Yum! Brands, Inc. (YUM) Earnings Call Transcript & Summary

Hi, everyone. John Ivankoe with JPMorgan. Welcome back for Yum! Brands. We're going to get right into it. With the company -- joining from the company today, CFO, Chris Turner; and many of you know -- in fact, probably all of you know, Keith Siegner, who's Vice President, Investor Relations, Treasury and M&A as well. So thank you, gentlemen, for joining us. Very much appreciate it.

Chris, I remember meeting you maybe 1.5 years ago when you joined the company. And you, from what I recall, didn't have direct restaurant experience per se. In that amount of time, and obviously, it includes COVID, which is -- couldn't be more significant from a business management perspective, what have you kind of learned about the organization that you want to talk about maybe from a positive side? I mean, what challenges did you face that you didn't necessarily anticipate? And if it's possible, talk about some of the projects that you and your team have been involved with that have yielded some changes in the organization, things that may be upcoming.

Great. Well, thanks, John, for having us, and thanks to everyone out there who made time to join. John, it has been an incredible 1.5 years, coming up on 2 years this summer. As you mentioned, I didn't -- never worked in a restaurant company, but I actually had a lot of experience with Yum! Going back to my days as a consultant at McKinsey. I had served Yum! I had served each of the brands and served the international part of the business. And then I worked in the food and beverage space [ so that's good. ] And I didn't know we were signing up for a global pandemic, but it's actually been -- putting the social impact of the pandemic aside, which obviously has been a terrible thing in the world, I've been so pleased and so proud to be a part of Yum! and see how our brands and our organization have navigated the pandemic. So to me, the things that worked so well during the past year, 1.5 years are, number one, we remained a people-focused [ group ]. We've put our frontline, our customers first. Our brands did an amazing job pivoting to keep people safe in the restaurants and give our customers confidence. Second, our brands has stood tall and been incredibly resilient. We've got 290 brand combinations around the globe, so very broad footprint. And we showed that we were able to serve customers in any sort of scenario, and customers show that they trust our brands. Trust is one of the most important things from a customer standpoint improving during the pandemic. Customers want to do business with brands they trust, and our brands are officially there. Third is the shift to digital to support the lost sales in the dining rooms. We've got $17 billion of our sales, give or take, that are in the dining room, people [ hanging out ] in the restaurant at Taco Bell and at Pizza Hut. Majority of that went away over the past year, and our digital strategy stepped up and allowed us to pivot that to off-premise. And we hit a new high, $17 billion in sales. So that was another huge thing that I think happened in the past year. And that's a big part of our strategy going forward, is to continue to [ recover our ] digital footprint.

That's an interesting point, the last one. $17 billion of sales were in the dining room. There's obviously a major shift to off-premise. QSR is specifically built for off-premise, Taco Bell more so than Pizza Hut, but still the Pizza Hut delivery. What do you anticipate? Or, I guess, what are you seeing in terms of kind of a shift from off-premise back to on-premise? And is it your belief that Yum! can hold on to its off-premise business in that -- with that tide shift as it re-adds, if you will, the on-premise customer? Do you -- is there any evidence around the world or even within markets of the United States in terms of what the net effect is of a shift from off-premise back to on-premise? It's a little bit of a mouthful.

Yes. It's a great question. I think the exact number still remains to be seen, and it'll probably be a little different from market to market. But I do think we believe there'll be some permanence in the shift toward off-premise. And we've stood up capabilities in each of our businesses to be able to support that digitally, as I mentioned. But you're also seeing that shift reflected in how we are thinking about our prototypes and restaurant designs [ going forward ]. So you saw that we announced a model at Taco Bell called the Go Mobile concept. One of our franchisees did another innovative concept in Minnesota. You've seen KFC produce a couple of prototypes. All of them have a slightly smaller dine-in -- dining space footprint reflecting that, and then they're expanding the off-premise capabilities. So the Go Mobile at Taco Bell has 2 drive-through lanes. And then they all are creating a full integration with our digital capabilities to enable this. So I think that's an indicator of our view of, hey, there will be some [ improvement ], but we still think there will be a role -- still do have a dining room in that Go Mobile concept. So we think there will be a role, but we think [ it'll be this way ].

