Earnings call transcript Q2 2023

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Operator

Hello, everyone, and welcome to the Second Quarter 2023 Yum! Brands Incorporated Earnings Conference Call. My name is Emily, and I'll be coordinating your call today. [Operator Instructions]

I would now turn the call over to Jodi Dyer, Vice President of Investor Relations. Please go ahead, Jodi.

Jodi Dyer

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 metrics addition, SEC to reconciliations the and used of our measures In to on and refer please and disclosures, with non-GAAP our of financial earnings call. other today's relevant release

system results currency. and note call, growth operating that foreign of sales impact growth all profit the today's during Please exclude

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

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

on our with be X, will Looking the quarter day. same released November conference on third ahead, earnings call the XXXX,

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

David Gibbs

our this morning, Thank growth. results vision. global quarter accelerated to Day last to you, I long-term against ability by our second At Yum! evidenced am good Jodi, deliver that to December, say vision and execute Investor everyone. are we for our shared proud further our

on fueled second distinctive record the system in capabilities units engines quarter’s current and Through XX% digital including our the our sales growth Yum!’s X,XXX in development drove restaurant which digital our capabilities, we new differentiated quarter, report bold gross to and deliver XXXX year sales. that algorithm. year-to-date business, we above momentum full long-term our I'm results especially results, expect see in growth our pleased strong to continued well the based

details Good additional color sharing on our restaurant Chris pillars of Pillars. relevant, second our for of on then unmatched and update Recipe followed through provide easy quarter the on Growth results will bold brands, our the framework. and talent some few our Growth capabilities, second thoughts high-level and operating cover results, an distinctive the by I'll development quarter before lens culture some and additional unrivaled

For of our quarter, the campaigns the setting pace delivered growth we unit and of original on in sales XX% growth breaded as industry-leading X% product X% remarkable nuggets such distinctive momentum, hand system second a and development launch recipe marketing layers, KFC chicken foundation relevant same-store the of sales the with the growth with US. of new here

sure icon, I'm LeBron partnership heard, way as liberated no Taco other in in mimic. global Taco another And with Tuesday Bell, a could successfully James all brand you've

will also Good by technology. be and strategy we December, digital for Recipe Growth discussed our As in powered

$X billion which capabilities, for our report and I'm system sales digital and to to resulting experiences spend in profitability continues system. note, distinctive enable incremental double-digit easier frequency, another unlock XX% in incremental pleased sales, growth greater through over of well as Our access as that quarter of brands to sales. our On representing our digital iconic higher global

our Turning Brand, Red with which iconic start Growth the back for to me XX% represents KFC and Recipe our let Good of division, operating our divisional profit.

growth. same-store growth quarter driven XX% by sales X% sales was Second and growth system XX% of unit

as results detailed sales the growth. and our China market in earlier a our China recovery growth Yum! this same-store week, powered transaction strong Widespread in

growth and was impressive strong growth mix. However, global with the sales same-store showed a of an digital in year-over-year even digital largest quarter, momentum globally up KFC XX% the on our is both basis outside and represents sales business China, in continued dollar

marketing offerings a and posted with a their they work same-store like emerging and Africa Among new to growth breakfast through East system layer Middle I'd did continued with to campaign team the our sales South and both for occasions, the core offerings team snacking Trevor value product and on the compelling Markets, focus to growth. their menu Noah. highlight strong KFC's grow digital additional sales Thanks for markets efforts bold customer to use unlocking drive

developed menu the our markets, Among and by check led value with Western strong in disruptive Europe results way transactions balancing core and items.

the first wraps, leveraging at U.S., bone and original recipe quarter, U.S. significant Turning improving X%, launched value KFC our to its an from KFC of off hand offerings Building nuggets innovation sales momentum the same-store the combination off grew International. chicken product chicken to strategy. always the behind sequentially learnings on with breaded business KFC our expand bone

sandwich was This million and reaction, already in nuggets with eight sold offerings after over resulting new an customers appeal product younger XXX positive well-established launch. sales first the consumer These in the innovation and the of in chicken boneless met builds successful following XXXX. weeks an launch immediate the upon KFC layer

