Yum! Brands, Inc. Q4 FY2025 earnings call

• Taco Bell gained market share with 7% same-store sales growth, KFC had record unit development and opened 30,000th international restaurant.
• Digital capabilities drove sales with digital mix near 60% and digital sales growing 20% y/y.
• Core priorities: battle for future consumer to lift average unit volumes, accelerate restaurant-level economics for franchisees, and leverage Byte for connected experiences.
• Collider's 2026 food trends highlighted shifts in consumer behavior like me, me, me economy, choice therapy, and vibe mapping.
• Pizza Hut strategic review proceeding as planned with team working on near-term results improvement.

KFC represents 51% of divisional operating profit, delivered 6% system sales growth and 10% core operating profit increase. Taco Bell represents 38% of divisional operating profit, had 8% system sales growth and 10% core operating profit growth. Pizza Hut is in strategic review with ongoing process and near-term results being strengthened with franchise partners.

• Excluding Pizza Hut, expect to meet or exceed long-term growth algorithm including over 5% net new unit growth.
• Taco Bell US restaurant level margins expected to be between 24-25% in 2026.
• Ex-special G&A expected to grow mid-single digits, including incremental overhead from Taco Bell US store acquisition.
• Interest expense expected in range of $500 to $520 million for full year excluding potential debt issuances.
• Tax rate expected in range of 22 to 24%.

• Forward-looking statements subject to future events and uncertainties causing actual results to differ.
• Impact of foreign currency on system sales and operating profit growth.
• Ongoing nature of Pizza Hut strategic review with uncertainties in final outcome.

Q: Could you talk more about accelerating long-term growth and potential focus on Taco Bell and KFC post Pizza Hut strategic review?

A: KFC had record gross unit openings, Taco Bell had strong same-store sales in US and international. KFC global team focused on elevating marketing, new category entry points, loyalty, etc. Taco Bell continuing momentum with plans to reach 2030 goals.

Q: Thoughts on reacceleration in KFC Global Development and potential for higher franchise revenue/profitability?

A: Focus on raise the bar strategy to accelerate restaurant economics, unlock white space in markets, with examples of growth in Korea, Italy, Japan. Markets like Brazil have potential for growth.

Q: How thinking about unit development growth rate for KFC and Taco Bell?

A: Pleased with unit development momentum, tied to raising the bar strategy, unlocking higher AUV markets and higher royalties to accelerate growth.

Q: Discuss Taco Bell's comp growth in 2025, traffic and guest demographics?

A: Strong same-store sales growth driven by transaction growth from penetration and frequency, broad range of consumers including higher-income, younger, and families.

Q: Current adoption of Byte in US and progress?

A: Byte has high penetration in Taco Bell US system, components active, focus on international expansion with deployment plans in KFC markets, investments in technology to bend g&A curve.

Q: Gating factors for international expansion of Byte and timeline?

A: Deployment involves evaluating benefits vs current tech systems, aligning with franchise partners, thoughtful implementation plan including change management, steady expansion with focus on 2026 deployments.

Q: Views on life beyond Pizza Hut and existing portfolio's ability to achieve long-term algorithm?

A: Primary focus on completing Pizza Hut strategic review, teams laser-focused on all brands, confidence in long-term trajectory with raise the bar strategy improving algorithm elements.

Q: Positioning of US portfolio for Pizza Hut, closure of 250 units in first half?

A: HUD forward program involves closing 250 units in first half, 250 stores is small portion of global estate, part of strategic review execution to position brand moving forward.