Yes so...

As I think about 2020, one thing I think is important is while we have the acceleration of the consumer adoption of a lot of this technology because of COVID, we also had a lot of grassroots efforts to continually improve our consumer-facing, let's call it, apps and accessibility options. So there was a lot of the legitimate progress that was made, whether it was adding these new channels, whether it was adding loyalty, whether it was adding new aggregators to the platforms in various countries around the world. But we made legitimate progress that had nothing to do with COVID that I think is sticky and will continue to benefit results as we move forward into 2021, 2022 and beyond.

Yes. Certainly. And I want to talk about the various initiatives that have been accelerated and realized. And therefore, since you've achieved so much of what you wanted to in the next 5 years, I mean, as you -- just -- I mean, like a lot of companies, but I think you, as much as anyone, achieved in 2020 what maybe would have taken me 3 or 4 or even 5 years from a digital acceleration point of view. Since that not necessarily is done, but since so much of the foundation is now built, how does that shift Yum! priorities going forward? I mean if the next 5 years is about digital use of accessibility, adoption data and that is now in place, how did the priorities of Yum! necessarily change?

Yes. So I think there'll be a few things that are evergreen in our space, and those are providing great food and great experiences to customers, having what we call R.E.D., relevant, easy, distinctive brands; and providing great value. Those aren't going to change, and we're not going change being a growth company. So we're -- our strategy is going to continue to be focused on growth. I think the things that have shifted forward and accelerated, the digital race will continue. That one's never going to stop. We're going to have to continue to move bigger and bolder things on the digital front. So I'd say things pull forward are accelerating our data and analytics strategy. You might have viewed it as a 2-, 3-year horizon [indiscernible]. We have our first-ever Chief Data and Analytics Officer and a number of elements that we're standing up there. We've also created our innovation team, a technology restaurant innovation team. First time we've had one of those. We hired Joe Park from Walmart, who used to lead [ digital ] efforts there. And they are working on a whole range of things that 1.5 years ago, I would have said are 5 to 7 years out. They're moving closer to things like applying AI in the restaurant, applying video and voice in the restaurant, and [ some forms ] of robotics and different elements of the operation. So that's another area that I think is moving forward. You saw -- to that front, you saw that we made an acquisition 1.5 weeks ago called Kvantum, which provides marketing and AI-based analytics capabilities that we're very excited about. It's part of that acceleration of those elements strategy.

And you bought -- over the last 3 to 4 years, I mean, you bought a handful of companies. I think most of them, if not, all of them, at least in some form, technology-related. I mean can you talk about the buy versus build versus just simply be someone else's customer? I mean what advantage does Yum! get of having something that's truly proprietary? And of course, how do you retain that talent that you've acquired to evolve that software technology, whatever -- excuse me, whatever it is, to make sure that it stays cutting-edge?

Yes. Great question. So obviously, there's -- you're going to think about do you want to buy it as a service or do you want to own it -- the capability in-house. When you own it in-house, you've got 2 choices there. You can either acquire it or you can build it. I think the top-level question of buy versus own in-house, for us, there's really a few things we think about. One, is it a strategic competitive advantage where we think we can be differentiated in a way that provides our franchisees and customers a benefit relative to our competitors? Second would be is it something that's such a core part of the operation, even if it's a little more commoditized, it's a core that we don't want to be reliant on a party. And then the third is the economics, the scale economics. Are they such that we gain economic advantage when we have it in-house? And that's really an important one. What's happened in the pandemic is with everyone needing to have digital capabilities to serve customers, there's been a little bit of a leveling of playing field there on the capability side. There's not a leveling of the field in terms of the economics of providing that. So when we've got a restaurant footprint at 50,000 stores around the globe, you think about a software, high fixed cost investment, when we own or build those, we're able to provide those at an economic advantage for the bigger business [indiscernible]. When you're buying it as a service, you've seen the valuations of some of the service providers here. So investors are going to expect high margins and increasing prices, and we don't want to always be beholden to that. So those are the things we'll be thinking about. Kvantum is one where we think it's a distinctive capability that has created success in our businesses around the globe, working with our marketing teams. They're also able to apply those analytics to other areas. And the -- it's on the smaller side in terms of acquisitions. We think very high returns and the economics of having that capability in-house, we think we leverage our scale, and that gives us competitive advantage on the economic side.