XX% share power Taco represents our profit recognition inclusion brand's on the world's of Moving divisional and XXX with which and our external XX% again, Once relevance more Bell's of of operating thrilled the influential the to I'm divisional Taco division, to on profit. roughly most Bell the U.S. companies. of Time list global operating brand

cultural another the exciting and and Congrats ever moment yet reintroducing Brand boundaries always the One of for conversation. by being incredible category remains and well-deserved entire our part introducing honor. of craveable Bell relevant franchisees and to and items and This Taco menu pushing team

a occasions, and X% of formula Bell's building growth second unparalleled value, by including balanced global magic mass digital brand unit the to sales Taco strategies X% sales led system buzz, and For grew X% Taco growth. commercial initiatives. growth continues quarter, set its Bell same-store through execute

the global partnership to global of entirety for taco Taco successful a surpassing campaign in Taco Tuesday highly campaign The mentions This Pizza spanning markets first-ever true Tuesday, James. relaunch team brand quarter, Mexican a in liberate year. with LeBron icon the Liberation created engagement, a launched buzz one in massive campaign XX and Tuesday the with week last

formula proposition and Taco growth maintain $X Creo magic to our our Cravings Deluxe margins. Cravings quarter value consumer Box the sustain includes winning help Your Bell’s over. and Build XX% that strong in Own both promotions Other contributing

with In addition second and Bell’s trading expansion late results. the Taco strong an night growth breakfast at of dayparts, quarter both helped hours

Finally, the continues of increased leader value Bell stores. Bell channels. all Taco amazing this U.S., digital economics. create their incremental be it of while delivering with also perception, the to account, team unit Taco XXX% demand XX% In a now in sales for in digital no year-over-year almost is continues to surprise kiosks deployed Taking into

Taco momentum. continue launched building US For Taco around with consistent Bell a third International, leverages global system Tuesday The in Taco the consumer Bell's, look leadership which XX%, equity driven and quarter, by the and development will brand cultural Campaign, sales feel world. through grew awareness and June

continued Throughout the Taco highlight Growth that nearly Foundation these the mass progress for included against to our to non-profits its strategy donated want live Round Recipe scholarships. $XX quarter to million raising Up through Good X,XXX year also I Taco this fundraiser. and so Bell’s funds far XXX Bell over

results the growth Pizza the price I'll our operating Since year, a encouraging of self-sustaining in sales discuss store Pizza XX early Melts sales late our quarter, U.S. grew unit of significantly has Hut X% be XX% X% The markets X% by alongside the individual to My X% other individual layer unit growth offering. largely international Melts accounts the in transaction same-store division, global platform, for point. sales International X% same-store at Melts quarter, growth. from from for proven by which grew led in is attractive and growth on driver XX base. occasion now Next sales system divisional growth. first has delivering driven System an US launching growth our over the now be occasion markets, incremental a the which XX%, the in continues to profit. reached entry Box, up and half product last

Limo Our as team across Party providing and Value in on such in UAE Pizza focused the Super the offerings value National Abundant deal markets promotion Australia. distinctive is the

from its U.S. The Grill their its Hut craft craveable Melts division elevated In sales through X% time X% by Hut. offerings, providing Habit U.S., limited sales driven system new to system grew Forward continues Burger customers flavor growth. strategy to Culinary order lean we on positioning the brand reason introduced Pizza Pizza highlighting to grew another profiles sales Habit same-store yet our for menu platform, unit X%, The offering. into X% team of growth.

our counter the another proof the of We with digital XX% access rollout kiosk for points average excellent converting customers to flowthroughs, value compared peaked now in with profit over continue of XX% higher of sales to yet sales and point expand sales. kiosks stores on from checks, front

will that culture January who CEO recognize our Taco driver, celebrate we that unrivaled talent the Bell to will Taco start, as leave and be of become of success, the division Moving year to foundation which the the King, continues Omar CEO growth will at XXXX. I'd retire like thrilled end to our of Bell Tresvant Taco effective we're division the legacy Mark the at Sean Bell to

strong Officer red Strategy the Taco Sean's and to long-term joined Officer. Chief vision Chief With to expanded growth Bell Sean ago of Taco years global continue two record successfully execute Bell's this transformative will Global brand confident and its earlier driving track Brand his role clear innovation, year, strategy. and I'm

