YUM - Earnings call transcript Q2 2024

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Operator

Hello, and welcome to the Yum! Brands 2024 Second Quarter Earnings Call. My name is Lauren, and I will be coordinating the call today. [Operator Instructions] I will now hand you over to Matt Morris, Head of Investor Relations, to begin. Please go ahead.

Matt Morris

Thanks, operator. thank joining and everyone, morning, you 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

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

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

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

units As business the in in KFC Canada will an When KFC and several on a including fourth of U.S. the Yum! for extra brands, U.K. Brands calendar mind and please quarter XXXX, this a keep forecasting Australia. all entities. period year reminder, week basis include report those

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for this call, about last talk planned date we Finally, year. for consumer our December on the originally shared timing of our

follow. date revised Please early and a to invitations stay tuned finalizing year. for more details are next We for

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

David Gibbs

thanks to operating operating I'm last deliver our the call. Thank laid on our Matt, quarter, and and execution in profit XX% was core growth challenging strong pleased morning, continued to progress Despite Yum! this good initiatives environment, on you, everyone. able out team's

comfort first quarter warrant we global not remains, take and in significant we same-store still them volatility in be. trends and we to While where improving are markets want the some for growth, sales recognize low expect sales the

from impacts we a have for profit sales. presented cost-conscious the on Middle are continued line addition in The will we Despite XXXX. for in more deliver set confident to with to East tougher conflict, XXXX up headwinds waters, strong growth are consumer, and long-term these algorithm our in same-store growth

navigate value strength to headwinds and of the reputations the environment. brands positioned well consumer these are given we our for Fortunately, no matter

value for the options everyday with Taco deals, Nonetheless, Pizza having Hut's offered examples and ensuring of an since or Menu. of Cravings all we reintroduced disruptive Value provide KFC's introduced Deal of U.S. year the consumers $X Bell's greater area track of focus as such our us been and affordable brands Lovers has deals in Taste last with KFC

to in recapture and brands our U.S. to refine markets offerings in we trends experienced to our continue result, similar the quarter a first the As market, international relative improving momentum.

offered quarter second The improving signs fundamentals. of

Middle not see check year-over-year Bell, KFC same-store East mid-single-digit have and per excluding transaction. encouraging growth For an were sales. led to increase into items QX we've reported materially Internationally, Taco example, impacted that sensitivities by from QX, conflict, in management China, at improve check to witnessed believe we begun by stabilize to markets the

includes journey navigate in remains our of our to franchise the scale, strong. has Across the partners be from improvements year, than XXXX recent efficiency our heading the in come of expected Furthermore, leading our inflation and commodity we momentum structure digital system, progress in our of robust volatility. sales, proprietary sales strategic underway business helping in our This areas critical digital our lower restaurant into and cost our ecosystem company. leveraging increases a continued efforts in deployment next global technology phase

market engines, U.S. sales these strong KFC and at growth by system twin Taco profit powerful gains Taco two X% Our Bell U.S. at share and units Yum! deliver unit KFC growth helped Bell delivered operating International. driven growth. growth International, Combined, business X%

of unmatched category, At a only a an record Chicken delivering individual clear expectations. high. increase environment, restaurant-level but not Taco in well margins in X% above level, Bell with achieving innovation sales Bell fueled growth sales standout is our performing today's Cantina the U.S.' ahead QSR near system same-store Taco

at wins In addition, even proving Taco digits today's that point a same-store Bell's sales craveable price cohorts, consumers. grew with across innovation income higher all mid-single

same-store are KFC At was from unit a basis, as quarter to year-over-year growth strong X-year growth an experience, by brand paybacks. not advantage X% know in tied powerful is impressive improvement we on strong but are showed is and success and take constrained opportunity, the very who choose rather about International, sales I This on our a allow system. intentional franchisees having of quarter-over-quarter expansion the we trend, why right this its franchise partner. with into closely

to partner expansion South and and tools performance sales up KFC program, XX KFC our App same-store improved over of In For with markets. team furthering vein, XX% live the franchisees the which Super that succeed, this global new the took loyalty franchise drastically example, Korea the has is is to tirelessly including in our give quarter. XXXX now in in working April

