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

Good morning, everyone, and welcome to the Yum! Brands 2022 Investor Day. My name is Jodi Dyer, and I lead our Investor Relations team. Thank you so much for each of you that are here with us today in-person, traveling to be with us at the New York Stock Exchange and for those joining us live via our webcast. Before the day gets underway, please note this presentation will include forward-looking statements that are subject to future events and uncertainty that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of today and should be considered in conjunction with these cautionary statements. Please take a look at our most recent report, our Form 10-K and our quarterly report on Form 10-Q, which are made available on our website, www.yum.com, for more information related to these statements. For those of you that are new to Yum! Brands, we are the world's largest restaurant company by restaurant counts with nearly 54,000 restaurants around the world in 156 countries. We generate roughly $60 billion in system sales annually, of which 40% are derived from our digital business. You'll hear much more on that today. Our portfolio consists of 4 iconic brands: KFC; Taco Bell; Pizza Hut; and most recently, the Habit Burger Grill. We are highly franchised with nearly -- over 98% of us franchise, and approximately 1,500 franchisees that provide not only our system and our franchises, incredible scale. Apologies for those in the room, it looks like we're having a little bit of a lag on our presentation. We'll keep rolling. You also know that we are truly a global and diverse business with over 290 brand country combinations. Of our roughly $3 billion in franchise fees, we generate over 50% outside of North America and over 30% in emerging markets. Here we go -- we're caught up. Apologies for the -- and finally, our portfolio of brands consist of 4 relevant, easy and distinctive brands that have significant market share in the markets in which they compete. Next slide, please. Perfect. Most recent addition to this portfolio of brands is the Habit Burger Grill, which you'll hear from our President today. It provides us with exposure to the better burger category, and we're incredibly happy to have it as part of our Yum! portfolio. Finally, let's wrap up with the agenda. Next slide, please. You'll first hear from our Yum! executive team, followed by each of our brand leaders. We will then move into the financial comments as well as closing remarks from David. We will conclude with a Q&A session before you're served lunch. Please remember to hold all questions until the end of the presentation. With that, let's begin with a brief video that celebrates Yum!'s 25-year anniversary as a public company. And then we'll welcome the Yum! Brands CEO, David Gibbs to the stage. With that, please play the video. [Presentation]

Well, good morning, everybody, and welcome to our 2022 Investor Day. It's so great to be back in person. And it's been a little bit of a while since we last had one of these. Great to see so many of you here in New York and everybody joining us virtually. Of course, if you showed up in New York, you got a bonus. We got you Taco Bell breakfast today. So I see -- for those of you virtually, I see a lot of smiling faces here in the room, enjoying a great Taco Bell breakfast. I'm going to start today. We're all very excited, obviously, about the story that we have to share with you today, but I'm going to start by taking a step back and taking a look at -- let's see. Okay. There we go. I'm going to take a start by taking a look back at our 25 years as a public company. If you didn't know, this year, we celebrated 25 years as a public company after the spin-off of PepsiCo. I've been around for 33 years in this system. So for me, I remember it sort of like it was yesterday when we were spun off. I was actually in a meeting room in Florida, and somebody came in the room and they had gotten a phone call, hey, PepsiCo is spinning off the restaurant group. And of course, we did what you do back then, if you want more information, you send somebody out to go get a copy of the Wall Street Journal, let's see if it's true. A lot has changed in the world in terms of how we disseminate information today. And certainly, that's gotten a lot more efficient. I would say the exact same thing about our business. I've seen it transform over the last 25 years, so that it doesn't look anything like what we had 25 years ago in terms of the efficiency and the way we're running the business. A great example of that for me was just last week, I was out visiting restaurants with Chequan Lewis, the Chief Operating Officer of our Pizza Hut business in the U.S. And he made a point of taking me by some of the stores we had just rolled out in the last year, the new Dragontail technology. You've heard us talk about Dragontail on earnings calls. It basically helps run a restaurant, makes all the decisions that are critical to running a Pizza Hut. I spent some time with one of the RGMs who've been with us for 30 years, and she was singing the praises of Dragontail telling me how much time it had freed up for her to do other tests and run the restaurant better. And then at the end of the conversation, she did admit to me though that after 30 years, she never thought there would be technology that could replace the role she played running the restaurant. So she asked for the password to the system when it was installed, so that she could override it. She ended up not ever overriding it, falling in love with the system. And now she told me she prevents -- she won't give the password to anybody else on her team, because she doesn't want them to override it either. That's the kind of journey we're making all around the world in our restaurants as we roll out technology that vastly improves the way we run the business, makes it more profitable for our franchisees, better experience for customers. So of course, those 25 years have been marked by incredible growth, as you see up there, when 1997, we were basically a U.S.