last which pillars socially of of Sustainability report we Citizenship our people center priority planet. people, three in growth, responsible risk our also This are reinforced investments which how of in and The is truly reminder report, sustainable the a and do, our great Global of is at everything food and stewardship strategic outlines published month. management was

the to to a entrepreneurship unlocking commitment barriers our I'd key the to part through XXXX each on including in remain and that world. knock and pillar, years purpose packaging, like five We in to million take $XXX reduction. our issues carbon down highlight equity of announced education to committed around we over work moment inclusions, opportunity across quality,

programs we change our impact unlocking programs XX social localized initiatives, funded to meaningful than countries, deliver activated communities where markets Through operate. develop we opportunity in to XX in have more and enabling

leadership make to continue by roles of progress XXXX. in by also held and achieving XX% with leadership gender roles women global We towards XXXX, parity

how been made the to two stronger. its These has examples are Yum!’s people just of and progress commitment never great culture first we've that

we cross-brand addition, continue to last building harmonized packaging progress introduced was upon In packaging, our sustainable year. that make policy around

XX% To-date, we our restaurants. at by reduction gas XX% a reduce Furthermore, climate gas great nearly teams reduction corporate our had a goals in have toward emissions to offices, with as March restaurants greenhouse greenhouse at XXXX. coupled success we've achieved XX% by our and franchise emissions

impressive first half teams an have looking similarly half year, we picture of second see And our put the the be the of on Reflecting year will forward set of strong. for results. the the forward,

fact drive XX% International strategy KFC divisional US from confidence that our profit. and category leaders Recipe Good of Our comes Growth and for Taco Yum!’s Bell the operating

in competitive brand affordability, leading opportunities U.S. The vast our partners growth their driven is unmatched KFC advantages with eager by operating to globally, Taco the cultural positioned and of mode. capitalize relevancy scale widen franchise is their both and majority markets on the profit Bell, and in by while

for In from know value tremendous that beyond. for in confident an XXXX to competitors to consumers will accelerated that uncertain differentiate environment, and our and am long-term is decisions always This to have craveable that line our I in we value Growth with Good can with growth for deliver coupled in vision continue and a on our good food. when Recipe us combination continue we experience, with strategy, global brands our news stood is addition convenience, make winning that

to that, Chris, over With you.

Christopher Turner

our second operating our and David drivers and everyone. discuss you, capital before I'll good Thank to strategy. quarter our financial growth restaurant turning unmatched results and morning, capability bold Today, development

with by We X% unit and XX% sales delivered begin X% same-store system growth. driven growth, quarter growth results. our I'll second sales

with store quarter digital Digital sales at of XX% our Taco for profit the level year-over-year. margins an up nearly XX%. impressive Core brands improved Bell total were sales operating all four XX.X%. grew

to in model unit to again near inflation, compelling which be deliver of the margin and Bell all-time margins Taco, ability once high. remain to their their XXXX. performance, full expect Taco continue Bell's year margins power mid-single-digit preserves business demonstrates despite an company-operated such strong to We economics, resilience similar and

a invest thanks XX%, division result, operating this labor level We're store long-term purchasing to in well improvement to Habit, of at the expect leverage improve scale, of we’ll year. and company-operated Yum!’s as progress Habit and efforts For we growth the a as with the better the to improved to loss for margins as continue business small margin encouraged productivity.

for administrative The and the general with in was our line $XXX expectations. XX%. tax expenses rate Ex-special million, Ex-special quarter

items $X.XX quarter our Finally, share. per second EPS, excluding was special

impact $X.XX, currency was unrealized translation gains offset quarter Second EPS of investment impacted negative foreign positively in our by by investment a relating of $X.XX. Devyani, to

momentum into year report growth continuing a deliver Given full expect of our basis, results, second long-term I'm half we over our components to the year, to half first happy strong on and all on algorithm. of the that

full X%. our expect XXXX We of of which guidance year ahead grow to long-term profits operating core low-double-digits, is at least

expect from our to relative higher, in our We we expenses G&A resulting primarily compensation second and recording modestly attributable to accruals QX. which be target began above to initial strong half plan, incentive performance