John, one interesting thing about Kvantum, just to point out, is there's a decision in EO right now that's being made by a lot of these companies about using more traditional marketing channels or new communication channels. And how do you effectively communicate to your entire system, including your franchisees about that allocation, how much to do, when to do it and what's the return on your advertising spend? That's what we're so excited about with Kvantum, is it quantifies your ability to say what was my return on advertising spend across these different channels, does this make sense, should we lean in more, which are optimized. And that's the type of technological advantage that I think can really make a difference for our franchisees. If they're getting better returns on their advertising spend, that's meaningful to them in terms of a competitive landscape. And so I think this is a good example of how we're thinking about the future and how we're bringing those solutions to franchisees.

Things like the royalty rate and advertising contribution are fairly written stone -- I mean, written in stone. They very, very rarely have ever changed. But to what extent can Yum! pivot to some degree of being a technology/advertising service company to the franchisee, in other words, convert some of these investments that you're making on the technology or advertising effectiveness side into recurring franchise revenue that they would be willing to pay with -- pay for, excuse me, as you justify the ROI for them?

Yes. So you think about that a couple of ways. And first and foremost, we use these technology capabilities to advance the business. If we want to want to drive -- they need to drive growth, which obviously creates growth for our franchisees, creates increased royalty stream for us. Plus, there's usually, with all these technologies, some cost benefit that comes to the franchisees. So think about the shift that we've had to digital transactions. All of those are lower labor cost for the franchisee. So it helps their unit economics. That translates to unit growth. When we have stronger unit economics, we're growing -- greater ability to grow the network. And so all of those elements really are, first and foremost, we want to provide our franchisees with the greatest capabilities at the lowest cost possible relative to what our competitors provide. So that's the core of the strategy. Obviously, in some cases, there are services or fees that the franchisees pay for these technology services to ensure that we're covering our cost and earning some return on the capital that we're spending there. But most importantly, we're -- this is about driving growth and creating competitive cost advantages for our franchisees.

Yes. And obviously, increased sales, increased royalty, and that's just the classic way to get paid. I wanted to see if we were maybe coming into -- you talked about valuations to service providers. That might be an interesting way to think about businesses like you're in longer term. So within the United States, Taco Bell is what comes to mind, but, I mean, certainly, we can make the case for KFC and Pizza Hut as well. I mean these were amazing profit years. I mean the profit margins of Taco Bell is -- like you're not used to seeing numbers as high as you guys kind of printed. There's a lot of good things that happened beyond COVID from an efficiency -- a lot of great things that happened from an efficiency perspective in '20. So a couple of points is how much do you think your businesses do you think COVID structurally enhanced store profitability. In other words, like how much do you think that store profitability will be permanent is the first point. And secondly, given the fact that your franchisees did make -- did extremely well in 2020, how do you capitalize on that -- on those excess economics? I mean how does that benefit the system longer term versus it just being a great year for them in isolation in 2020?