-centric company. The vast majority of our stores were in the U.S. Here we are today with the vast majority of our stores outside the U.S., nearly tripling our sales and certainly no surprise that with that kind of growth, it's translated into amazing returns for our shareholders. We outpaced the S&P 500 returns by a factor of 5x, a pretty impressive stuff. At the same time, though, we created enormous value and wealth creation for our -- for our franchisees. We created great career opportunities for a lot of the people you're going to hear coming up on this stage in terms of the growth and how that gave us great experiences in our career and ability to grow our career. So it's just been a win, win, win for Yum! all around over the last 25 years. But of course, as a team, we're very focused on the future, not looking back in the past because we fervently believe that the next 25 years, the next chapter of growth for Yum! is going to be much stronger than the past. And the past was pretty good, as I just showed you. There's a couple of things that we have put in place over the last few years that give us that strong belief about the future. I'm going to talk about them right now. For me, coming into the role as the CEO of Yum! in 2020, you have a lot of decisions to make. What are you going to keep and what are you going to change? It was important to me that the thing you see up there, our recipe for growth remained. That was an important driver of the acceleration in our growth over the last few years. The 4 things that we focus on, we call them our growth drivers, have been embraced by the organization and have been our Nord North Star. So that wasn't going to change. However, one change I did want to make was to talk more about what we're doing on the goods side of the equation. What are we doing in the world of ESG. I felt like we did a lot of stuff, but we didn't take credit for it. And then we really needed to refine our game plan as we go forward, given the importance of ESG and the role that we play in our communities. So we elevated our Recipe for Good, which was actually created but tucked in a drawer somewhere. We pulled it out, we put it on the same slide with our recipe for growth, and we call that our Recipe for Good Growth. So that is our strategy on a page, as you can see there. And the great news is, we are really making lots of progress on that good agenda, and it does drive the growth part of the business. Just last week, we got recognized by Newsweek as one of the 500 Most Responsible Companies in the United States, the only QSR brand on the list. I think there's plenty of other accolades that we've received, and there's lots more that we're doing in this area. I'm not going to cover all that here. You'll hear from this sprinkled into other speeches that follow me from the other presenters. But just know that our Recipe for Good Growth is driving everything we're doing at Yum!, and we're gaining a lot of recognition and having a lot of success. One of the other things that we did over the last few years to strengthen our business model that gives us confidence in the future. You're probably all fairly well aware of and that is what we call the transformation of Yum!,. right? We decided back in 2016 when we spun off Yum China that we would also use that as an opportunity to embrace a complete asset-light model for the company. We sold off more company stores. So we got our company ownership down to 2%. And we did a whole bunch of other things to make the business more efficient in terms of rightsizing G&A, returning cash to shareholders. All of that, as you know, have been well documented, worked perfectly. We ticked off every single thing that we committed to by the end of 2019. And frankly, we're all feeling pretty good that this stronger foundation for the company as we went into 2020 was going to serve us well. But of course, things don't always go exactly as planned. And we unfortunately had to deal with unprecedented global uncertainty. It wasn't just the pandemic, but social unrest, inflation, supply chain disruptions, you name it, we got hit with all of that. But ironically, this all became yet another opportunity for us to strengthen the business and give us even more confidence in the way forward. You saw the way the business performed during the last few years, the resiliency that we demonstrated, the strength of our relationship with our franchisees and not every brand in our category had for us, that was something we leaned in on and worked together to manage through all the challenges thrown our way. And truly, it sounds a little cliche, but we are coming out of these last few years stronger because of it. And we didn't really take a break during the last few years either when it comes to our growth agenda. You can see the numbers up there. We actually still grew the business pretty well during the period of great uncertainty despite all the initial impact that we had in 2020. The number I'm probably most proud of on that page is that restaurant count number. We increased our restaurant count by 12%. That's franchise capital. There's virtually 0 company capital going against that number. Franchise Capital invested in building new restaurants during the time of incredible uncertainty. If there's ever one sort of indicator of the confidence that our franchise system has in our business, it's their ability to build through all of that uncertainty. And as you know, those numbers just continue to tick up. So that's why what you're going to hear about us from us today is briefly summed up as an accelerated global growth story. The next chapter of Yum!'s growth is going to be faster than the 25 years that I just shared with you. And that is really in very many ways, powered by digital. As you know, our digital business has taken off, which I'll talk about in a second. So we have tremendous confidence in our ability to have accelerated global growth. And let me just take you through a few more proof points of why that is. We'll just walk -- take a walk around our strategy wheel and start with where everything starts at Yum!, and that's with our unrivaled culture and talent. I'm not going to give you a lot more detail on unrivaled culture and talent other than to say, you will see it in action today. One of the great things about doing these investor conferences, you normally just get to hear from Chris and I, which I get bored of my own voice sometimes, and I'm sure you guys do, too. Well, now you're going to get to hear from all of our great leaders. And we have an amazing group of leaders that are coming up on stage, a great mix of internal, promoted, and developed leaders with decades of experience. And then you'll see some leaders from the outside that have come to us as fully formed big leaders running our brands, in some cases. They bring different thinking and different things to the equation. We have no trouble recruiting great leaders and no trouble. We always have people on the bench to fill roles. So you'll get to hear from them. What they all share is some common traits. They're smart, they're heart-led leaders, and they are relentlessly pursuing growth. Nobody at Yum! is going to be in the senior leader unless they check all those -- senior [indiscernible] they check all those boxes. So that's unrivaled culture and talent. Now let's talk about Bold Restaurant Development. As you can see on this chart, our pace of development for 2021 and 2022, we're going to average 3,000 net new units developed each year, over 4,000 gross. These are mind boggling numbers. Go back to when we were transforming the company and we were spending over $1 billion of company capital, we were only still building 1,300 stores. So to think that we could pull back on having -- on spending all that company capital and have development take off the way it has, is an incredible testament to the work that our teams around the world have done with our