Financial Data and Key Metrics Changes - The company reported an 8% core operating profit growth over the last two years, maintaining this growth in Q1 [12][28] - The long-term growth algorithm aims for 5% unit growth annually, coupled with same-store sales growth translating to 7% system sales growth, targeting at least 8% core operating profit growth [31][32] Business Line Data and Key Metrics Changes - Taco Bell US significantly outperformed the US QSR industry in Q1, achieving a 9% same-store sales growth [62] - KFC International is the leading unit development engine, opening a new restaurant approximately every three hours [10][25] Market Data and Key Metrics Changes - The company operates in over 50 countries with a 98% franchise model, providing resilience in various macroeconomic environments [11][12] - Yum China continues to expand, serving only one-third of the Chinese population, indicating substantial growth potential [43][44] Company Strategy and Development Direction - The company is focused on transforming into a pure-play franchisor, emphasizing digital and technology capabilities through initiatives like Byte by Yum [12][21] - The strategic imperative includes leveraging scale across brands for procurement and supply chain efficiencies [58][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of KFC and Taco Bell, highlighting the resilience of the business model amid macroeconomic volatility [11][12] - The management acknowledged the challenges faced in international markets, particularly with Taco Bell in China, but remains optimistic about future growth [38][44] Other Important Information - The company has made significant investments in technology and digital capabilities, with over 40 AI projects underway [92][106] - The leadership team is seen as a critical factor in maintaining the brand's relevance and innovation [76][82] Q&A Session Summary Question: What is still underappreciated in the stock today? - Management believes the growth potential and the value of Byte technology are underappreciated by investors [24][27] Question: How sustainable is the 5% unit growth beyond 2025? - Management is confident in sustaining the 5% unit growth due to strong franchise capabilities and market opportunities [31][34] Question: How does the algorithm hinge on recovery in China? - While China has been a primary growth driver, there are still significant opportunities for unit growth globally [42][46] Question: How does the company view competition in the market? - The company is focused on outcompeting rivals and believes its franchising capabilities provide a competitive advantage [53][56] Question: What role does digital play in the company's strategy? - Digital initiatives, particularly Byte, are expected to enhance operational efficiency and improve franchisee economics [83][86] Question: How does the company balance investments in technology versus profitability? - Management aims to optimize resources while ensuring long-term growth through strategic investments in technology [96][97]

Core Insights - The restaurant industry presents complexities for investors due to performance variations, despite its familiarity to consumers [1] - Successful restaurants in the current value-conscious environment are those offering exceptional products and experiences [1] Pizza Chains Analysis - Domino's Pizza Inc is expected to continue outperforming, supported by partnerships with delivery platforms and value-oriented menu strategies, with a Buy rating and a price forecast of $549 [2] - Papa John's International, Inc is anticipated to improve its earnings profile post-investments planned for 2025, also receiving a Buy rating with a price forecast of $52 [3] - Yum! Brands, Inc has maintained stable returns on assets, leading to a Neutral rating with a price forecast of $159 [4] - Market share dynamics show Domino's gaining share, Papa John's maintaining its position, while Pizza Hut has experienced a decline [5] Broader Restaurant Sector Insights - Bloomin' Brands, Inc may face slower same-store sales growth due to macroeconomic pressures, receiving an Underperform rating with a price forecast of $7 [6] - McDonald's Corporation could achieve better margins if it slows investment or finds cost savings, with a Neutral rating and a price forecast of $327 [7] - McDonald's defensive profile may become more appealing if investor sentiment shifts towards risk aversion [7]