Yes. So I think first on the question of what impacts were temporary versus which can we hold on to. Obviously, there were some that were just -- that were related to what happened in the pandemic. When the dining room shut, you needed a little bit less labor to staff and service that. That created a labor cost benefit. That's one that will swing back as those dining rooms reopen. The increase in transaction size, there's part of that, that will swing back a bit as we bring back the dayparts that were hampered. So you think about the late-night daypart at Taco Bell, breakfast. We bring those back up. You're typically going to have smaller transaction size. So that will come back. Now -- those are a couple of examples of the temporary piece. We're going to fight and do everything we can to hold on to as much of the change as we can. So for example, where we've gotten larger transaction size with families who were dining together because they're working at home, we're going to try to do everything we can to hang on to that while we build back the other dayparts. Think about the shift to digital. We know that when we have customers on digital or in our loyalty programs, like the one that we're growing at Taco Bell, we have higher frequencies. We have larger check sizes. So with the shift to digital and people now being on our platforms, we hope to continue to hang on to those customers. It's a big part of the story of Pizza Hut. We've had people come back to the brand who haven't been with the brand and who now are appearing to stay with it. And so we want to hang on to those. Plus you get the labor cost benefits of that shift to digital. So those are elements that we'll try to hang on to. I think it remains to be seen exactly where that falls. But we're going to fight to keep those benefits as much as we can.

And in terms of how you take advantage of what was a very strong profitability year in fiscal '20 and convert that into longer term?

Yes. So I think that's where -- that's what's really driven unit economics and franchisee health. So obviously, as you've seen these profitability increases, the unit economics have gotten stronger in many of our markets. There's obviously some markets around the globe where you still got sales that are impacted by COVID. So it's -- yes. Sure, there's markets around the globe where it's challenged, but in general, our unit economics are strong. And second, our franchisees are -- they were healthy coming in to the pandemic, and in many cases, they've gotten even stronger. We started a franchisee health effort at the beginning of this to give our franchisees the support they needed during the toughest periods. They did a great job. And I think our relationship with them has strengthened as a result. So great unit economics, healthy franchisees. That translates to what is our #1 growth priority, which is returning to our historical rates of unit development. And really, those are the 2 important things. And so that's what we're focused on right now, is getting back to that really impressive historical growth rate on the unit side.

And would that include -- go ahead, Keith. Sorry.

One quick thing, as you think about the check benefit from a margin perspective and cash flow perspective, right, the increase in checks, to some extent, look, we use Taco Bell as an example because we have a meaningful company-operated base within our financials. You can see where those margins trended. There's an optimization there. As we regain individual eater occasions, it's going to put some pressure on the check, right, which could put some pressure on the margin. But net-net, you still end up in a better place from an overall cash flow perspective. So you're just using it as an example, and it's a little bit more extreme than some others given that it had more reliance pre-COVID on individual eater occasions. I think it's safe to assume some reversion in the margin trend, maybe not all the way back to where we were but some below where we were. Oversimplifying things is always dangerous, but the goal is to hold on to -- or to recover as much of the transactions as we can while holding on to as much of the check as we can through leveraging all these new tools in digital and technology. So net-net, you end up higher cash flows but probably lower margins, which is a sign of the health of the overall brand.

I understand that. Thank you for that color. U.K., Canada and Australia have -- are more like the U.S. and most other markets around the world, that they do have the drive-through-oriented markets, more freestanding units, what have you. Can you talk about, I guess, the challenges and the opportunities that presented themselves across Europe, Latin America, Africa, for example, where Yum! does over-index in certain cases relative to its peers, especially in Africa, and the underlying health of that franchisee, one, to survive; and secondly, to get back to previous levels of expansion? That's -- obviously, there are so many countries to talk about, and I know it's hard to kind of pull -- put a country within a region, but color in those markets specifically, I think, would be helpful.

