partially store debt $XX as franchisees, as with others expense XXXX, related quarter. financial to that briefings investment higher the debt The that parties and results rebounded we figure. an by that royalties, Ultimately, below by the bad issues we unit an KFC related International incremental in on greater debt U.S. NPC debt, will a be the will strongly to was our encountered million, expect $XX and million level recoveries due court system. of attributable the rulings. rent operational provide there increase in excellence of of and support outcome hardships restaurants during directly level In U.S. will largely to NPC we second in for quarter NPC. compared level in services we Pizza other certain bad and expense related increase significant offset well to related was

with quarter. encouraged improvement second in the the We shown are

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

$X.X First, of restricted slightly EBITDA, we of of target ended X This and with times is historical above approximately cash leverage billion, net which QX represented times. cash. equivalents cash excluding our X.X consolidated

considered at our believe during with we alongside this million end began QX. at off drawn this the draw dividend at compared quarter, demonstrate the When confidence only end should paying the quarter's with our million in of drawn time. revolver $XXX we during declared we $X.XX Importantly, have we QX, to liquidity $XXX clearly the position

remainder in shareholders priorities capital maintain via a a invest competitive remain return and Second, balance unchanged: the repurchases. business, pay our to cash excess dividend sheet, flows healthy

we and Regarding grow drawdown into our X of times our target a over commitment back sheet, to plan consolidated continue our net time. revolver repayment to healthy to historical leverage balance

billion share may ending business sheet, achieving confidence are time line gain the We persist for should healthy to I we resume repurchase repurchases outlined. in we $X a the Third, just trends suspension should and of as program. continue balance our

runs shares As our a summary, through reminder, authorization, current we've under middle future of XXXX. is the In which not repurchased any Yum!'s bright.

has capability brands purpose-built in sales sales and We we dining trend model the direction the for to continue as right experience confident proven in and accelerated are off-premise customers business around has digital Our overall globe. reopen. our resilient, remain to growth modern our a delivering

is quarters. and for too near-term, to uncertainties the make to which Just as as That investments as acceleration digital future. important to drive value still the coming frame we to options. for appreciate units continued building payment growth, for strong benefits an investment enhanced sales profitable we off-premise is contactless enhanced growth forward remain confidence. to franchisees, discussing by forecast early ordering and create these Therefore, accelerate your access such growth look are when understanding we for capabilities, as scale and stakeholders progress well-positioned said, By our reassert believe for system guidance. in in to We our time specific it numerous difficult and all in especially believe drive-thru leveraging long-term such with new ever, and case the the lingering

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

Operator

you. Thank

from question John begin [Operator first question-and-answer session. will Glass Stanley. today now We Morgan of the The Instructions] comes

John Glass

the think matters to Thanks terms help to philosophy the know to What growth you in independents? in markets? that, share do to on markets? What I can comments going of them they about a give opportunity to specific the rekindle of by ahead smaller various Chris, that where give enthusiasm? these guidance, Are – capital Is comment it in certain market, chain's very relative not by you're of certain are going you allocation markets resuming back early development. growth just brand. change some it too How talk much. willing I about know conversations about with your but the about franchisees? the in

Chris Turner

the John. in an question, and algorithm. our part back we'll are that. strong. you near-term, about on given sure unit Good conversation, the this We've of an certain the depends when are think been actually the if we But And factors we're uncertainty remain are Yeah. Obviously, development story. not be get globe. long-term, important where where around really it we growing to Obviously, has markets part you got think our network sales important the confident in Yum!'s driving that that it will of

have our focused. are brands proven Our their forward franchisees resilience, and

And year. focused night You we've Those got franchisees where the the of COVID. for operations their at sales or by are and basic markets some we spectrum other -- other units China are where more impacted got reaffirm last heard right now. then the still just Yum! on end closures