franchisees to strengthen the unit economic model. And we'll talk a lot more about that today. Tracy Skeans is going to talk about unrivaled culture and talent after I leave the stage. Chris Turner is going to come up. He's going to talk about the development engine. And then when it comes to our brand building, of course, you're going to hear from our great brand leaders all about what they're doing to stay better connected to consumers in our brands all around the world. We literally wrote the book on R.E.D. Marketing a couple of years ago, the book came out called -- about relevant, easy and distinctive marketing. And I think every day, we're writing new chapters in that about how to bring your brands alive. The most recent one that we'll probably be a chapter on our book someday is how we marketed the Mexican Pizza, for example. So lots of great work going on there that you'll hear about. And then finally, on unmatched front operating capability, our franchisees run our stores. So in many ways, this is just about do we have the right franchise partners? We have very unique franchise partners, as many of you know. These are much larger. They run about 35 restaurants on average, much more capable. We call them 3C franchise partners that's capable, well-capitalized and committed to running great restaurants. We think we over-index in terms of the quality of our franchise partners in terms of running our business, and that is a competitive advantage. And then finally, all of this is in sort of a digital and technology wrapper because that's taking over everything we do at Yum!. Everything we do comes back to digital and technology in every part of the business. You've seen our sales go from $12 billion to $24 billion from prior to the pandemic to where we'll probably end this year from a digital basis. It's amazing growth, and it's not letting up. Chris Turner will talk about digital and technology. Our strategy there, the acquisitions we've done that have all worked out so incredibly well over the last few years. We are really just getting started on having digital and technology drive our business in ways we couldn't have even imagined a few years ago. So when you sum it all up, if you take anything away from the presentation, it would be this slide. These are the unparalleled strengths of Yum! Brands. And these are -- this is why we're putting up such good results right now. All 5 of the things that you see on the page are unique talents that Yum! has, unique advantages in the marketplace. Everybody may talk about these things, but truly, we are the talent factory in the industry. Nobody is building as many restaurants as we have. We've set records for the industry. We wrote the book on R.E.D. Marketing. We have a unique franchise base that nobody else has. And more and more, our proprietary technology is becoming a huge competitive advantage and putting us in a leadership role in the industry. So that's a setup for what I know you're all really curious about is, well, what about your long-term algorithm? So we'll get to that. We talked about accelerated global growth. Let me set the context for the algorithm. As you can see, over the first 25 years, we grew units at 3%, we grew system sales at 5%, and we grew operating profit at 5%. Good results that translated into massive shareholder value. More recently, our algorithm has been much more accelerated in terms of what we're expecting to get out of the business. You can see the numbers up there. But given everything I just described is probably not a surprise. There's lots of confidence as we move forward. And in fact, we are going to raise our long-term algorithm, and I'll share that with you right now. It's 5%, 7% and 8%. We're going to 5% unit growth, 7% system sales growth and at least 8% operating profit. I'm pleased to be standing up here sharing that today because it was about 6 years ago when we were doing the spin-off from China that Greg Creed and I would go around and meet with a lot of investors and say, someday, we think we could be a 7% grower. And I would get a lot of raised eyebrows, skepticism, okay, sure, whatever. Nobody was really buying into the vision that 50, 60, 70-year-old brands had more growth ahead of them than behind them. And they could start to accelerate growth, but that's exactly what's happening. And despite all the global uncertainty, we're very comfortable raising our algorithm to what you see there. I would also point out that, look, our team is not looking to stop at those numbers. Everybody in this company is wired to constantly take whatever target we throw at them and try to figure out a way to beat them. And that is our commitment as we go forward. We're not stopping anywhere. We're constantly looking to take our growth game to the next level. So that's one thing I know you're very interested in. Another one that we feel compelled to provide since we're here intra-quarter, we don't normally do this, but I will give you a little update on how the fourth quarter looks. And the summary is, it looks pretty good, as you can see from that slide. Q3 was a great quarter with 10% top line growth. In Q4, it looks like we're actually even slightly ahead of that pace. We have lots of pluses and minuses, as you can imagine. Still have areas affected by things like COVID lockdown. But when you net it all together, particularly because of the strength that we're having in the Taco Bell U.S. business, and I would probably point out the Pizza Hut U.S. business is doing quite well with the launch of Melts this quarter, which Aaron Powell will talk to you in a lot more detail about. So we've got a couple of things that are really helping drive the business and all of which are more long term in nature rather than just short-term blips. So feeling good about the quarter. Obviously, a lot more on the quarter when we get to the earnings call. So hopefully, I've given you a little bit of a flavor how the day is going to go. We're excited about accelerated global growth powered by digital and technology. And the speakers that follow me will unpack all of that for you, and we'll have time to dig into it some more in the Q&A. I started by talking about why I'm confident about unrivaled culture and talent, I talked about the team. Our next speaker is such a great example of that. Tracy Skeans and I began working together like 20 years ago. She had just joined Yum! with the CPA in the finance group. And I've watched her grow and take on more and more responsibility. It's not often that you have a CPA that ends up becoming the Head of HR for one of your brands, running one of your brands internationally. Then becoming your overall CPO, and your Chief Operating Officer. But Tracy's been on that journey in so many ways, the culture and talent that we've built is a direct product of the work that she's done. And it is truly my pleasure to give her a chance to speak to you guys because I know you don't get to hear from her that much. So with that, I'll have Tracy come on up on stage.