Yes. So it really is. I wish I could give you a very simple here's the math and the regression that tells you exactly what happens and every kind -- it's been a very different story from each of -- in each of our 290 brand country combinations. And the elements that give some indicator, one of them does relate to what is the asset footprint. So if you've got a market that is more -- has a heavier dine-in business or where the footprint is more in malls, transportations, that's been a -- there's been a bigger headwind there. Another factor is how strict were the COVID restrictions in terms of customers being able to move around. Another is what was the level of economic support to customers in the market. So all of those factors. But even if you normalize for those, there's still some different stories. I think in general, if you think about across those markets, on average, compared to our competitors, our franchisees are larger. We've got a relatively small number of franchisees that make up a high percentage of our stores and restaurants. And so they're larger well-capitalized organizations that are very resilient, and they are all growth-minded. That's why they were in our system. Those are the franchisees that were building 2,000 net new units a year prepandemic. And they -- there was the initial shock, but then they sort of settled in and said, "Hey, here's how I can manage the business through the pandemic." But they're starting to look beyond. We're all starting to see a light out there at the end of the tunnel. They want to get back to their business model, which is driving same-store sales growth, driving net new unit growth. And so I think they're starting to look toward the thrive pieces and -- because they now know how to survive through this. And again, their size is what aided their resilience as we go through it. So differences around the globe, but in general, I feel really good.

And oftentimes is the case that larger franchisees had higher debt to EBITDA because they were considered to be sophisticated borrowers, and debt capital markets across the globe are open to them. Is that not the case for Yum!'s businesses -- I mean, for Yum!'s brands kind of across Europe? And is that franchisee balance sheet, is that something that you see on a regular basis that gives you continued confidence in their ongoing basis?

Yes. It's -- this is obviously a part of our relationship with our franchisees, ensuring that they have great financial strength. We work with them and collaborate with them on that. It was part of why we provided those grace periods. If you recall, during the franchisee health [ efforts ], we said, "Hey, we know there's going to be an initial cash shock that happens when the sales decline." We were the first partner there to say, "Hey, we'll do a couple of months of grace periods on the royalty side." And we made deferrals on their capital obligations around new builds. That obviously came with a slowdown in our unit growth. But we felt like it was the right thing to do. We wanted to be the first partner to partner with them. That helped. And many of their other suppliers and lenders gave similar sorts of relief, and that allowed them to move through that shock. And then once they stabilize the business, in many markets, not everywhere, but in many markets, they've actually been able to strengthen the balance sheet and the [ financials of the company ]. Just think about the U.S. One of the most challenged areas was our Pizza Hut U.S. franchisees. They're in a much stronger position now than coming into the pandemic. So that's -- in general, I feel great about our franchisee health and about the relationship and the strength of the relationship that we've built with them.

[ Just some ] objective data points to point you to in terms of our financials as well that I think are encouraging. Our accounts receivable is lower than it was at the end of 2019 pre-COVID. Our allowance for doubtful accounts is lower than it was end of '19 pre-COVID. We've got a de minimis amount of receivables remaining outstanding under that royalty grace period program that Chris talked about. And even from an all-in perspective, 2020 bad debt expense on the year was more reflective of a historically average year. So there is real support from a data perspective within our financials that the health of the franchisee base is pretty good.

So I want to go a couple of places with this question. Obviously, very much part -- it's kind of on the [ existing ] brand at Yum! getting back to 4% unit development, it being a case of not if but when you get back to 4% unit development. Can you do so with the existing 3 brands, with obviously KFC really -- especially in terms of absolute numbers, it really has a lot of weight on its shoulders? Or does it make sense to look at a potentially fifth brand, obviously with Habit being fourth, that can specifically be expanded into that large international franchise network? Certainly, U.S. valuations aren't low. We can debate if they're high or not, but there might be opportunities on the international side that we haven't necessarily considered of operators that weren't as fortunate in terms of weathering their storms and having the balance sheet and access to capital, what have you. I mean how significant of an opportunity do you think of your way of basically, for the lack of a better word, buying your way to 4% unit development? Does that make sense to consider at this point?

Well, good question. Obviously, our focus for our existing footprint is to -- for it to return to those historical growth rates. That's mission one. That said, we are always keeping our eyes open on the acquisition front. We think about 3 buckets: brands; conversions, which is where you buy restaurants or work with our franchisees to buy them and convert them to our brands; and then you've got enablers like Kvantum. If you think about the brand -- like we obviously did our first acquisition in several years this year by acquiring The Habit. The Habit has performed very well.

