Core Insights - Yum Brands is leveraging its Byte by Yum technology platform to enhance operational efficiency and customer satisfaction across its restaurant brands [2][3] Technology Platform Overview - Byte by Yum is a proprietary software-as-a-service (SaaS) platform designed for KFC, Taco Bell, Pizza Hut, and Habit Burger & Grill, focusing on quick-service restaurant (QSR) operations [2] - The platform has achieved significant operational improvements, including an 85% reduction in stockouts, a 75% decrease in aggregator ordering failures, and a 10% increase in consumer satisfaction [2] Business Impact - Improvements from the Byte by Yum platform are expected to drive higher same-store sales growth and enhance unit economics, aligning with the company's "Raise the Bar" ambitions [3] - The platform's ability to own data and key technology components provides a competitive advantage in a rapidly changing technological landscape [3] Product Offerings - Yum Brands offers the Byte by Yum platform in two bundles: Smart Ops (point of sale, menu, and kitchen management) and Digital Ordering (web and app ordering, menu, and third-party marketplace applications) [4] Adoption and Expansion - By the end of 2025, Smart Ops was implemented in 7,000 restaurants, and Digital Ordering was in 18,000, totaling at least 38,000 restaurants utilizing at least one Byte product [5] - The company is now focused on enhancing product excellence and accelerating global adoption of the platform [5] Digital Sales Growth - The Byte by Yum platform, along with the company's loyalty ecosystem and AI-driven marketing, contributed to digital system sales reaching $11 billion, with a digital mix of 60% in Q4 [6] - Growth was observed across all digital channels, including mobile apps, loyalty programs, and delivery services, reinforcing the company's competitive edge [7]

Financial Data and Key Metrics Changes - In Q4, the company achieved a 5% growth in system sales, driven by 3% unit growth and 3% same-store sales growth [19] - Digital sales reached over $11 billion, growing 25% year-over-year, raising the digital mix to nearly 60% [20] - For the full year, system sales grew 5%, with Taco Bell at 8% and KFC at 6% [20] - Q4 core operating profit grew 11%, and the full-year core operating profit increased by 7% [22] - Excluding Pizza Hut, core operating profit grew 10% [22] Business Line Data and Key Metrics Changes - Taco Bell reported 7% same-store sales growth, while KFC achieved 6% system sales growth [4][11] - Taco Bell's U.S. restaurant-level margins were 25.7%, a 50 basis points expansion year-over-year [21] - KFC's Q4 restaurant-level margins were 12.7%, a 60 basis points expansion year-over-year [21] - KFC opened over 1,100 units in Q4 and nearly 3,000 units for the year, marking a record pace [22][23] - Taco Bell opened 228 new units in Q4, with a target of reaching at least 10,000 units in North America [26] Market Data and Key Metrics Changes - KFC's largest equity estate, the UK, saw a 10% increase in same-store sales in Q4 [11] - Taco Bell International achieved 5% same-store sales growth, with standout performance in Canada, the U.K., and Spain [16] - Pizza Hut experienced a 1% same-store sales decline globally, but saw growth in Pizza Hut International [30] Company Strategy and Development Direction - The company aims to raise the bar with three core priorities: enhancing average unit volumes, accelerating restaurant-level economics for franchisees, and leveraging technology through Byte [8] - Taco Bell has set ambitious goals for 2030, including reaching approximately $3 million in U.S. average unit volume and expanding to 3,000 international stores [9] - The company is focused on digital capabilities, with digital sales growing significantly and expected to drive nearly one-quarter of Taco Bell's average unit volume growth in 2026 [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's momentum and the ability to exceed long-term growth algorithms, particularly in Taco Bell and KFC [39][43] - The strategic review of Pizza Hut is ongoing, with expectations for strong gross openings globally despite targeted closures of underperforming units [32][36] - Management highlighted the importance of franchise partnerships and the potential for growth in under-penetrated markets like India and Brazil [24][25] Other Important Information - The company returned approximately $1.35 billion to shareholders in 2025 through dividends and share buybacks [33] - The capital priorities include maximizing shareholder value, maintaining a strong balance sheet, and returning excess cash to shareholders [33] Q&A Session Summary Question: Can you elaborate on opportunities to accelerate growth in Taco Bell and KFC? - Management noted strong momentum in both brands, with record unit openings and a focus on improving restaurant economics to sustain growth [39] Question: What are the prospects for KFC global development and franchise revenue? - Management emphasized strong paybacks in various markets and a focus on unlocking growth potential in under-penetrated regions [46] Question: How is Taco Bell's comp growth driven by traffic and demographics? - Management reported strong transaction growth across all income bands, with increased penetration among higher-income consumers and families [57] Question: What is the current adoption status of the Byte initiative in the U.S.? - Management indicated high penetration of Byte in Taco Bell U.S. and plans for further expansion into international markets [62] Question: What are the long-term growth expectations beyond Pizza Hut? - Management is focused on completing the strategic review of Pizza Hut while driving performance in Taco Bell and KFC [71]