Good morning, and thanks for the welcome, David. So it is my distinct pleasure today to talk to you for just truly a few brief minutes about how our unrivaled culture and talent truly does fuel our good growth. You've heard for many years that the people-first culture and recognition culture of Yum!, that's what's been able to enable us to attract incredible talent into our organization from the outside. And also to develop and grow that talents from within and promote from within. And actually, our talent and culture is now even more distinctive. We have really become a talent engine for the rest of the restaurant industry and beyond. While that was certainly never our goal, we view it as the ultimate complement that you can look around the restaurant industry and find [ Yum-a-lums ] everywhere. So bottom line, we feel great about the talent we have and the fact that they are constantly driving great results through our system. So guess what? I totally realized we're at an investor conference. And I totally know that David just finished up talking about Q4 inter-quarter earnings and teased you with the long-term algo. And that you might be really wanting to get back to that. I will tell you for just a few minutes so that there is a reason you should care about our talent. Our talent is the absolute #1 reason why we have driven those results for the last 25 years, and it's why we feel so good about the prospects going forward. We have over 1 million employees, almost 1.5 million employees, and we're adding hundreds of employees every day. They are the key ingredient as to why we're able to keep creating great, great financial results. And when those financial results keep coming, it really enables us to do more good in the world. So we realize as the largest restaurant company in the world that we have a responsibility to make the world a better place. And in the last few years, we've been much more purposeful and much more deliberate to do that. We really truly want to move from unlocking the potential of our own employees, to unlocking opportunity and fighting inequality for all. We want to do this in 3 distinct areas, 3 areas for both our employees, for all the restaurant team members and quite frankly, for the communities that they live in. Those 3 areas being equity and inclusion, education and entrepreneurship. I will tell you every one of our brands is doubling down on their social purpose programs. We are not going to stop until all people and all voices have seats at our table. I know many of you saw that in 2020, we announced a $100 million unlocking opportunity investment all meant to more aggressively fight inequality. And to date, we've allocated about $50 million. We got another $50 million to go in the next couple of years. So again, our incredible culture enables us to get great talent. That talent all around the world, is driving incredible financial results. And we believe that those financial results are not only just great for our shareholders, but will help us make the world a better place. So switching gears. David said we have a great lineup of leaders for you today. And if you're going to pride yourself on having such great teams and talent around the world, you really do need exceptional leaders to lead them and lead the brands. And David mentioned, he has 33 years of experience with Yum!. I have 22 years of experience of Yum!. Quick math, add that together, that's 55 years of experience, and that's a lot, which is just one reason why it's so important for us to have a really deep bench, with a lot of new talent coming in, fresh perspectives, to also balance out some of our long-term veterans. So it's my pleasure today to get to walk you through our leaders and tell you a little bit more about who you're going to hear from today. So first, you have the fabulous CFO, Chris Turner. Chris joined us about 3 years ago from PepsiCo, where he led the Walmart businesses before that being a longtime partner at McKinsey & Company, where he partnered with Yum! many years ago as well. And you will see in the next presentation how much time and effort he's been putting in to really get the digital and technology investments moving. We also have our incredible Scott Catlett, our General Counsel and Chief Franchising Officer. Scott's been with Yum! for 15 years in a variety of legal roles and has now opened the franchise office such that we can look for more diverse franchisees and also make sure that Yum! stays the franchisor of choice. We'll also hear from all of our brand leaders today. So we have the very talented Sabir Sami. Sabir became the KFC for -- the CEO for KFC, just in January of this year. But he had 13 years of experience with us already, turning around some businesses, taking others from growth to growth in Canada, in Turkey, in Asia, in the Middle East, just to name a few. We also then have the amazing Mark King. Mark had well over a decade of CEO experience already at adidas North America and also TaylorMade before that, and he joined us as CEO of Taco Bell in 2019 and is very much taking that brand from strength to strength. A few years back, you saw Julie Masino here on this stage as she was with us as the President of Taco Bell U.S. Because of her prior global experience, we then asked her to move over, and she is now finally the one that is unlocking the incredible potential of Taco Bell International. Our newest executive, newest to the team is Aaron Powell. Aaron joins us after 14 years or so with Kimberly-Clark, where he led many of their businesses finally as the President of Asia Pacific, their largest business. Before that, he worked with Bain & Company and Procter & Gamble and now is the CEO for Pizza Hut. He is quickly changing the trajectory of that business. Last, but certainly not least, is our awesome Shannon Hennessy. Shannon had almost 20 years of experience with McKinsey & Company before she joined us, actually joining us as the global CFO for KFC. Then earlier this year became just another example of what we do at Yum! where we shift people. We shift people between roles where the business needs them and she was promoted to President of the Habit Burger Grill. So you'll see that there's a