Core Points - Pizza Hut launches the BOOK IT! app as part of its revitalized summer reading program "BOOK IT! Summer of Stories," aimed at encouraging children's reading during summer months [1][2][4] - The program offers free Personal Pan Pizzas® to children who meet their reading goals, with the initiative running from June to August [3][4] - The BOOK IT! program has a long history, inspiring over 70 million children and distributing over 1.5 billion free pizzas since its inception in 1984 [9] Company Overview - Pizza Hut, a subsidiary of Yum! Brands, operates nearly 20,000 restaurants globally and is recognized for its innovative pizza offerings [5] - The company has a strong digital presence, with over half of its transactions coming from digital orders, and it continues to lead in technology within the food service industry [5] - Pizza Hut's commitment to community and environmental impact is reflected in its initiatives focused on equity, carbon reduction, and better packaging [5] Industry Context - The "Summer Slide" phenomenon refers to the decline in reading skills that children often experience during school breaks, with research indicating that students can lose the equivalent of two years of learning by middle school [2] - The BOOK IT! app aims to combat this issue by allowing parents to set personalized reading goals for their children, thereby enhancing literacy skills during the summer [2][4]

Group 1 - KFC plans to invest £1.49 billion in the UK and Ireland over the next five years [1] - The investment is expected to create over 7,000 jobs [1]

Core Viewpoint - KFC is expanding its drive-thru service despite challenges in implementation, aiming to compete with rivals like McDonald's and local brands in a highly competitive fast-food market [17][22]. Group 1: Drive-Thru Service Challenges - Some KFC locations are not designed for efficient drive-thru service, leading to employees waiting outside to hand over orders, which complicates the process for both staff and customers [3][10][20]. - Customers often face issues with poorly designed drive-thru lanes, causing delays and confusion during the pick-up process [11][14][16]. - The drive-thru service has been described as "slow pick-up" due to various logistical challenges, including the need for customers to navigate complex parking and pick-up routes [10][14][22]. Group 2: Expansion of Drive-Thru Service - KFC's drive-thru service has evolved to a 2.0 version, which includes street-side pick-up options, and is set to expand to nearly 5,000 locations by the end of 2024 [18][19]. - Despite the challenges, KFC is committed to promoting the drive-thru service as a competitive advantage in the fast-food market, particularly against McDonald's and local competitors [22]. Group 3: Consumer Behavior and Market Position - The demand for drive-thru services in China is questioned, as many consumers do not prefer to eat in their cars, leading to low order volumes at some locations [21][22]. - KFC's strategy appears to be driven by the need to maintain market share in an increasingly competitive environment, where even small advantages are deemed valuable [22].

Company Overview - YUM! Brands Inc. is a global leader in multi-branding, offering consumers a variety of choices at a single outlet. The company operates through four segments: KFC (41% of total 2024 revenues), Pizza Hut (13.4%), Taco Bell (37.9%), and Habit Burger Grill (7.9%) [11]. Investment Ratings - YUM is currently rated as a 3 (Hold) on the Zacks Rank, with a VGM Score of B. This indicates a moderate investment outlook [12]. - The company has a Growth Style Score of A, forecasting a year-over-year earnings growth of 9.7% for the current fiscal year [12]. Earnings Estimates - In the last 60 days, seven analysts have revised their earnings estimates higher for fiscal 2025, with the Zacks Consensus Estimate increasing by $0.04 to $6.01 per share [12]. - YUM has an average earnings surprise of 0.5%, suggesting that the company has a history of exceeding earnings expectations [12]. Investment Potential - With a solid Zacks Rank and top-tier Growth and VGM Style Scores, YUM is recommended to be on investors' short lists for potential growth opportunities [13].

| 2025 | Logo | Name | Country | 2025 | 2025 | | --- | --- | --- | --- | --- | --- | | 1 | | McDonald's | 페 | $40,512M | AAA+ | | 2 | | Starbucks | 제 | $38,760M | AA | | 3 | KEC | KFC | MI | $15,360M | AAA | | 4 | SUBWAY | Subway | 베 | $8,082M | AA | | 5 | 图图 | Taco Bell | 제 | $6,916M | AAA- | | б | Tim Hortons | Tim Hortons | 4 | $6,839M | AA | | 7 | | Domino's Pizza | 제 | $6,691M | AAA- | | 8 | 7.75 | Chick-fil-A | 图 | $5,658M | AAA | | 9 | 100 | Wendy's | 图 | $5,165M | AAA | | 10 | | Pizza Hut | 200 | $4 ...