Financial Data and Key Metrics Changes - In Q4, the company achieved a 5% growth in system sales, driven by 3% unit growth and 3% same-store sales growth [19] - Digital sales reached over $11 billion, growing 25% year-over-year, raising the digital mix to nearly 60% [20] - For the full year, system sales grew 5%, with Taco Bell at 8% and KFC at 6% [20] - Q4 core operating profit grew 11%, with ex-special EPS at $1.73 [22] - Full-year Yum ex-special EPS was $6.05, up 10% [22] Business Line Data and Key Metrics Changes - Taco Bell delivered 7% same-store sales growth, while KFC achieved 6% system sales growth [4][11] - Taco Bell U.S. restaurant-level margins expanded to 25.7%, while KFC's margins were at 12.7% [21] - KFC opened over 1,100 units in Q4 and nearly 3,000 units for the year, marking record unit growth [22][23] - Taco Bell opened 228 new units in Q4, with a target of reaching at least 10,000 units in North America [26] Market Data and Key Metrics Changes - KFC saw strong performance in the UK, with a 10% increase in same-store sales in Q4 [11] - Taco Bell International achieved 5% same-store sales growth, with standout performance in Canada, the U.K., and Spain [16] - Pizza Hut experienced a 1% same-store sales decline globally, but saw growth in Pizza Hut International [30] Company Strategy and Development Direction - The company aims to raise the bar with three core priorities: enhancing average unit volumes, improving restaurant-level economics for franchisees, and leveraging technology through Byte [8] - Taco Bell has set ambitious goals for 2030, including reaching approximately $3 million in U.S. average unit volume and expanding to 3,000 international stores [9] - The company is focused on digital capabilities, with digital sales growing significantly and expected to drive nearly one-quarter of Taco Bell's average unit volume growth in 2026 [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's momentum and the ability to exceed long-term growth algorithms, particularly in Taco Bell and KFC [39][43] - The strategic review of Pizza Hut is progressing, with expectations for strong gross openings globally despite targeted closures of underperforming units [32][36] - Management emphasized the importance of franchise partnerships and the potential for growth in underpenetrated markets like India and Brazil [24][25] Other Important Information - The company returned approximately $1.35 billion to shareholders in 2025 through dividends and share buybacks [33] - The capital priorities include maximizing shareholder value, maintaining a strong balance sheet, and returning excess cash to shareholders [33] Q&A Session Summary Question: Opportunities to accelerate growth in Taco Bell and KFC - Management highlighted strong momentum in both brands, with KFC achieving record unit openings and Taco Bell maintaining strong same-store sales growth [39] Question: KFC global development and franchise revenue - Management discussed the focus on improving paybacks in various markets and the potential for higher franchise revenue as unit growth accelerates [46] Question: Unit development growth rates for Taco Bell and KFC - Management expressed confidence in maintaining or accelerating unit development growth rates, particularly in KFC and Taco Bell [50][52] Question: Taco Bell's comp growth and demographics - Management noted strong transaction growth across all income bands, with increased penetration among higher-income consumers and families [57] Question: Byte initiative adoption and technology-related G&A - Management confirmed high penetration of Byte in the U.S. and plans for further international expansion, while also managing technology investments prudently [62][64] Question: Future of Pizza Hut and long-term growth potential - Management emphasized the focus on driving performance across all brands while completing the strategic review of Pizza Hut [71][72]