lot of diversity amongst these leaders, diversity of background, diversity on all different dimensions. But there are some true commonalities. They are super smart, savvy business people. They truly, truly are courageous risk takers with a really go get and winning mindset. They are humble, fairly low ego, fairly low ego, genuinely caring people with huge hearts for our business and for our people. They're the reason that Yum! Brands is sticking along, and I am very honored to call them not just colleagues, but true friends. So here's the thing. I hope that I've convinced you that we've got a great set of leaders here and behind them are many more. There's many more where they came from. Individually to a person, they're extraordinary. But their true power is that collectively, they are unstoppable. When this group collaborates cross, the potential is, it's truly unmatched. So we think that's the reason Yum! is such an incredible investment of choice. When these leaders collaborate across brands, across functions, across centers of excellence, whatever it is, the sky is the limit. And so here's just a few examples of how that collaboration takes place. We have -- in the last few years, I can tell you more than ever before, been collaborating, even when we couldn't travel that much. We are doing cross-brand ops councils and Marketing Summits and our brands are more than ever sharing ideas, sharing best practices and sharing solutions. Because I guarantee you, if you have a challenge in one part of Yum!, there is likely someone that has already solved it in another part of Yum!. That's the power of scale and one of our biggest strategic advantages. So one example I'll highlight is our Collider Lab that we acquired several years back. Ken Muench and his team talk about talent. His small but mighty team, they are made up of marketing insights people. They're made up of sociologists, cultural experts, anthropologists. And they basically go around the world, brand to brand and make sure that we get the cultural insights right, brand by brand, market by market. In the last few years, they have trained over 2,000 marketers across our system to make sure that we stay up to date with the most important things we need to know, to drive our brands. Recently, with KFC, they have been training the brands across 20 markets and significantly moved to the sales growth numbers in those markets. And here's the thing. As much as Collider is a secret weapon for us, it's really only one of many examples that exist across Yum!. Well, I promised to be brief and we have so much more to get to. So one last time here is the punch line. We are absolutely sure that our culture is what enables us to attract, grow and retain talent. And we are absolutely confident that, that talent is what will continue to drive results going forward and why you should be so confident in our future. We are wildly confident that the best is yet to come and we hope that you are too. And so with that, it is my great pleasure to introduce my great friend and partner, our CFO, Chris Turner.

Good morning. It is terrific to be here today. Thanks to all of you for being here with us in the room and all of you being with us out online. Today, I'm going to be on the stage, 3 different times, which is a real privilege, to tell 3 different parts of Yum!'s amazing story. Right now, I'm going to put on my digital and technology hat. And we're going to talk about those distinctive digital capabilities that are driving profitable growth for Yum! and our franchisees. Let's talk about the journey that we've been on. If you go back before 2019, we had a very decentralized technology strategy. Each brand was driving their own approach. We were primarily focused on e-commerce with most of the energy in the Pizza Hut business and Yum! mainly provided back-office capabilities. There were some smart folks at Yum!, including a few in this room, David, Tracy, Sabir, Gavin Felder, our Chief Strategy Officer, who at that time said, hey, we can see on the horizon that digital is going to have a major impact on the industry, and we want to be leaders in driving that. And they said, in order to do that, we have to elevate and change our strategy. So the last few years, we've put that strategy in place, our brand technology teams, in combination with our new Yum! digital and technology teams at the center have built and acquired a distinctive set of technology capabilities, and we've used that to drive tremendous growth in our digital sales. Going forward, we're going to be focused on scaling those technologies across the network, which, of course, will accelerate the impacts that they are having, and we're going to be continuously innovating to stay at the leading edge. So let's talk a bit more about that digital strategy. The core word is, easy. You've heard us talk about relevant, easy and distinctive brands for years. We believe that digital and technology is the primary way to bring easy to life in our brands. Let's go a bit deeper. Our technology capabilities, we segment into 3 areas. First, we have a set of capabilities that drive easy experiences for our customers. Second, we have capabilities that drive easy operations for our team members and our franchisees. And third, we have capabilities that allow us to drive easy insights from our data. That allows our marketing teams, our development teams, other teams to make better and faster decisions. Of course, the overall goal of all of this is to make it easier for Yum! and our franchisees to drive profitable growth. So how are we bringing this to life? It is a partnership between the brands and our Yum! digital and technology team. The brands are responsible for developing the front-end interfaces between our technology and our customers and our team members. Those need to be tailored for every brand country combination. What a customer in KFC in Thailand expects may be very different from what our Taco Bell customers in the U.K. expect. Yum! underneath provides scale platforms, giving us efficiency and giving us a secure environment in which to operate our technology. Yum! is also responsible for continuously staying at the leading edge of new technologies that