followed development, brands our good bold sheet and R.E.D and short, capabilities I'll strategy. capital unrivaled discuss our easy balance will and culture or operating restaurant relevant, followed by results, and and provide talent position an our for on unmatched update strategy. distinctive Chris quarter by growth Now our second

of Beginning sales operating division, X% our grew divisional by unit we with system which growth. profit, for KFC the accounts XX% led X%

weakness East largely sales underperformance same-store of Middle in on of Our of relating the a and account were number market. the scattered markets U.S. down pockets conflict to in X%,

of will If begin sales QX impacted hold, directly pressure trends November. in quarter, This directly as same-store on we markets. set any markets we abate year's sales prior for improvement not most in impacted the to beginning lap did the see the impact the growth

seen Middle Middle several the East neighborhoods. comparisons markets significantly Malaysia performance sales across Beyond impacted other in we've the store Indonesia, East, and of based surface conflict on from the markets impacts most

other first from to and the during In quarter, including trends of improved Europe, witnessed improve began the the and Canada South parts transactions world, Eastern Central we while Africa's quarter.

Coffee an Yum China The adjacent team reduced Another XXXX. development from was allowing an the of costs exciting investment KFC, has part beginning quarter consists a and K day existing averaged the since one in of lower K Coffee, that XXXth Yum kitchen celebrating which China of facilities. storefront is operating KFC sharing per its new

count of While our not future new in sales are as growth. they these units system, do a same-store driver

and This in we started quarter, restaurant we operations U.K. there. and have the restaurants acquired Ireland, to optimize XXX KFC

sales, digital China nearly sales. KFC Lastly, XX% grew with excluding kiosk impressive in an growth XX%

profit. the division, formula grew QSR divisional of executed XX% variety ]. margin. its Fries Taco introducing same-store a operating U.S. Taco Bell such outpacing to represents X%, innovations this of the quarter U.S. through Aardvark [ winning Cheez-It and Bell our secret the a which on Moving sales industry by wide as compelling

launch, in Bell's new orders, X from item. into Chicken an platform often the quarter a foray platform Taco XX sales Cantina chicken a including points Cantina menu, chicken has Since our the second and mix elevated to offering contribution nearly reflected innovate X increased around. Chicken The sales with

Another in breakneck digital grow loyalty Taco up at continue part pace. the QX, over is of which sales digital In formula sales Bell's winning were to team's XX%. a

trends restored markets creative still opportunity. International for XX% signs Taco and system in teams value It to within of days A has is relevance. sales, with Taco Bell with introduction national working value International, is a the more on At marketing early in markets emphasis budget. Bell team offers. we be saw mature we but forced which on Europe, improvement of remain the long-term limited accounts many of remain our over confident brand building In volatile the encouraging

trends Indonesia. Malaysia have Pizza X recoveries We're I'll discuss in and Hut Pizza recovery sales remained in operating progressing ] encouraging Thailand same-store quarter stalled System [ same-store Next, were from for negative Hong of X% division, the and year-over-year. Hut a points of in with in flat divisional and this expanded encouraged sales improved sales units last because which part profit. Kong. our quarter XX% accounts our and -- International U.S.

world, average transactions most of recently Hut the including Melts to expanding actively meal India quarter assembled is value-based momentum increase providing efficiency, in in Box. the an to occasions to leadership promotions team number price CEO consumers. Powell accelerated as an a amazing has our My trends. joining Around [ Thailand. align complexity Pizza platforms Hut the ], Since team introducing [ strong Hut lift attractive the reduce XXXX, and Both launch points per ] consumer expand and Box increase and individual to in our My Aaron weekly restaurant provide dayparts, accountability, is and with brand the U.S., In and throughout of attributable drive underdeveloped

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good Now I'll our strategy, people with turn to pillar. growth our start

welcomed about from our recruitment marketing people-first Yum!'s on Laredo drives is delivering builds at which some the organization. culture, amazing the brands. of recently impressive within the of bench U.S. leaders is also President. largest the in a Hut we Karl results excited leader deep with hallmarks going work world's and One seasoned ] Karl as [ of and experience at I'm deep brand's a best-known talent where Pizza perspective, great of talent a

and marketing, Executive, welcomed and physical Pizza We digital ] Calin global Chief points. including as power consumer harnessing brand of division's PepsiCo [ strategy Thornton leading across Brand connections Officer, the the touch Global engaging Hut former also