Financial Data and Key Metrics Changes - In Q4, Yum! Brands achieved a 5% growth in system sales, driven by 3% unit growth and 3% same-store sales growth [18] - Digital sales reached over $11 billion, growing 25% year-over-year, with digital mix increasing by 9 points to nearly 60% [18] - For the full year, core operating profit grew 7%, with an increase of 10% excluding the Pizza Hut division [20] Business Line Data and Key Metrics Changes - Taco Bell reported a 7% same-store sales growth, outperforming the QSR industry, and achieved 10% core operating profit growth [4] - KFC delivered 6% system sales growth and a 10% core operating profit increase, with significant growth in the UK and Middle East markets [11] - Taco Bell U.S. achieved restaurant-level margins of 25.7%, while KFC's margins were 12.7% in Q4, reflecting improvements in both brands [19] Market Data and Key Metrics Changes - Taco Bell International saw 5% same-store sales growth, with notable performance in Canada, the U.K., and Spain [15] - KFC's largest equity estate, the UK, experienced a 10% increase in same-store sales in Q4 [11] - Pizza Hut International reported a 1% same-store sales increase, with strength in the Middle East, Latin America, and Asia [29] Company Strategy and Development Direction - The company aims to raise the bar with three core priorities: enhancing average unit volumes, improving restaurant-level economics for franchisees, and maximizing the potential of the Byte technology platform [8][9] - Taco Bell has set ambitious goals for 2030, including reaching approximately $3 million in U.S. average unit volume and expanding to 3,000 international stores [9] - The strategic review of Pizza Hut is ongoing, with a focus on strengthening near-term results and aligning stakeholders on a targeted program [16][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's momentum heading into 2026, highlighting strong paybacks and unit development in KFC and Taco Bell [37][41] - The company is focused on leveraging its scale and technology to enhance franchisee profitability and drive growth [46][70] - Management emphasized the importance of maintaining relevance with consumers and improving restaurant economics as key drivers for future growth [70] Other Important Information - The company opened over 1,800 new units in Q4 and more than 4,550 new units for the year, with KFC leading unit growth [21] - Yum! Brands returned approximately $1.35 billion to shareholders in 2025 through dividends and share buybacks [31] - The company is committed to expanding access to education and employment opportunities, impacting over 400,000 people in the past year [17] Q&A Session Summary Question: Opportunities to accelerate growth in Taco Bell and KFC - Management highlighted strong momentum in both brands, with record unit openings in KFC and continued same-store sales growth in Taco Bell [37][38] Question: KFC global development and franchise revenue - Management reassured that KFC is focused on improving paybacks and unlocking growth in under-penetrated markets, with a strong emphasis on franchisee profitability [45][46] Question: Taco Bell's comp growth and demographics - Taco Bell's growth was driven by increased transaction frequency across various demographics, including higher-income consumers and families [53][55] Question: Byte initiative adoption and international expansion - Management confirmed that Byte is actively used in the U.S. and plans to expand its deployment internationally, focusing on thoughtful implementation [58][64] Question: Future of Pizza Hut and unit closures - Management indicated that the strategic review of Pizza Hut is ongoing, with targeted closures planned as part of the Hut Forward program [75]

Group 1 - Yum Brands is undergoing significant leadership changes, including a new CEO, Chris Turner, who will assume the role on October 1, along with a new CFO and chief consumer officer, and plans for a chief scale officer [3][4] - The company is focusing on enhancing its technology capabilities to address challenges in the fast food industry, where many businesses are experiencing sales declines and reduced traffic [4] - AI is being leveraged to improve personalized advertising, decision-making, and business innovation timelines, with plans to expand the internally developed voice AI solution to drive-thru restaurants [5][6] Group 2 - Jim Dausch has been promoted to chief digital and technology officer and president of Byte by Yum, the company's SaaS platform for AI-driven tools, replacing Joe Park who is leaving for another opportunity [8] - Dausch has a strong background in digital and technology roles, having previously served as global chief digital and technology officer at Pizza Hut and held positions at Under Armour and Marriott International [8] - The leadership transition aims to strengthen Yum Brands' ability to deliver value to stakeholders and enhance growth opportunities [4]

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]