Yes, surprisingly well.

We've brought a lot of value to Habit. Habit has actually brought a lot of value and learnings to us. So this has been a great first year in terms of that experience. So we're going to continue to keep our eyes open. As you mentioned, the -- if you think about the criteria for doing an acquisition, first and foremost, there has to be a growth rationale or logic to it, a very good brand that has great growth potential that maybe has something standing in the way of that growth that we think, when we bring it into the Yum!'s system, we can help to unlock it. That's number one. Second, you hit on it. There has to be shareholder value creation in doing it. So we're not going to get caught up in frothy valuations in the market. So we keep an eye on that. So we need to have some advantage in terms of how we make the acquisition, so that there's -- so we're not just buying the growth. We're actually creating shareholder value. Those would be the -- and I'd say, third, there needs to be a cultural fit given how important culture is, too. Obviously, our history has been to take U.S. brands around the globe. We're not -- there's no reason we couldn't make an acquisition somewhere else. The conditions would have to be right. There'd have to be a high bar on making sure that we thought the conditions were right for expanding it. But I'm not opposed to looking at those things at all. And then certainly, in the conversion space, which tend to be smaller, might be 10 stores, 50, our folks around the globe are always keeping an eye open for those opportunities and looking for those to help drive growth.

Yes. I mean those are -- I wouldn't call asset deals. I mean are there many of them that have kind of -- that are kind of jumping up in urban areas around the world? I mean, obviously, there are -- a lot of cities have been impaired for a long time. I mean, across Europe, across Africa, I mean, we're now kind of dipping back into -- Brazil is obviously extremely challenging. Are those kind of asset deals kind of showing up at this point at an increased frequency? Is that the point where we should start thinking about them or looking out for them more than we've done in the past?

Well, like I said, I think, in general, in the conversion space, they'll be smaller. But there are a number of these opportunities out there that our teams, whether Yum! Brands or Keith's team, are helping to evaluate and assess. A lot of them end up not making sense or be the right thing to do. But I expect -- we've had big ones in the past, Rostik's in Russia [indiscernible] the Telepizza deal. I expect there'll be some smaller ones that we do in this space.

Okay. Makes sense. We spend so much time talking about the global scale of Yum!. But so much brand -- so many brands need to be expressed within individual countries. And even Taco Bell is run differently. The KFC is run differently, the Pizza Hut. Can we talk about really what global scale means and how we can really start to take advantage? Like why Yum! -- excuse me, why Taco Bell franchisee benefits somehow because it's part of the company that owns KFC, that owns Pizza Hut? I mean what are the -- what specifically are you doing on a scale basis that does drive value for customers, for employees, for shareholders beyond -- it's just like it certainly makes sense conceptually, but if you can talk about specifically how the scale advantages could last.

Part of Yum!'s story of success and growing so quickly around the globe is a more decentralized operating model. We had guardrails for each of the brands. You put a very entrepreneurial GM into a geography. They were able to tailor the brand and the experience of the customers. And that's what allowed us to grow so fast. So we want to keep -- we want to hang on to that benefit. But there are certain areas where scale can provide great impact, both economic -- on the economic side and just on the general management and performance side. So I'll give you examples of both. The economic side, I think technology is the clearest example. So think about in -- we hired Clay Johnson as our first Chief Digital and Technology Officer at the center. He worked with our brand CIOs. And we just launched the new KFC U.S. app, and that is an example of our platform strategy in technology. Now I know that's a core kind of fundamental capability, but think about that, that allows us more quickly, over time, to use that platform to stand up the next generation of apps in markets around the globe or in other brands; being able to apply Kvantum, that capability, make small acquisition, be able to apply that capability across all of our brands' markets. Another example of that, economic scale. Purchasing is obviously another one where, in larger markets, even across brands -- in the U.S., our purchasing co-op now purchases for all 4 of the brands. And that brings scale and benefit to franchisees across each that they couldn't get otherwise if we didn't have the other brands. So that's the economic side. The management and performance side, I'll give you a supply chain example. During last year, when we had these dramatic supply chain disruptions everywhere, our -- we never had any sort of a major or meaningful outage in any of our markets. The reason that happened, our supply chain council, which consists of franchisees who are running supply chains in their individual countries, other supply chain partners and our young folks were meeting multiple times a week to share best practices. So the KFC franchisee in Southeast Asia was telling the Pizza Hut franchisees in Europe how to think about the supply disruption they might see a couple of weeks later from COVID and how to prepare for it. And the collaboration was amazing with those best practices. And that's what enabled us to navigate the supply chain challenges so well. So hope that gives you a feel for both an economic example and a noneconomic example.