] see positions. Yum!'s roles. of and bench finance, spending strategy It brand Freebay XX deep at Bell Marketing Hut [ Melissa bigger after years talent U.S. Taco is insights also assume to marketing, rewarding Officer, from recently Chief joined Pizza leaders in various as

partners KFC talent company as gathered building capability forums franchise and various vendors leaders, world and R.E.D, practices to collaboration culture keep strategies consumer sale promoting and and share In markets. our KFC's around the professionals, addition meeting. to such iconic marketing best marketing products insights and innovative annual and our across of global of from brand powerful furthering to from our recruiting planning we're discuss in delicious

to Good our on Growth pillar the Moving planet strategy. of

by global XX% We renewable focus are our making gas greenhouse efficiencies progress XXXX suppliers. and reducing and nearly our with with goal energy food in a on our restaurants ongoing emissions of collaboration energy on

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cutlery. making packaging, opportunities. against the and also unnecessary And plastic like straws, we by global goals of we terms In markets eliminating lids, with to impact progress finally, in communities serve we're unlock continuing meaningful cup many a items our making stirrers are

out As curriculum an gain learning flexible help critical school, country's KFC job of the entrepreneurial Thailand, students to with nonprofit partnered to and Thai skills. government launch example, dropped first-ever in who and the

second over XX% pressures. wrap before a to sales operating up our in to pleased core despite we To profit growth quarter are system built handing Chris,

better, system sales we as confident While technology more, agile, in safer a these trends, efforts resilient to be part investments promising partners. the more commitment of making be cheaper lead year technology All and our of to prove XXXX. choice are franchisor and will next phase the our in faster, underscore our deliver and tandem teams our to we work are services stronger to to in the journey

including Taco hundreds out AI, in with U.S. with I'm drive-through addition excited KFC power AI Voice this of to international year-end to expansion roll market. technology about plans our capability of in of to harness stores Bell an to the by testing plans the

phase deliver next growth We unlock are journey hard our technology by at the years driving to strengthening work business of exceptional value and resilience in ensuring our shareholder the future ahead. we

over Chris, you. that, With to

Christopher Turner

development restaurant outlook Today, the everyone. I'll and year. of our unmatched drivers, and our capital results, morning, our strategy financial provide sheet Thank update discuss and on good for the you, our an balance operating David, bold remainder growth capability and

observe second business East impacts of continue unit to of and sales delivered hard business our XX% sales in pressure globe. Beginning in conflict-related and QX in relating X%, and grew conflict the continued And of scale, markets. to strategy digital Despite benefits resilience management Consumer in pressures, reflecting our the technology the observed precisely the we impressive with these System X% expert for Malaysia a the recovery around our set profit quarter quantify, broader leaders an our core increasing system multi-brand to The in operating the growth of model, sentiment quarter. driven the by to by growth. flattened Yum! the results. growth QX. Indonesia, trajectory the Middle while Middle East, we

factors that XXX which stores the the total U.S., largest estate brand Store strength stores of resilience Bell exceptional store Taco advantage global Bell but Taco and the and improve to -- tremendous consumer which single over our franchisees an mature prime stores deliver Importantly, leaders taking experience, our of XX.X% magic simultaneously of company-owned margins further enable growth is productivity. mix in our its Taco in approximately experiences, half margins are achieving was in also our digitally labor XX%, model and the for value of improve company-owned to formula, outstanding XX% were business A the with only example reflecting operations profitability consumer in revenue. enables Bell our consumer continued sales our now underpinning of digital company-owned Yum! representing operations not level ways store-level

improved to leverage. expense profit was Another contributor growth

leverages As January, for future optimization G&A we will to up expense ongoing benefits in our which overlaps. strategically we to free our benefit general our Yum! such both administrative program, to the reinvestment which onetime addition of franchisees in scale throughout the resource AI, shared growth expected drivers beneficial and year and as in some expense see