As employee to compensation of incentive internal algorithm. a to components reminder, performance tied growth long-term linked targets, is our

lower book fourth the quarter. on go our first rate the or similar we year expect G&A prior to we can half, growth look we expect rate decline by year-over-year year-over-year Balance year. depending G&A second the of the throughout followed a year, the accrual with of GNA half the in growth quarter in the The performance. third to in growth up Consistent our guidance, down to be our still year-over-year

we've is profit little to impact to foreign and FX $XX million, currency a the current the year. balance for Finally, operating reported headwind year-to-date faced no forecast of our in

Now we growth. Developments, X,XXX Bold new gross X% to to during quarter moving on unit contributing opened Restaurant the units

encouraged consumer space appeal markets enormous in our about broad are and for partners are and by operating opportunity unmatched our who enthusiastic excitement growth who their capabilities. the among Yum!’s ready see We franchise white brands

We to the expect scale franchise of the advantage widen allow system to to our industry. relative will the and benefits health continue our of us our further that development

As of are before, Yum! Committed, you've the system and heard up XC, franchise is well-capitalized. partners me who made Capable world-class truly say

another development to of similar incredible we years. XXXX, both which result, be year expect were XXXX and record-setting XXXX a will industry As

year's highlights re-accelerated their China's ahead XXX the quarter division, Yum! opened putting across few KFC our development and new KFC's widespread a was share with beginning this opened India, development Middle markets, growth East, of year-to-date remainder XXX gross me development last The of Let new unit in quarter, the units of by Asia. which unit. led momentum The unit pace. gross

division, gross at US, Hut least Pizza opening acquire expansion Pizza the India, the units. led for units. June, to Flynn units, opened China, by As Australia, first its The with Restaurant which Pizza announced XXX new each international and Hut an Group XXX agreement the owns Spain, Turkey, Hut, XX team with In approximately

This great is a within a our to XC partner system. grow of eager example

restaurant and franchise nearly XXX For those unfamiliar with the roughly in the industry restaurants, are Huts. with largest Flynn operator Restaurant Pizza X,XXX Group, they X,XXX including U.S. Bells nearly the Taco

XXXX growth accounted builds Bell the eight outperformed XX their international gross across with record-setting Flynn track roughly for of new some another including in system. year Hut on XX U.S. Pizza the development For markets perspective, significantly rest XX% U.S. and new overall, units, in Taco remains sales of countries. same-store for the

a a first Totaling that half Yum!’s gross unit development environment. nearly result resilience the demonstrates fantastic Yum!s it reflects units, engine, new of development despite up, XXXX challenging all macro more

our unlock faster distinctive improved customer unmatched our includes growth level This that franchisor global to turn choice. operating store as strategy sales capabilities better digital lead and to margins. I'll experiences to contribute Next, the our of position that to

exclusive that, pillars Blizzard in-game team Diablo time KFC strategy. Easy Beginning With three with in offered of launched Activision KFC. KFC was leveraged exchange a platform, partnership which in me Yum! quarter, Experiences the to commerce discuss Pillar, the our digital first with the the this in customers and promotion with limited for for purchases. US U.S. XXXX enable let rewards

would we infrastructure the in-house months with to have gaming this our significant Previously, a technology, in third-party leveraging build of By expense. weeks. the promotion to matter taken exciting were integration support and necessary able process

the Bell the platform. platform a Taco its as achieved migrated traffic milestone in we digital Commerce quarter, U.S. expanding Yum! significant onto This

Bell's processed Taco are mobile, now digital through platform. All and of this Delivery-as-a-Service transactions web,

the Additionally Pizza the first to begin international Hut commerce Peru using Market this quarter. became Yum! platform

commerce will XXXX continue platform brands several coming additional markets the Hut to migrate quarters, U.S. markets. and Yum! throughout including We the Pizza over international in to

our and both Within system. the to adoption Easy point-of-sale continued recommended of expand Operations pillar, we ordering Yum!

recommended recall, order. ordering each module a predicts learning recommends and that the restaurant may of AI should an general you machine As quantity manager is product

over is this live KFC and Recommended another and stores. ordering in now quarter deployed Bell Taco U.S. stores in XXX was XXXX

Yum! this improves quarter member stores U.S. team year-end. stores X,XXX X,XXX efficiencies Our is point-of-sale targeting system this operational and First rollout leading to system Cloud Next-Generation Bell deployed having enhances and by Taco this effectiveness.