It does. But -- so the technology data, consumer insights piece, I mean, that might be the Holy Grail because, I mean, that's maybe -- is that practical within countries, I mean, especially where, in a country like the U.S., where it has 4 brands to kind of have like insight on a specific customer is kind of the first point. And secondly, I hear KFC has a new app you can apply to other businesses. I'm nearly certain KFC, Taco Bell, Pizza Hut, like your back-ends, your point-of-sale systems are completely different, correct? Like you don't have a U.S. point-of-sale system that's in all 3 brands at least kind of equally. So do you want to get to the point where technology, data, consumer insights truly is shared at -- is kind of developed at the corporate level and truly shared? And if so, how far away is Yum! from realizing that potential on it?

That's part of what we're working on. Obviously, we want to continue to advance the digital capabilities, but you also have to continue to advance the core technology capabilities. That's why the platform -- on the POS side, we're now testing what would be a -- eventually a common platform. We're now testing it in Taco Bell. So it's something that we are -- we're building. To your point, we're not there yet. There's still a lot of different solutions across different markets and different brands. And so what we -- this won't change overnight. And we're not going to slow down all of the leading edge things that we're doing in the front end and serving customers while we do it. But you've got to continually refresh these things. So as we do it, we'll be platforming those over time. And then our data and analytics capabilities, yes, we build algorithms and tools. There's no need to build those algorithms and tools 4 times for each of the brands and 100 times for each of the countries in which they operate. You would design them with the team so that they could be applied by the marketing teams who work with our franchisees in each of the individual markets around the globe. Location analytics is an example of that. We've developed it in a couple of markets, and now we're starting to apply location site analytics in other markets. So it's really the tools and the algorithms, I think, where you get the scale benefit of being able to share as opposed to having to build it multiple times in parallel.

Yes. So a slightly different question. What is ring-fenced at the brand level? And does that have to be that? In other words, is there any flexibility in terms of what is ring-fenced and what isn't in terms of what is in one brand and kept away from the others? Or is -- what is the one brand isolated from the others, I should say?.

The things that we think are really important are obviously the way you build the brand and bring it to life. The marketing expertise is in the brands, in the markets. The way that we manage our franchisee relationships in the market, the brand owns that. The front end of the technology, the look, the feel, the way it interfaces, that needs to be customized from market to market, from brand to brand. That's why we still have technology teams in each of the brands who own -- how do things interface [indiscernible]...

How the KFC app looks different than how the Taco Bell app looks but the back end could eventually be the same.

Yes, there's no need to build multiple back ends. So look, we realize that every brand has a personality and identity and a connection with consumers. We don't want to get in the way of that. So still -- we're still a decentralized -- largely decentralized company. We're just trying to say where are the things where you get real economic or management scale advantages in the back end, and we want to take advantage of those without giving up those benefits of decentralization.

That was a great conversation, guys. Chris, Keith, thank you very much. We are actually a couple of minutes over time, so we have got to say goodbye. Thank you.

Awesome. Thank you, John. We appreciate your time. Thank you, everyone, for joining.