was related down of resource reflecting expense program. was G&A year-over-year. million, special G&A [ ex-special Reported $XX to quarter $XXX our million Second million, optimization ] X% $XXX expense

resource additional on optimization the savings in ex-special the of generate to expect We the program year. second an basis from half

with to a in algorithm of profit QX tailwind headwind. current a has operating foreign footprint, to Since quarter. interest operating Historically, foreign a rates Reported in equivalent $XX been profit the translation as X% of given in growth U.S. in rise period. operating increased times a million currency negative headwind under impact year our long-term roughly X during profit continued global translation nearly at be to at significant million operating profit began XXXX, reported the headwind other currency, our a our currency and growth to reflects annual $XXX our foreign that times,

higher year-over-year was Second gains. $X.XX, from quarter and investment a year-over-year lower impact EPS $X.XX ex-special tax reflecting a negative rate

by translation unfavorably QX Additionally, $X.XX. EPS currency foreign impacted

brand. transferred bold certain Pizza Yum!'s our X the leading growth of America the exclusively rights system count the Telepizza quarter, Pizza growth. total related number history, expanding growth year-over-year, [ XXX of QX points in highest we ] franchisee, on the the second in our in enabling local gross restaurant to X% units, development Hut unit opened teams Latin focus openings Latin to to Moving In in contributing Gino's America our on to driver. trademarks driving Yum! to to brands our and sales

in compensation. low we rate store exchange from a for associated those volume units As our and low result, removed royalty nominal with brands XXX base

growth the unit this X%. was of impact Excluding transfer, our

with brands during the country remains last XXX contributing and months. brand combinations growth across XX growth Our countries diversified

half KFC countries. record across division, In the China, a X,XXX XX KFC year. development. Japan development. This in KFC units gross our led brand-specific opened all-time brings XXX we and first year-to-date to Thailand the for to for openings Moving units, new of India, the

the and highest the and quarter, Over the the our positive XXX one Brazil. the unit in Philippines U.K. average on of transaction development annual In stores markets. to Ireland, volume seen last year, trends Africa, in South purchase we closed we've

now stores, majority which KFC at Our is XXX the total in of U.K. are located equity market. the estate

across time the Hut's China higher markets, from Hut closures is of which largest Indonesia The XX XXX Pizza Japan, of including trending in Malaysia. and unit U.S. units last and Pizza our opened in growth year-over-year this for year countries. and offsetting division several the slowing conflict-related is development

international Taco countries. we quarter, in markets units this across our Bell, new XX At opened XX XX units including

for the of higher the pick and are the openings we running gross half second expect half, U.S. up year-over-year year. international first growth store in Our to

X% China, international up year-over-year. count Excluding was Bell Taco unit

initiatives. technology Moving digital and to our

call, You our become restaurant earnings journey will company. that recall digital leading discussed to global on I the last and our David

Super our The focused innovation POS of through ownership Yum! of data extensive the of and our acquiring, creation are as scale system, on ecosystem, Within e-commerce the maximizing Global potential our first advantages on platform, the phase the phase, AI of accelerating that leveraging scaling such App leverage. and focused of Dragontail, this data, our In platforms a journey are the we Poseidon control and phase, comprehensive Hub. deployment of value assets. platforms we Data our next building and owned platforms, through enable foundational is digital this of suite cost speed

and differentiator, make creation value the our scratching us Data better is the believe we capabilities. to still better franchisees a crucial full of becoming of enabling decisions. and generate potential insights surface only are our We

our experience I and technology providing with on experiences, additional digital frictionless to QX easy discuss begin pillars. operations easy and experiences our our now accomplishments focused easy me across pillar, will easy Let for insights consumers.

year-end, scale Australia. drive-through member Bell menu underway be now pilot point-of-sale leverages digital we And the our witnessed more standard encouraging as technology XXX This the Bell in Voice expand a consistent the we In KFC system, We and technology productivity. to announce AI recall, while results, is Taco will last has our XXXX of Yum!'s today, technology plan by test discussed to proprietary consumer early I'm several Bell excited which over have hundred you to the given rollout. we experiences and have boards, this to team operational in team higher accelerated stores stores. Poseidon. stores. Taco technology brand plans that in tests, As quarter, to Taco