we can use to drive performance and assessing which ones we should incorporate into the business. Okay. Let's talk about our strategy. So every restaurant company is talking about digital and technology. We believe that at Yum!, we have a distinctive and differentiated strategy. There are 3 things that differentiate it. First, we will own more of our technology than many of our competitors. We're not going to own things that are truly commoditized. We're going to own things that are competitively advantaged elements of the tech stack. The reason we want to own it is because we can be faster and more nimble in updating those to stay at the leading edge. We won't be beholden to third parties for competitive advantages in our system, and we own the data. Second, we are thinking end to end. That easy framework that I shared earlier is truly comprehensive. Many of our competitors, particularly smaller ones, when they talk about digital and technology, they're talking about the very narrow e-commerce slice. We want to have a full suite of capabilities that allow us to be a truly digital restaurant enterprise And third, with 293 brand country combinations, our technology will be scalable across multiple brands and multiple markets. And of course, in technology with significant fixed cost investments, that gives Yum! and our franchisees a cost advantage in the technology space. So let's talk about the people who are bringing this to life. As Tracy said, talent is at the center of everything that we do. We have an incredible team of leaders. Clay Johnson joined us in 2019 as our first ever Chief Digital and Technology Officer. Clay had been the CIO at Walmart. He has done an amazing job driving the strategy and executing it in partnership with an amazing set of brand technology leaders. In addition, we have bold leaders at the head of each of the easy capability areas. And of course, cybersecurity is a key priority, and our information security team does a great job ensuring we have the highest standards. So now let's talk about the capabilities that are coming to life in our system. You see the easy framework along the left side here. But you also see 2 columns that are important to note. We have a set of capabilities that we are building with our talented development teams in the U.S. and around the globe, but we have also made a number of acquisitions to bring distinctive capabilities into our ecosystem. We really have a competitive advantage on the acquisition side because of our broad scale. We're able to see technology players around the globe who are working with their brands, working in particular markets, working with our franchisees, and we see the ones that are driving the biggest impact and that our franchisees have excitement about and are adopting. That's given us a competitive advantage in identifying these companies to bring in. All of these acquisitions have been small, but they've each been incredibly powerful. If I go down the road, easy experiences on the build side. This, in our larger scale markets, where you've got a number of other restaurant competitors with strong digital capabilities, we want to have distinctive tailored solutions from a front-end standpoint, web, app, kiosk, Underneath is the Yum! commerce platform, where we get scale. We are rolling that across the U.S. this year. We'll continue to roll it around the globe. On the acquired side, TikTok, you've heard us talk about TikTok's conversational commerce capabilities, the ability to order in chat or in social channels. TikTok also has a set of traditional e-commerce capabilities that allow us in smaller countries to rapidly and with low cost, scale up e-commerce. So that is the combination of built and acquired on easy experiences. Easy operations, the presiding point-of-sale system, we've developed internally. We're starting to implement at Taco Bell. It's having a big impact on team member experience in the restaurant, will eventually drive faster throughput in the restaurant. The Yum! Super App, which started in Pizza Hut as the Hut bot. We're now expanding it across brands. It's a tool that makes it easier for our restaurant managers to manage the restaurants. We'll talk more about the Red innovation team in a moment. That's our team charged with looking at future forward innovations and thinking about which can drive performance in our business. Dragontail, you heard David talk about Dragontail. We'll talk more about it. Next-generation restaurant management in a multichannel fulfillment environment. [ Trak ], our smallest acquisition, we haven't talked a lot about it, is a robust back-of-house management system allowing us to manage things like staffing, scheduling, inventory in the restaurant. And finally, on easy insights, we're building the Yum! global data hub to house our data securely and then the combination of Collider, which Tracy mentioned earlier, and Quantum, which we acquired last year, bring the art and science to drive the insights from that data. So as you can see, this is a comprehensive set of capabilities. And let's give a few examples from why these are so distinctive and why they're driving value. We'll start with easy experiences. The reason we are so excited about easy experiences is the power of our digital sale. Every time we grow our digital sales, we see a tailwind in overall sales growth. We see higher frequency, higher ticket, plus we access new customers and new occasions. Digital sales also support productivity because we no longer have to take the order or take the payment. And they power our brand strategies because we have the customer insights and relationships with our customers. I mentioned earlier, the way we bring this to life, our e-commerce capabilities in our larger scaled countries, that brand layer on top with tailored guest experiences that will be competitively advantaged in each market powered by the Yum! e-commerce platform underneath, which gives us scale in transactional capabilities. I talked about TikTok. In smaller markets, where speed and being low cost are the key success factors. We're using TikTok's e-commerce capabilities to rapidly scale up our digital business. We've implemented it in a number