Financial Performance - Total revenues for Q1 2025 reached $1,787 million, a 12% increase from $1,598 million in Q1 2024[8] - Net income for Q1 2025 was $253 million, down 19% from $314 million in Q1 2024[8] - Basic earnings per share for Q1 2025 were $0.91, compared to $1.11 in Q1 2024, reflecting a decrease of 18%[8] - Operating profit for Q1 2025 was $548 million, slightly up from $520 million in Q1 2024, indicating a 5% increase[8] - The company reported a comprehensive income of $275 million for Q1 2025, compared to $307 million in Q1 2024[10] - U.S. revenues for KFC, Taco Bell, Pizza Hut, and Habit Burger & Grill Divisions totaled $1.0 billion in Q1 2025, up from $0.9 billion in Q1 2024, representing an increase of approximately 11.1%[54] - Company sales reached $607 million, up 28.1% from $474 million in the prior year quarter[8] - Consolidated operating profit for the quarter was $548 million, with income before income taxes reported at $429 million[52] Cash Flow and Assets - Cash provided by operating activities in Q1 2025 was $404 million, an increase from $363 million in Q1 2024[12] - Total assets as of March 31, 2025, were $6,659 million, a decrease from $6,727 million at the end of 2024[14] - Cash and cash equivalents as of March 31, 2025, totaled $607 million, down from $616 million at the end of 2024[40] - The total cash, cash equivalents, restricted cash, and restricted cash equivalents decreased to $782 million as of March 31, 2025, down from $807 million as of December 31, 2024, representing a decrease of about 3.1%[40] - Accounts and notes receivable, net decreased to $712 million from $775 million as of December 31, 2024[37] - Property, plant and equipment, net increased to $1,338 million from $1,304 million at the end of 2024[39] Shareholder Information - Shareholders' deficit increased to $7,804 million as of March 31, 2025, compared to $7,648 million at the end of 2024[14] - Dividends declared per common share increased to $0.71 in Q1 2025 from $0.67 in Q1 2024[8] - The company declared dividends of $199 million in Q1 2025, compared to $190 million in Q1 2024, representing a 4.7% increase[15] - The company repurchased 1,556 thousand shares of common stock for $228 million, with remaining capacity to repurchase up to $1.4 billion[33] Tax and Legal Matters - The effective tax rate for Q1 2025 was 41.0%, significantly higher than the 18.0% rate in Q1 2024[41] - The income tax provision for the quarter ended March 31, 2025, was $176 million, significantly higher than the $69 million recorded in the same quarter of 2024, indicating a year-over-year increase of approximately 155.2%[41] - The IRS has proposed an underpayment of tax amounting to $2.1 billion plus $418 million in penalties for the fiscal year 2014, with an estimated interest of approximately $1.5 billion through Q1 2025[72] - The company intends to contest the IRS's proposed tax adjustments vigorously and has filed a protest with the IRS Examination Division[73] - The company does not expect resolution of the IRS matter within twelve months and believes its tax position will be sustained[74] Acquisitions and Growth Strategy - The acquisition of 216 KFC restaurants in the U.K. and Ireland was completed for a purchase price of $177 million, enhancing KFC's growth strategy in the region[23][26] - The total identifiable net assets from the acquisition were valued at $89 million, with goodwill recognized at $88 million[27][29] - As of March 31, 2025, Yum! Brands operated over 60,000 restaurants in more than 155 countries, with 98% owned by franchisees[17] Capital Expenditures - Capital spending for Q1 2025 was $71 million, up from $49 million in Q1 2024[12] - Capital spending for the quarter was $71 million, with KFC and Taco Bell accounting for $18 million and $31 million, respectively[53] Debt and Financial Instruments - The company has a total long-term debt of $11.327 billion as of March 31, 2025, compared to $11.306 billion at the end of 2024, reflecting a marginal increase[58] - The company entered into new interest rate swaps in April 2025 to fix the interest rate on $1.5 billion of borrowings at a rate of 5.09% from April 2025 to March 2028[63] - The carrying value of the Term Loan A Facility was $500 million, with a fair value of $496 million as of March 31, 2025[69] - The carrying value of the YUM Senior Unsecured Notes was $4.550 billion, with a fair value of $4.395 billion as of March 31, 2025[69] Miscellaneous - The company recognized a foreign exchange net loss of $3 million in Q1 2025, compared to a gain of $5 million in Q1 2024[35] - The company is appealing a court decision regarding the utilization of tax losses in Mexico, with no expected resolution within twelve months[44] - The company incurred corporate and unallocated G&A expenses of $105 million for the quarter, which included charges related to resource optimization and brand headquarters consolidation[55] - The company recorded a net periodic benefit cost of $(1) million for its U.S. pension plans for the quarter ended March 31, 2025[57] - The company reported a loss of $20 million related to the sale of a 5% minority interest in Devyani International Limited during Q1 2024[60]