Yum! Hut made On Pizza Commerce the the at e-commerce we implementing in significant platform have front, progress U.S.

are We second Pizza which at Hut in international to the to line. Yum! in Pizza next be Commerce this to on Pizza platform currently market transitioning Hut U.K., will the platform operate Hut the Canada

Next, members I'll team to pillar, and efficiently. discuss our our where operations easy deploy technology more with to continue operate provide we our the capabilities to stores and their franchisees effectively world-class

AI-enabled Poseidon entire We Taco deployed and of Bell Dragontail, respect have With point-of-sale the our plan stages management year-end. our into in estate. incorporating system out rolled U.S. system, nearly to fully the Pizza by system system KFC early restaurant U.S. this system Hut U.S. to have to we the are within the

in increase U.S. X% leading improved have example of X,XXX technology, overall to in to measured impact, a first the Hut due we consumer Dragontail's the an stores and implement to hotter As pizzas Pizza frequency. consumer fresher satisfaction

and achieve app in XX,XXX Hut KFC Finally, across -- we by at our globally the of restaurant to scaling the General U.S., Manager milestone process year-end. are support store we plan Pizza

an AI in basic covers communications our of data this the XXX and This approach may other our broadly in future, innovative brands. to pursuits AI-driven first-party easily as partnership on our AI engage space a application This paid start-up which Lastly, the our I'll insights leverage known unlock steps deepened personalization for of We assets. the media. be we to deep to the taking massive and R.E.D consumer extend easy expect will quarter, reinforcement benefits and integration CRM pillar. with discuss channels our sales instance, and channels, partnership focus to and our learning, across scalable learning database

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

quarter our guided resilient reminder, a and excess business, by million value maintaining a cash were expenditures refranchising shareholder capital shareholders. maximizing CapEx Net for the in and sheet, our $XX returning gross priorities competitive are $XX dividend million, in to $XX offering include capital in a investing reflecting balance million proceeds. and As the

Our net at X.Xx. leverage quarter ratio ended the

until no and have strong balance We a maturities debt XXXX. sheet

shares quarter, repurchases is in During are value entire we repurchased year back have second the the million resumed XXXX. our during context by buying to stock, $XX of the share for which pleased same of

Going investment shareholders KFC attractive excess of our to share like to we forward, opportunities to absent repurchases. acquisition U.K. continue any plan recent return restaurants, flow cash through

to the extended track unit outlook global impact I'll year the planned note the XXXX. Middle of on balance of path full Finally, We should full our the some number for a the of X% East on discuss despite to remain be markets. our certainty similar is conflict. year unit the in gross growth East gross Middle of to expected XXXX. in for openings number achieve our the on also future On openings basis, We

For East, example, there Malaysia XXX the temporarily restaurants are Indonesia. and closed currently across Middle approximately

These the are permanently this temporarily the risk of plans stores but were reported conflict if the some unit impacted royalties restaurants to place and would While is our month close. the not closed, while future half stores count second be been producing negatively starting some have those trajectory there pending close could permanently throughout that impact. these there in reopen year, of to of later

Bell expect With be margins XX%. we profitability, in the XX% respect to store year full company-operated to store range of to company Taco

Regarding G&A.

low we percentage. a week, a expect G&A single-digit XXrd basis the lower Excluding year-over-year ex-special on by be now expense to

QX Summit. sequencing, as year's and Global Leadership we insurance costs for we be lap will of higher incur year-over-year to cyber-related relating as recovery As G&A last proceeds our

remain the we year basis year operating despite core deliver balance that benefit our to a XXrd X% the of updating at of excluding Middle tied seeing outlook we're least the week. East growth profit sales the will to confident on we continued Finally, reflect conflict, softness full

the to forward cement the of global proud do choice. very teams and our business to going of to I'm Yum! resilient as continue as growth Yum! work franchisor position further a

our distinctive XX% testaments our our mix digital are and and distinctive of AI and toward technologies technology plus strides rollout continued to digital pursuit. incredible ambitions, digital that sales making are We

franchisees around the capable, want with working outstanding In well-capitalized our and markets world, XC have we committed brands. who with grow and privilege of our system the to that is iconic