Insights us Finally, advancing of and a pillar, our are experiences This increase platform improve Easy and a we solution enable our US for for third-party our brands and digital our will frequency. aggregators. to using digital customer across data provide to view customers strategy new customer ultimately customers unified

and the unlock powered other marketing, XXX% to and the branding by vision future of programs in One this Eventually, personalized will our is provide automation. Achieve to infrastructure digital. step joint This Day latest internal sales

provide position. our Lastly, an and liquidity sheet I'll update on balance

a growth, In the our enable long-term, sheet, returning to business shareholder and maximizing As paydowns a a our maximizing excess remain debt is and that, strategy doing competitive balance shareholder unchanged, by capital value. while share reminder, maintaining in priorities dividend repurchases. capital paying resilient value for the through investing

Net expenditures $XX million re-franchising reflecting gross in and $XX million, were million CapEx proceeds. for capital quarter the $XX in

modestly net Our intention our stated to X.X ratio reflecting times, net leverage to to this declined allow lower leverage year. drift previously

balance of We than revolver, $XXX greater ratio environment. leaving mind, current paid year, years in minimal maturity quarter. term million the maturity average and November million this is of fixed outstanding our of a upcoming on in in weighted attractive Furthermore, end $XXX at a our we the down our have of Keep our bond floating debt XX% until only current six remaining market an has the XXXX.

current interest shareholder maturity value. at funding We upcoming share repurchases rates, continued debt excess to of before evaluate our optimizes use we the our and best capital believe best

strong, giving year-to-date remarks, out deliver above continued I'm To our algorithm. our full confidence, we year us and well long-term with results momentum round XXXX results incredibly will prepared growth our pleased

franchise in brand exceptional deliver remain maximize Our value. and and vigilant shareholder to turn teams the pursuit performance operators in

With operator, any that, to we take questions. are ready

Operator

Instructions] [Operator

question today ahead. comes go the first line please with Dennis Our Dennis, Geiger from UBS. of

open. is line Your now

Dennis Geiger

current ask Good more a of wanted to Great. on particularly double-digits. heading of outlook touch, you. the to the question environment? the and ahead have well morning into sort a including Could the top-line, low think into in growth spoke the any momentum that I bit is which half second visibility folks I you maybe thank the on for XXXX that commentary you you encouraging

takes you puts you. any the helpful And on the to profitability then, and additional beyond call? callout Thank that mentioned

David Gibbs

Look, into Yeah. Bell the as in obviously, We're just trend, strong what confident. out We basically see U.S. launched of our QX. come look year. all we the very businesses well half far I our value. has prepared confirmed example And to that momentum of sales on way, think We which as continuation we the little anomalies. visibility year, Taco a half remarks, a of give we you first as a the the in second They've why feel that we saw if got in for two-year above we're of at evens some algorithms. of

Christopher Turner

And improving profit comments full color on lot then expect in our on my decline around company gave then, of profit earlier first pleased drivers to We're low-double-digits. the year the that margins we of now expectations think to operated mentioned core in based. be the year and And in we operating in I continuing that from the Dennis, of QX a G&A store we back trends, a in QX. and half trends year-over-year the have part also

don't of to there out basis color else call going driven in that. our in XXX improvements year. a biggest to our bases saw on in improvement point to part biggest by there's of think back You the continue manage terms anything I store we're and -

Operator

Brian, line Co. Our next Bittner the from question of with please ahead. comes go Brian Oppenheimer &

Your line open. is now

Brian Bittner

Good Thanks. morning.

showcase of us in be the second that to out you positioned currently You've like resiliency? pointing dynamic drivers in built to you and continuation consistently understand Can seem the are to resiliency, X% with healthy said environment for growth win proving that trends. quarter. a to same-store sales seems this Yum! brands to any what is help And just blue be chip

believe results? you despite more very become indeed if strong obviously, And macro of recently the has continuation your challenged portfolio across