But our going be So the restaurants you general, for stronger in around the are on really the investment believe we where forward. discussions depend case globe. will even

estate real proven We should have brands favorable believe be more resiliency. going forward. Our costs

for footprints allow Our obviously to pivot and off-premise, our that to digital optimizing environment. us at be capabilities we'll looking

the feel about good So investment we case. really

David Gibbs

And is not franchisees bit remarks, this do wavering asset-light and little they been to prepared to been the to pleased corporate we've we been model gone have open that. a Habit building with data to Taco do And time. development. Our of franchising but We'll through the your has though, as over the resiliency it are stores. do how we've said, continue business, Habit, question, that of for up slowly stores. Within from a to model, that we continue right? really the our we about point John, building that then To going look, couple equity of that, Bells, we're talked in and

term. over So there company and will in the stores mostly Taco be investment near Bells Habit

Keith Siegner

Next please question,

Operator

The next question America. of Please Bank Gregory of go from ahead. comes Francfort

Gregory Francfort

for the question. thanks Hey,

could invest little touched bit some willingness, I just the maybe And I guess Is is of a something back considering? table in there. the to maybe some situation. somewhat off comes and that the will you Thanks. Yum!'s And that You at put accelerate be guess, this in of NPC that the capital some on these something guess, point? question I franchisees. asset to changes Yum!'s Or if

Chris Turner

Again, in just business, but this to of the comment capable made. plenty not expect a We're there's of coming our comment the never possibility, We to back how than and specifically model. franchisee into situation, different it resilient around we're about process. in getting of the interest any And to of asset-light our that Yes. in going have out we're is. to There's out businesses be rule NPC the hands very to but other the say working productively. lots investors we all as seen I committed world interest of business

Keith Siegner

Thank you.

question, Next please.

Operator

of Senatore Sara from Bernstein. comes ahead. question next Please The go

Sara Senatore

of chains people how the extent you taken think that pandemic. in is give the eat what was Pizza to retaining and maybe Your in when dining about that as rooms x a Hut talk out, seen Pizza happens historically, comping maybe interested that you you've better. dine-in how you'd consistent back? Both in Certainly, business we've behavior comps, go They of do particular. led able have off-premise How and And who the that dynamics two which to characterize specifically KFC and just we've I I'm in think if that, many is you over think you seen other closures Hut, from again? time. of think, of Thank you. you then do Can large actually some repeats strength, during with long keep pizza think, the XX%, the few them it about are what are some I if much – I could open. changes quarters. the will, I you Hut market pretty also talk Pizza the about share, consumer would I wondering beneficiaries,

on how So over capitalize you things? do I Or term? Thanks. these guess, can long you the

Chris Turner

that the it's Meal Great A KFC And for encouraged times. one the the these in our question, the gains feedback is Hut being to solutions, great our things the Family of customer But hold during really the they satisfaction made. fact brands – of gains Sara. are have that we've from drawn Customers on intent positive we're and I'm been and incredibly our new obviously which to is are our that brands surveys. customers these offer that right times. to all at lot Pizza getting about of that

So those given should together hold like and customers, to of what be the that normal obviously, now. experiences two that able will says to great months six very new they're on It's from coupled having new some the hard, things the to these look predict we world

on that most we'll little that how happens lot think country impact the gain but when as -- our we've and of I needs degree see we conclude the the you gotten data certain the not a bit customers in to business, can like certain to and about do nimble an that dining-in we're lead at retailers, here. all a of their -- to markets. we in customers We And to or up how parts gains how to will return give meet of other that how know, businesses demonstrated resilient pivot change. we're our proud we've are we what looking

in it terms bright paints a for it's of So, pretty what future. the picture

Keith Siegner

please. question next Operator, Thanks.

Operator

next Ivankoe from comes go Please JPMorgan. The question ahead. of John

John Ivankoe

obviously, you and I very release, Thank apologies, through went Hi. the quickly.

in relationship business of U.S. been reported. a a And the of some margins obviously store out what store provide year-over-year? did lot how First, your sustainable? Can And this company in of Thank I on comp And actually then dollars that jump terms if you delivery comment benefit that Can margin some what grow of if of -- there's new Bell you'd considering third-party potential to you. guess, is the there and might you page, may, way? of color or, Taco I in ability a guys in the the you first if that specifically some the around disruption is impact off happened? in the your news coming on to, question. kind secondly, business the Taco And really Bell terms in world, changes delivery. out is like like margin