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

Operator

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

David Tarantino

we're My in I environment. same-store your on could wondering currents given maybe macro second plays question comparisons, cross progress out. lot but the is And you was you that you how seeing on a of know outlook, called And in -- have the if all there's a sales thinking the could half easing elaborate out. I you're lot of uncertainty markets

on So just could it the year. or wondering context you're your if guidance you about some for profit within provide how X% profit thinking core growth

David Gibbs

David. Yes. Thanks,

more, think changed, learn our obviously, week. we thinking I every hasn't although

forecast. Bell, therefore, general, have are despite lap we As pull, for a these Obviously, I harder but forecast same-store improvement in continue progress of we our actually QX same-store brands growth, the in right every And -- we improvement conflict. know Yum! is in Middle becomes lap see said sequential lap are performing quarter the we some to lap a beginning much the single and an through levers slightly East as we tough we quarter-to-quarter easier we an the we year, sales Taco growth. QX of all easier well But start to sales year, challenges. think to as for to

Middle the international, impacts. I basis East example, KFC X-year XX% mean, on for up despite is a

Taco You Bell did QX. in saw what

But this We a think be and get then know of environment. you there's year reasons choppy to next to we optimistic. say, lot easier year. as get obviously through much laps I it a can

Operator

Our comes next from Tower question Jon from Citi.

Jon Tower

first a the year. operating provide and return to can what for the piece color through little growing about it normal again? back bit seems and a because we specifically, the I you that in of to And hoping was puts we to of G&A comp business see the I little unfolding on expect dive hoping 'XX. especially Should some into back growth then of you core how bit the on and this cadence, in mover half takes maybe the obviously, be should profit the if incentive kind resets to was more a think half

Christopher Turner

what If I Yum! you're a that driving sum of what plan driving been the Look, think were has team to playing and doing, I management G&A there's happen John. Thanks, our and out drive for seeing as few Yes. our year for expected. efficient is faster this to kind levers we're and we're that. buckets are And of up reallocating growth franchisees. more that our streamlining is

year we've that said course, with Of net a onetime some there year. the benefits are this basis full on

area The and digital technology here. an important is second,

more year, burden. that, have So to curve. burdened by years, platforms we talked bit. that past which that of the income is, adoption and this and our starting ahead about we behalf few the our that we're P&L from the what bend fee more And franchisees, of as reduces it we invested over mean we a on But we get

effectively a done at ways years. to which allows Yum! more got acquired of governance are that find mature, get cost, we better, hired Those we more our our spend tech also in to benefits And capabilities And place. organize of maturing. the and people companies, us as to internally, franchisees. We lot several in and strong four lower last we've operate

I think of resource more optimization operate driving the productivity effectively third in of parts We've to been is area business. ways parts in We're finding D&T. the program. other this outside

enabled cases, company. Now becoming a that's in more some digital by

they plans how the good business around a And driving as said our their the GMs is then remarks, really globe. the as doing are in we pulling job see on finally,

those the year. So are factors that are G&A the this trends driving

AI the reinvesting same chain culture in that then on the and into We're investing at like note We're it's last talent. supply AI. We are mentioned putting Now time. marketing capabilities, in we to and our projects important motion. call, areas investments XX-plus

driving long-term we're the of at health the business. same So time, the

beyond, XXXX the to we're If leverage on going and look continue get to to you line. G&A

G&A aside growth a set get terms the you'll You we for and an company line, in to year-over-year leverage of I ours. incentive on factors like comp, like good rate normal think like see a asset changes G&A expect in

Operator

Our next Charles Cowen. comes from TD question from Andrew

Andrew Charles

segment confidence of the Taco share have Bell. strength two-part items Taco same-store question XQ in is Chicken in bigger on can value. retain drive-through to understand the I of looking remainder how sales back And while Cantina you on trends hold intensified new promotional Taco your XQ question to the -- half you U.S. the away menu shift Bell's the ability to I'm to focus the XXXX? as you your a Bell's from that

David Gibbs

in, Sure. feel Obviously, Bell results a in the -- good for Taco we Bell and QX, is the about really coming lot positive Taco of of year.