Christopher Turner

commentary. Sure. And the appreciate I

marketing I Just, our industry. are navigate a world and have teams for in we're as able brands far the environment? to to as, many writing around in lot kind of the Look, how in this this so brand why confidence of ways we playbook leaders our build

provides We in so - have Collider us inside and consumer terms much of which is an the internal our time that to behavior. group

these that'll being the just world. I top XXX way shows in And we the up brands brands build in think

been say far out where had than bit would than the little As more an ever past. normal come environment the a of I this as environment. We've macro a is a in is we've years challenges, series operating more things different that of have

a to call In is documented. really environment it But in peak obviously, It's and most sales between markets mid-single past difficult I markets, is, about just think that's stable we wouldn't, growth to and the operate environment developed digit in been inflation in. US well it developed a markets, way quarter. our we're the positive breakdown, One emerging. to saw

brands. low-income ways, in in for was can remarks. And have my we succeed. and for value example, an because growth we their in But quarter, the had many mentioned as US, this importance. KFC leaders environment their they with most the our is on for Value seen is our always in prepared in consumers, rising I solutions where quarter,

environment in this win develop and can we markets. So

Europe a for Western a been challenged Similarly, documented as lot. has environment

had us, good we For results there.

German strong great markets and job there. growth of delivering mixing did a innovation and Our value, and French

those in little brands markets, more built and to of So, more a developed to return our stable markets. are normal, win bit

little these but not markets, in a growth we're Little the inflation seeing peak of quarter. We're double-digit the in different sales general, of bit vary, a it's for emerging story. of lot In bit a markets. past more

very inflation, growth pass that positive So, consumers. markets markets. in we're still importantly, But those to transaction these on taking pricing able to got over of we've it some

our demonstrate time, in any navigating growing we're at our proven environment more same challenging in operate But how we to environment when how really all still resilient you said, share a as you win. to bit industry, little markets. those up, it are the brands and and add the can in we're emerging we've So,

Operator

go from Our next of with the Jon question ahead. please comes line Tower Jon, Citi.

open. is now line Your

Jon Tower

taking want Thanks to expanding I that Taco question. commerce in the onto company that some globe platform. over the the including others and Great. collect the sort across any zero the on for P&L of platform brands you're now of about Bell of if are number hopping And Does platform? from fees it rolling the the so, into franchisees we time? hopping this think onto should how across the

Christopher Turner

the Jon, strategy. about of we're all the progress on making excited that aspects Yeah, we are digital

KFC And benefits so, set. e-commerce the that some And a about we platform that Experiences think that, about like capability growth ways about talked you of talked platform, for derive our experience core we do whenever which U.S. we part us and is faster franchisees Easy really, the the this. We Diablo for we in our it the profitable of you're ultimately drives X asking systems

across more to quickly, multiple each had you for the that platform then campaign faster in geographies talked Taco across about you as Bell, we in brands brands, And, platform, or previously It big more milestone, have across get integrations to would. to a normally allowed multiple business. are marketing we've than more implement implement build much because the discrete markets, of us don't you that able we course, campaigns technology implementing much

front-ends this and At got each build the capabilities. robust you've to as market are addition, relevant that top. In tailored on brand base you

the fees for and our from us. strategy, and ROI benefit they the of at digital our driving obviously in the the that growth this we're that make driving through day, move is both have we we of So end for for But end at for franchisees the markets. that us profitable if in franchisees share franchisees through this and our certain day, an investments

Operator

Our please next JP Ivankoe the of John, go line from ahead. comes with Morgan. John question

open. now is line Your

John Ivankoe

XXXX, US different menu And that. in sizes. the in service of of increase premiumization, on consumer thank there's a and Hi, also been the larger of Obviously, up a the very has you. but been lot you has Europe least. been lot average over high a by quick that price of ticket driven have What trading factors amount at

I risk an where kind of quick was firstly transaction if I driving know the franchisors if extent. incremental quick-service I doesn't Obviously, or very to transactions, wondering is for unwind service you, want some incremental see over because - drive that profit. don't of an incremental rare kind have focused very opportunity time see of to on of been it's

ticket and to future I ticket I an growth mean, of direction we came in a the sacrifice transactions? model, opportunity, an the might have think we four the guess unusual off kind actually higher model next of period, over of such see years. do a So, am time wondering of profit-driven terms you how percent I over kind that dollar about it's transaction-driven higher margin.