Group 1 - The collaboration between Nanjing Hongshan Forest Zoo and well-known brands has created new engagement opportunities, attracting nationwide fans during the May Day holiday [1][2] - The zoo's partnership with Golden Eagle Group has launched a 2.0 version of deep co-creation, themed "Everything is Cute," integrating cultural tourism and commerce to enhance visitor experiences [1][3] - The zoo implemented a visitor management system during the holiday, limiting daily admissions to 80,000 and peak in-park numbers to 40,000 to ensure safety and order [3] Group 2 - The collaboration with KFC introduced exclusive merchandise, such as plush keychains, which significantly increased customer engagement and social media discussions, with a topic reaching 409,000 views and 2,660 discussions [2] - A pop-up bus featuring zoo mascots was deployed at a shopping area, further promoting the partnership and attracting fans for photo opportunities [2][3] - The zoo's visitor numbers ranked in the top four among city attractions during the holiday, indicating a successful marketing strategy [3]

Core Insights - Yum Brands reported $1.79 billion in revenue for Q1 2025, an 11.8% year-over-year increase, with EPS of $1.30 compared to $1.15 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $1.84 billion by 2.76%, while the EPS exceeded the consensus estimate of $1.29 by 0.78% [1] Financial Performance Metrics - System same-store sales for Pizza Hut Division decreased by 2% compared to an estimated increase of 1.4% [4] - Taco Bell Division saw a 9% increase in same-store sales, surpassing the estimated 7.4% [4] - KFC Division reported a 2% increase in same-store sales, slightly above the estimated 1.6% [4] - Total restaurants for Taco Bell Division were 8,723, below the average estimate of 8,794 [4] Revenue Breakdown - Company sales for Taco Bell Division were $607 million, below the average estimate of $640.81 million, but represented a year-over-year increase of 28.1% [4] - Franchise contributions for advertising and other services amounted to $395 million, slightly above the average estimate of $394.76 million, with a year-over-year change of 7.6% [4] - Franchise and property revenues totaled $785 million, below the average estimate of $805.21 million, reflecting a 3.7% year-over-year increase [4] - Habit Burger Grill Division company sales were $125 million, below the average estimate of $134.02 million [4] - Taco Bell Division franchise and property revenues reached $234 million, exceeding the estimated $229.75 million, with an 11.4% year-over-year increase [4] - Pizza Hut Division franchise and property revenues were $143 million, below the average estimate of $151.72 million, representing a 3.4% year-over-year decline [4] - KFC Division franchise and property revenues totaled $407 million, slightly below the average estimate of $416.53 million, with a 2.5% year-over-year increase [4] - Taco Bell Division franchise contributions for advertising and other services were $160 million, slightly below the average estimate of $162.24 million, with an 8.1% year-over-year increase [4] Stock Performance - Yum Brands shares have returned -7.1% over the past month, compared to a -0.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]