this industry to core craveable. do the we First the it a back on. when where a incredibly nobody so value the us us little has. all, items. It's of on they're XX unique. They good menu They're like in the probably Taco bit, They're moat value. And and put around item. a that Cravings pulling of items else always comes being in unique versions Value That feel got consumer is Bell's own right. Remember, stand They're served really it environment in brand. not their about brand? junior-sized well, is Why always has

a an $X onetime price. is tasting incredible which Box of food have amount great we the offerings addition, ] that [ price In Lux for at point, like

a way which Cantina like great in as when move off you a innovate that we for have forward. that launch the really that we QX, with of then platform is to So others value makes to hard Chicken And we'll play compete. continue couple things to it

example of got Street in can a launched Taco probably you've program things the saw do we we Bell improving [ of at good start. all Taco Cheesy Chalupas just sorts rehit Cantina QX, off That's of in that You like launches. great are an with ] to what speed QX. menu. service, other going loyalty then on that And Chicken We'll Cantina Chicken

So environment, industry the crowd, again hopefully, the move seeing really out Taco confidence in we QSR the Taco sense in as a we And forward. have I margin. stand we're Bell outperforming by Bell think from of in wide this the

Operator

comes next from Our from Brian question Oppenheimer. Bittner

Brian Bittner

challenging backdrop. navigating a on Congrats

half, is Yum! half operating is the there is going half sales on that core negative You as guidance, versus comparisons profit I And Or favorable profit par this in second half is with quarter trends guidance reason possibly in second now and delivered first year-to-date that in at looking more will X% And still third is maybe the the And the aware the be the challenged, fourth anything the full first course. we've the growth had in that believe for the to you've operating know in I'm already second in environment to differentness profit accelerate in about X% the year there bag call. timing remain is as there's quarter. half have conservative? of an opportunity first for I versus half. not sales I first know year-to-date. growth of? the that there this half should half? same-store talked the But better to but G&A overall, second between growth despite on Is some

Christopher Turner

at delivering in we the call, on Brian, confident we as remain Yes, X%. least said

of expect David have complex we still Of course, we back standpoint. lots said, to from to of as operating G&A part environment. There as a quarter-to-quarter do it's sequential the are unfold as said, mentioned, in year. And be But you [indiscernible]. we full the forecast improvement year in the sales yet a unknown

with midpoint. So deliver still the we're health good job at And profit back into possible the as in the here as to our it's the half going growth long-term investing the business. of while much starting of year a point

the doing, focused teams on and And are simultaneously. the so term that's what term our short long management driving

Operator

Our Dennis question from comes UBS. from next Geiger

Dennis Geiger

little bit development. are franchisees looks, anything else to and looking that the the you've got a of you managing particularly open at to still, how solid that talk little wanted KFC. cetera? effectively on a to about the a brands even but global there, some unit macro impressive offer the challenges, continuing about bit ahead, pressures including rate? into pipeline more strength visibility how development Obviously, Could more there's growth, out et ask if I And typically, at restaurants

David Gibbs

impact Yes. seeing The particular of one you really about the widespread is all Thanks, world. the around Dennis. strongly sales think in we on picture the encouraging. markets, are conflict development growth quite that is When still

that small to quite the brand a are store. combinations don't a an even my months countries I about think build built country X/X of a have small last our of I lot opportunity There's over XX mentioned store. that remarks, in have

there right impressive is that widespread. it's that So

to we what open did like in it's As ability units XXXX to going mentioned, gross we to our similar looks very . be XXXX. and

Now like number to that we would go every up year.

remarks, potential So half potential in just Chris some, up Middle would year. as the East that stores the for closures, are in any volume close, their some perhaps the that in line. that's second normal additional stores for particularly than markets, there's lower greater that mentioned showing from impact of probably people his the portfolio. been Middle gross small would some And have in East pruning But unit

impact year. development the additional to system year to full in drive similar ability of sales to from very terms last the this expect be We year

and meticulously Why franchisees development lot have our that the and in of around the to I their are investments. franchisees We returns market sure story the on paybacks. world that? is our the a good the they're confidence So their long-term country Because every track good is of the brands good. getting think make getting paybacks strength in businesses around