David Gibbs

John. the Yeah, thanks for question,

party thing You're disrupted Obviously, and I absolutely of transactions was to things the right. got ticket as first mentioned one size. sort also in size. is one that the the list of pandemic add you would The

became of we did we an of off-premise delivery up. see per parties more go As a number business, much ticket

our number to decline when talking slight normal. this that what So for a in in great in news in translated about but businesses. transactions, transaction was more growth had of to business. But return quarter, I that's neither we not is And the a good our the eaters I

all it's I growing reality the sites out go share We around world. our are down coming pandemic. party meal individual the let of the the think of transactions which more back occasions business just and And seeing is growing

environment to we're that and record, you're of into going think feel I probably game. right. I kind sound get but So, broken playing winning just like that We're back a to not that like

Operator

Palmer The David ISI. next from Evercore ahead. please question go comes with David,

open. is line Your

David Palmer

whether the results, grower. being maybe too. about the though you see alike going the that KFC then Pizza in particularly to division growth, about digital quarter I'm Hut, US. XX% there's What's unit some the sales same-store growth stable an And a Thank curiosity this you. in the sales thing - ongoing just be with comment this wondering, I know

ask profitable because were a the but and there lot lots improved happened quarter. more has I delivery today, Melts, third-party comps like wanted slower to the and big third-party a delivery, and doing the innovation in with business now systems marketing, competitors

So, curiosity to in will you about be slowing do going also think brand there's a I'm some sure the economy. how

thoughts of So, sales any be to you sort ongoing think is brand? same-store positioned that brand about well, positive an how Thanks.

David Gibbs

I'll question. take for then let the and first Thanks aggregator I'll talked landscape. the the Great. Chris about

Pizza quarter X% on and really picture, category. is overall the sales growth to in on see gaining Hut, growth system algorithm. nice contributor importantly, they're all, can our There big in Yum!’s of share you First the

the you peers. to relative on If do numbers of their some

love we lot things a Powell, Hut. differently. that of the Aaron of built and he's on going doing brand is leadership team team, that at a So, Pizza leading the that are And lot what’s

individual them seeing which innovate us. Melts, accessing incremental like more a with things in lot occasions, is for You're bringing business

run The in a is, me global other to we're the always brand. thing lot they're case. like hasn't future confidence of a been able about brand which operating, the way the That gives

XX% they of Melts example, So in are for what you the the is now around stores saw world. over with already

us for That's be sort unprecedented of to able.

it the in something but got challenges. every works US, their market own want pretty well, You

challenges. chain supply got You

sharing different and that got stronger for united at business they've But is us practices world Pizza to a the You got only business leading best cases. whole Hut. sharing data,

where with are a particularly that's point. starting think you're at and we pizza, gaining on pretty share, I happy pretty good we when we're algorithm So,

space a and we're talk bit little Chris let thinking that how competitors about I'll the aggregator there. about

Christopher Turner

specifically produced result very the the Hut, pleased a US, globe to number in and been and Pizza on in utilize pleased been In and capacity Hut delivery implemented with aggregator zoom and year of each that's we on we've we're markets way Yum! of the the globe. brands last marketplaces when needed. the in approach around that and our Pizza front at look, Yeah, the incremental out by aggregator our that found customers level, large around the we able we've incremental with

wanted we of aggregators we to We gave understanding that, started that investment on evolve. us us was front knew where an our would wasn't one in space seat a knew row in this I customers that industry. to aggregators Of wanted leadership in that to this transact how But aggregator with strategy. be XXXX an always course, this and mind, made recall the the team the strategy. the impact keep when team would have here

our in pizza And capabilities forward, to we define on helped always gone as sustain Pizza actually and help remember, our advantage competitive to going that it was some planned. the think implement differentiating strategy. Hut will sat of it's Board Pizza our Hut us intended And aggregator. course, of have We with who experience that in CEO That aggregators. we the

talents interface of marketing the One is and going expertise around us business the Dragontail, in those that that plus, to aggregators, help our Pizza advantages we've delivery operations optimize our drive which think forward Hut. including with in will space some restaurants that continue in helps got first-mover to we