Chris Turner

Yes. questions. Thanks, John. Good

was Taco is the Taco that Bell outstanding obviously, store business yes, for And similar around resilient model I'd I by say, seen main our takeaway brands that's margins, shows that Bell. some us the and takeaway to XX.X% globe. related resiliency. is That On what I driven in the think result Taco for are to we've us other probably pandemic. main Bell primarily things the think the the But is, from how

for consumers We've pandemic. sizes check labor some So, have operating closed, average the a the bit. have more than for had higher also buying seen are efficiencies adjusted as our to as we rooms been prior occasions family hours and dining we've

that So, I'd say primary two those the things were helped. things

equation. the the bonuses things COVID-related on our other some We paid other to some course, and of front-line we had expenses. side Of had extra

that balance it. So, helped

So, a and the of would I back once But was two go primary those dining check that story. other be think good swing those to normal, sort drivers things rooms, of those back would direction. it to things

So, highest I want us. third-party our our with to I customers resiliency want during to takeaway accessible business they be we build think is at purpose. remains think we to the crisis. do And relationships On aggregators serve the delivery, with level, where main to the that philosophy

saw globe, the around that's north that year. capabilities by aggregated terms now than offer at delivery our of last point restaurants number XX% last restaurants. total We're more Part of this XX,XXX from XX,XXX of our driven up relationships. delivery, in year versus of just terms over a increase of In we

got we've number as proprietary our course, a restaurants Of own delivery well. and capabilities those of

So, doing where we with in are aggregators, general, there. it's there. be think a want But business mix I customers to

David Gibbs

Yes.

business pickup as out in way. The growth way, can contactless operators of high-margin about which other when we've a carryout our delivery a it's carry for we've do -- seen growth, delivery is also great like curbside as point much with obviously a seen options because in you lot that

the is So drivers. the at delivery the is seeing, kind that of But pace. one much same very we're of growing growth yes, carryout

Keith Siegner

please. Next question

Operator

from of next Geiger Dennis The comes UBS. Please go question ahead.

Dennis Geiger

Thanks, doing hope you're well. and all I

about you bit a new latest loyalty talk Bell, could program, developments, coming including could you well very industry-leading there about making that as speed drivers strength menu Thank franchisees, brand momentum some items thinking the as what are the you Maybe going in comment operations if future? the maintaining of or wondering more the there if and the opportunity in and Just the Taco much. is, way the specifically, forward. simplification? And of more if on for the

Chris Turner

bright Bell quarter. a spot Taco Yeah. for Look, the was

look -- progress made two-year and on they're a basis, flat at during you If basically the they quarter. tremendous

the they previous you results you the forward quarter. from at that from can through results, filings look had our best April If sales moving probably just see

late almost breakfast U.S., think sales is you in were about they of example, If what Bell, most. and night one-quarter dine-in -- with for the and business, their the impacted the Taco

ground got along to Bell, two make other they with positive. up. big all July, we've U.S. and had most the into So the And brands now Taco are

enormous a business. margins recently the upside. that's obviously record, us store-level but that's And a the to the loyalty in infancy, fact somewhat the to items launched option of Cheese which hit as that the -- consumers proven really for So they've Grilled with still the actually program, lot menu a their margins well, were you like has record love hit. Burrito, pivoted a given quarter. It's due for tying of leveraging mentioned, obviously the in that its progress The

Again, more you all Bell. with amount Taco times. franchisees, working quarter. mentioned, So about come The with the brand couldn't been partners up, relationship of beginning the add when the they out great pandemic. we the all these challenging the momentum positive. huge I'm They've of as this a at the as that of future through be very were it's excited most for you hit

the with on quickly together with but most done in partnered the the dire straits, were have the an more they now. solid business team get and to some job and amazing footing U.S. his much right ones momentum in in So were ways that the franchisees. King Mark

Keith Siegner

you. Thank

Next question please.