Operator

comes from Stanley. Morgan question next Harbour Our Brian from

Brian Harbour

broader impacts to weaker? I stronger think markets with Middle remarks you Europe other been I there? is more broadly, anything that in or East if the of of there highlight out some or And just you're what to on curious your could just prepared referring that. guess, has I comment mentioned you some was the you issues. like sometimes some call markets And of

David Gibbs

have in obviously, markets to Look, Middle and general, the highlighted, Malaysia Indonesia addition markets for impacted been terms in East in I us. of think significant we've

first and to hearing the precise out from but some types that trade a just not from the the of by stories area them that impact markets from be we hard Beyond just trade can that East area that, we're markets trade We it impact Middle see would Indonesia all, it's hard but trade can Malaysia, area in to by -- not than the of you impacted. it's we're imagine further given bit measure. field area to is very because science. little very a know be and pull -- broader But it's And going of that the the the data not in market. a

very important seeing growth markets some despite world. where out same-store at Middle thing If the impact I look put the year. is, we're the like seeing -- on of a of take are I on a all at at mid-single-digit top and quarter up we're think same-store that's we back -- start mentioned growth sales growth sales second which know actually put seen the places East, plus of the for KFC. read KFC from XX% for really And consecutive it that, our the a impact then they all, just ex-Middle -- they East, LA&C, business clean the we X-year XX% little there's second Q&A, we've around no XX% last

XX% Latin it's So same-store America in sales growth for KFC.

best East headwind that tell as the Middle our from is strong. the could can we're You as And really this really imagined. quite business be of through getting foundation

Matt Morris

time more have one . for Operator, we question.

Operator

Danilo final Bernstein. our comes from Gargiulo So from question

Danilo Gargiulo

Bell. question the Taco margins a have at I sustainability on of

labor are the in in pressures the margins value seeing you're spend of the the context quite impressive -- California, consumers. from So

think margin deploy what be do levers incremental about X do forward? years? these in sustainable expect able going are to maybe to talk to you you XX%, other improvements X Taco And margin In how XX% So Bell? next wouldn't the at words,

Christopher Turner

impressive seeing great Yes. very margin it. on creating Danilo. of the bear and the you're Taco I the of value the operate purchases to how leveraging Bell consumers context be is when to story environment. bringing food Look, of these our long our think Bell The a delivering business advantage more Taco you'll maintain in buzz I us market, industry-leading franchisees that value-oriented And is yet innovation restaurants. Thanks, see scale. serving and terms think And from us in productive the need consumers, in margins. our and more continue take run, scale That in comes we

lever just great become is And at XX% that one team more is you As mix, that than we us example to house. digital things member of of faster front. us AI, other a productive a and experience digital, more provide about accelerating ago. heard just more back on talk of digital which we happening Voice a customer expected months in that more X allows pace experience, be Lots a and great

value great be consumers stores going our I company sets up for and and for continue to for think our to strong well us it margins provide to forward. able to franchisees

David Gibbs

margins put questions. Well, brands and proud proud I the the into our for XXXX. up this about we're Inflation our about the we environment, laps the the AI, future twin doing you, Obviously, business, thank your stronger, even reinvent talk digital we and despite G&A, year and this lean getting time appreciate growth investments scenes our everyone, that in stronger Bell the of to all quarter results as are into good to half second they work Taco up we in run easier. how behind more really this quarter. we're the we're but is this on today. go of how performed in headwinds getting The getting the are moderating, We the to excited numbers. putting really leadership reallocate and our engines are

where and future is this excitement quarter, future. that The compare spent with some from be twin incredibly engine and today, partners International But brand, for franchisees the have about Taco that everybody of Bell not about I the international Taco Bell -- time our calendars -- the also of that talk at the Bell world together of growth get the we that marketing that Con, quality Taco convention around calling excited one future growth the although for Taco to was quite it's another clear reason bright at we're we to the the strong. and

quarter future Thank for that of our the go of our time. strength into and the brands and everybody, a think the demonstrated about QX. as you, I So excitement we resilience your business model

Operator

This concludes today's conference call.

You may now lines. your disconnect

Yum! Brands (YUM) 6 Aug 242024 Q2 Earnings call transcript