Operator

Stanley. please Our Brian, next go Brian question with ahead. line of comes Harbour Morgan the from

open. now is line Your

Brian Harbour

company I Or true of franchisees cost? you. for the be food your past favorability franchisees as your weekend trends of lot markets? XXXX Be Thank in more that'll some placements? morning. think you sort your a other that kind show some they margins. see kind on about starting Good curious just to of of of if do can that store Is Obviously, are wanted also seeing. about cost we that’s to of Yeah. ask

David Gibbs

Yeah, good question.

in our they focus where are have That our second globe, think economics differentiated capability. still providing run. always If is always Our customers. about of that driver unit piece key strong. we value very the are on around is a the economics course our ensuring development of strong franchisees unit that And we relative long to strong

normal got And when market-to-market we're what return you've operating terms a in standpoint, in takes believe is peak year-over-year puts and we part of of of market. markets, the environment. the of nature timing the to that's inflation a point of was from past it. In developed a more Now hitting of David terms mentioning The inflation.

ensure pricing still as course, emerging we delayed are ways developed markets, help with of pressures the as business some markets, unit value. We're strong economics strong we providing scale using a remain franchisees markets. those needed that the as optimizing and to to we can. that offset of But In bit all while much to those in relative our inflationary relative model inflationary were use

in best You remain to strong. the quarter think economics up open. development X,XXX units unit the results evidence our about That's that

Our to their capital XC franchisees continue work. to put

Jodi Dyer

more time have question, one for we Operator, please.

Operator

Thank you.

Our final question ahead. of today Tarantino comes line David the from with David, go Baird. please

is open. Your now line

David Tarantino

term you And higher dollar I basis if I thoughts the you us long-term of you be would clarify longer now could number on with secondly, guess about Hi. Chris, could think I that an like time. should percentage think update last could, That on Thanks. G&A sales. a as actual looks wondering I Good was gave on that us system maybe where you outlook. bonus morning. on number just wondering, the if just is your G&A, question, My as sit a you then, great. what the accruals? just if was

Christopher Turner

philosophy. we that that take areas talked and will to that business on else. the efficient going invest Yeah, be in everything we're in drive We long-term before thanks, We a David. Overall, lean G&A, on and in came implies about growth, into of consistent relative we was that modestly largely with see as the initial a G&A philosophy. But the intact. - higher that back with we That is plan the that that plan plan. will year, that part said year to we help was

comp is owing And performance. strong the that our of driver to incentive primary higher

QX. the next in to looking back the around QX in part comp But year, of color you plan. change been similar the driver a year-over-year decline think first year. on the incentive about as year Of on resets We earlier primary talked the then half course, each that's and the about that

business. But we G&A on the net-net and algorithm G&A course, long-term the leverage year leverage our in it’s of expect implies full

So, think results playing of how thinking you I and it's are how picture about it - that pretty gives good out. the a we're

David Gibbs

those all to companies development, at our taking that with It's announce contributing, this sales way. lot above is quarter wrap Sean the we're a and the have algorithm profitable, really pleased results the for system of comes and talent take be something Chris the XX% won't in was brands miss another just that he'll being system quarter for strong that growth, call Very I of back a we in want is reiterate, over I'll of. Yum! getting that right just proud we and the at XXX franchisees Mark. being business to of on the of a about level KFC Bell. to Thanks beat all talent and to we we're digital our for at and thank Yum! number step was and higher this place few everybody up. brands to do to widespread sales have doing, And were percent know kind Taco that, growth all I

performing couldn't be plus results if our half share and XX,XXX the will the years. about you a nearly think years built XX better but math stores stat if I to new this, of to about just half any and added the operating have last a fresh on consumers last you Yum! one really be brands Do the with we system. years, think for unit couldn't fun history, were our gross new they haven't done you in with the you quarter. two and they XX% two and more That's the in

to franchise bring thank members I being every you that call. all for So, on life truly the to astounding. partners want that our helped thank of team day. all growth And and our

Operator

joining today's for us and now disconnect. concludes you everyone, This may you, conference today. Thank

Yum! Brands (YUM) 2 Aug 232023 Q2 Earnings call transcript