Operator

Andrew from comes question Charles go ahead. Cowen Company. and of Please next The

Andrew Charles

Great. Thanks.

bit? since when that the return X% franchisees the access to I'm set to step-up markets the in particularly can in this Thanks. saw net KFC biggest As context understand to International is the help of you debt capital, little emerging quarter? business during bad engine about development behind the more investors Yum! you better development, restaurant the to backdrop looking can learn try a expense

Chris Turner

with with feelings deal of stores is are in vast have in long-term the through in this them business of presence just have terms want the long-term our we closed shape. all availability to to there's we'll very out obviously a vast challenge, and positive Yeah. attractive not But creates Look, which resilient good a that when. emerging pandemic still it emerging the this that challenged. with comes X% our matter has a this around the back working developed of of that countries. still if, proven, to of are investors to franchisees it's it so together; together matter to pockets and positive return model the markets exact majority grow up X,XXX difficult We The things how when get get That's that space; again, we in the majority in have and markets development we've more of sites, But where partnerships their on coming which our franchisees the to making franchisees And invest thousand bigger world. is brand. the our of interest to a in couple of algorithm. when struggling to adds to to are timing predict many

in is as algorithm. when vary encouraging. very of will get they by already the last it So vary back Obviously, China night, Yum! we will which there, by terms is to announced franchisee market. It

Keith Siegner

you. Thank

Next question, please.

Operator

question Saleh next go from comes of BTIG. The ahead. Peter Please

Peter Saleh

Or Do with recapture taking be, Great. the start open advertise? plan advertising U.S. to just same-store do half that about to units ask the Or to do my strategy, sales, would election your to momentum pulling the with all you And guess, to pre-COVID? Thanks to plan the you can do year? the had rooms for that especially second need question. currently? on year. have in continue wanted back the you guys of the drive-thru second previous at dining Thanks. question I in the you I get you you

Chris Turner

Yeah.

the on first rooms. XX,XXX that one last we've the dining reality taking got rooms... The Just is dining

David Gibbs

That closed.

Chris Turner

today. close are That

we U.S., fraction our just a have rooms the in really and of dining open. – So

still getting, opened results talk we're lot able we're of sales have are at in the impressive rooms, that dining about globally that it's our with excluding you get majority the of closed our quite we stores. look closed – stores, back flat, those dining to when without that when a So really you rooms approaching to stores

room and developed make – XX been the we It's sure success. dining return that, cleaning imagine, we've front So over something you makes the different – to it's minutes, customers. not the can protocols quite would teams very it critical something plexiglass our our safety restaurants, to that will overcome that largest points cases, world Pizza we more to imagine as the high-touch the you piece would Certain room on safety some obviously right every that able the counter in develop sense. have to company reliant it, the to really we in most And with it. obviously ensure of reliant things do markets, all company the that But restaurant captains time dine-in the successfully when obviously, clean dining on to Hut markets. in on is all

of a story the good on terms does it's rooms. in dining – pretty So story does vary. it But overcoming average,

we're our obviously, this at in And piece, have different ways algorithms that doing we're environment. with products have advertising looking the our been promotions advertising The of changed On brands. promoting changed.

the has. It – brand but that year. the of varies each what of brands by committed terms of are, we spend they our menu. to our advertising heard core about part, we're the through But continuing for more advertising products, spend skinnying to We're more percentage most in for that sales the down advertising You've balance announcements channels. of to the spend committed we're us digital

Keith Siegner

Thanks, now you. the take last Thank operator. We'll question.

Operator

I'm At not showing additional questions. this any time,

Keith Siegner

Okay. do David, up? wrap want you to

David Gibbs

Yeah. with everybody, us this spending for Look, thanks, time morning.

comments, made was it momentum joking It out were We was quarter. the from feels the what's proud in the tell the XXXX. ago. can coming we you like is that progress And relevant we're As we've of back the long incredibly have of during April so that quarter.

demonstrated happened quarter new really, get terms we the already that think do solutions of can a world And we've the I we had which positive is the speed of that they've around the incredibly lot business business that that in out to that teams needs. is digitally. place, in this nimble, successfully. done what's incredibly meet with big resilient to and And move customers' our accelerated a is strategies

XXXX. assets, billion was that's As from up been that's that of of we've dine-in $X we that moving we've made proud business, billion. to accelerated we're mentioned, – and there. part by progress the And actually more delivery year-over-year, QX than our grow assets plan to even like And things $X

excited Yum! So is we're coming will stakeholders. about future. company stronger, the high-growth out was, much of it remain a all for and

quarter. demonstrated think this that I we've

So thank you.

Operator

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

disconnect. now may You

Yum! Brands (YUM) 30 Jul 202020 Q2 Earnings call transcript