of smaller markets. You see 2 examples here. KFC in Mexico and Pizza Hut in Costa Rica, where TikTok's e-commerce engine has driven significant conversion lift. We're focused in other areas as well and easy experiences, delivery as a service. We've now stood up in our largest brand country combinations where you can order in our native apps and websites and still utilize third-party delivery. Loyalty now covers more than 50% of our restaurants around the globe with distinctive programs. And of course, CRM, the ability to have those relationships with our customers and the insights from the data that powers our commercial strategies. Now you may be asking, what's the value of these digital sales? Well, first, they've grown tremendously. As David mentioned, this year, we'll achieve $24 billion in digital sales, 40% mix in our global business, tremendous growth rate over the last few years. But I want to give a case example from Taco Bell U.S. to bring the life just how powerful that digital growth has been. Taco Bell in 2019 as we were accelerating our digital strategies. Mark and his team spent a lot of energy building distinctive commerce capabilities across multiple channels, kiosks, web and app. They also did a great job partnering with the marketing teams in Taco Bell to have tight linkages with our brand strategy and launched the Taco Bell loyalty program in conjunction. So what have the results been? We had virtually 0 sales in 2018 in Taco Bell that were digital. This year, we will be north of $3 billion in digital sales. 23% mix. So a lot of progress. Of course, that 23% is way behind our 40% overall mix, so there's still a lot of opportunity ahead for Taco Bell. So now let's look at that $3 billion in digital sales. A little under $2 billion of that has not been incremental. It's been a transfer of non-digital sales to digital sales. But we still like every single thing about those digital sales dollars. They drive efficiency, as we talked about earlier in the restaurant, and we know who these customers are, giving us the power of the data. But a full $1.2 billion of those sales have been truly incremental to the system. This is lift in check size and frequency in our existing customers, plus serving those existing customers in new occasions, and we brought new customers into the business. So $1 billion in sales that we wouldn't have had otherwise, if it weren't for our digital strategy, full 35% to 40% of Taco Bell's digital growth through 2022 based on the mix of channels has been incremental. So now let's talk about the power of that $1 billion in incremental sales. I probably want to know, how does that flow through to the P&L? I can tell it flows through in a strong way. You get fixed cost leverage on those incremental sales dollars, and for the delivery component of that, our customers are willing to pay more for the convenience. That more than offsets our investments to bring this technology to life, the promotional cost of our loyalty program, and, of course, the added cost of delivery for that segment of the sales. If you flow that through to a franchisees bottom line, for the average store in the system, this has driven an incremental $65,000 in EBITDA for our franchisees in 2022 versus 2018. We scaled that up at recent trading multiples for stores in the Taco Bell system, that's $4 billion of value created for our Taco Bell franchisees. Let's talk about the Yum! P&L flows through in royalties and in our company stores. Even when you allocate Taco Bell's share of Yum!'s digital and technology investment costs, it's added more than $50 million to our P&L. At our recent multiples, that's $1 billion in shareholder value created. In total, $5 billion of value in Taco Bell U.S. alone as a result of that digital growth. Hopefully, you see why we are so excited about driving the digital strategy and why we and our franchisees continue to partner to invest to drive it. Let's now shift to easy operations. Easy operations is about driving better productivity in the restaurants, improving the team member experience. And of course, when we do that, we improve the customer experience. Dragontail, we talked about a bit earlier. Dragontail grew up in the Pizza Hut system. We acquired it, brought it in-house. We're now deploying it across our other brands with big success. What it does, in a multichannel fulfillment environment, it directs our kitchen for when to cook the food so that the food is coming off the line at the right time. When a delivery driver is available, so our customers are getting fresher, hotter product, customer experience goes up, plus we're seeing productivity improvements in our driver force. Dragontail having a big impact, big plans to continue to scale across the system. Let's talk about our Red innovation team. Gavin Felder is leading this group. This is an internal team of experts and engineers that partner with third parties, partner with our franchisees to look further out at technologies that we think can drive performance in our business in the future. They're focused in 4 areas right now: computer vision. How do we use computer vision to help our team members fulfill orders more accurately in the restaurants. Labor productivity with robotic assist. We're testing robotics in flying in our labs and in KFC restaurants around the globe, drive-thru productivity. How could conversational AI allow us to automate order taking at the drive-thru. We're working on that at Taco Bell. And finally, Internet of Things. This is using Internet of Things, IoT, to monitor restaurant systems to help save some administrative time for our restaurant managers and drive things like energy efficiency. We've already rolled this out in hundreds of KFC restaurants around the globe, and we'll continue to drive that. So it's one thing for me to talk about Red innovation, but I'd love to bring it to life with a quick video. [Presentation]

Pretty exciting step. Gavin, Lorence Kim, their team doing an incredible job, driving the future, how we'll bring new technologies to bear to drive performance at Yum!. Let's now shift to easy insights. So the basic structure of Easy Insights is first at the base, we've got to house and collect our data securely. We're building the Yum! Global data hub to do that. On top of that, you then have to have capabilities to drive insights from the data. And that's where we bring the art and the science together. Tracy talked about Collider, which brings the art, customer insights, decision-making, how do we drive our strategy and Quantum, a broad set of analytics capabilities that we acquired last year, which helps us bring the science. Together, they help us drive better commercial decision-making, marketing optimization, pricing optimization, of course, Quantum's calling card is marketing optimization. In each of our 150-plus countries around the globe, the transition from traditional marketing to digital marketing is happening at different paces. Quantum helps us get that right in each market. You see an example here in Pizza Hut U.K., more than a 40% increase in return on ad spend. So easy insights to drive better decision-making. So we've now covered each of the capability areas. In our journey, we've accomplished a lot. There's still a tremendous amount of opportunity ahead. You see here a few examples of how we're scaling these solutions just next year. It not only gives you a feel for the pace that we're moving at, but it also demonstrates how our franchisees have buy-in. They're seeing the power of these solutions in their stores and they have pull for us to continue to drive the digital strategy. Of course, every journey at Yum! needs to have a bold destination in mind. My aspiration, and it's shared by our brand CEOs and Presidents and our technology leaders around the globe is that someday, 100% of our sales should be powered by digital. I don't know how long it's going to take us to get there. I'm sure it will be a challenging journey with some twist and turns. But I know with our distinctive capabilities, our differentiated strategy, our amazing talent, and the partnership of our incredible franchisees will get there. And in doing so, we will drive tremendous levels of profitable growth for Yum! and its franchisees. With that, I want to introduce our Chief Legal Officer and Chief Franchise Officer, Scott Catlett, to talk about those amazing franchisees.

All right. Good morning, everybody. It's great to be with you. As Chris said, my name is Scott Catlett, I serve as Chief Legal and Franchising Officer. And I'd like to start this morning with the -- our brands are full of fabulous stories, and I'll take you back to the very beginning in 1951. So a chance meeting occurred between the Kernel, Kernel Sanders and a workaholic restaurant tour from Salt Lake City named Pete Harman. This meeting took place at the National Restaurant Association Commission in Chicago. The 2 struck up an immediate friendship. The very next year, while the Kernel was on his way to Australia, to attend a preacher's conference, where he hoped to be cured of his awful cursing habit, he stopped in Salt Lake City and met with Pete and his wife. Over a handshake deal, Pete agreed to sell the Kernel secret recipe in his restaurant. The very next day, the Kernel continued on his travels to Australia and Pete actually converted his restaurant to what would become the world's first Kentucky Fried Chicken. Little known fact, but Pete actually came up with the name Kentucky Fried Chicken, went on to invent the bucket and came up with many other innovations that still define the brand today. So as you can see, franchising is at the heart of Yum!'s business model and dates back to the origins of our brands. And we've seen through many decades of experience, the beauty and the benefit of the franchise business model. But 2 seismic shifts have happened since we were last with this audience in 2018. First, Yum! completed its transformation to be more franchised, more focused and more efficient. And second, we all endured a global pandemic. Both of these events highlighted for us the opportunity to redouble our focus on being the world's franchisor of choice. And we're doing that today through the global franchise office. As you've heard already, today, 98% of our restaurants are owned and operated by about 1,500 franchisees. These franchisees represent 1,500 different stories of small businesses, entrepreneurs and large public and private companies who are investing behind our brands. And of these 1,500 franchisees, just 5% own and operate about 70% of our restaurants. We know that the success of our franchisees is critical for Yum! to achieve its growth ambitions and for us to maximize shareholder value. And we believe that our franchisees are some of the most growth-minded entrepreneurs in the world. And as you heard David and Tracy talk about that seem focus on people and talent at Yum! flows throughout our franchise system to our franchisees. And I'd like to describe to you how all of this adds up to a competitive advantage for Yum! in our system. First, through many decades of experience, we've come to identify what we believe are the hallmarks of a great franchisee. And within Yum!, we refer to these hallmarks as the 3Cs. First, we look for franchisees who are well capitalized. Our Taco Bell India franchisee is the Berman family, and they're known for many generations of success across multiple industries. Our franchisees have the advantage of being able to fund their bold development through free cash flow and access to public and private markets. Second, we look for franchisees who are committed and for that, I think no further than our franchisee in Turkey. IS Holdings has both Pizza Hut and KFC in Turkey and is led by a gentleman named [indiscernible]. IS Holdings has opened over 300 new units since entering our system less than 20 months ago. And when I think of capable, I think of the Flynn Restaurant Group, which is our franchisee for Pizza Hut and Taco Bell in the United States. It is an incredibly sophisticated operation, full of very capable operators. In fact, we see this because their Pizza Hut restaurants often outpace the balance of the Pizza Hut system. And our great franchisees have their own dedicated development teams, M&A teams, supply chain teams and food safety teams. We know when we put our iconic brands in the hands of a 3C franchisee we can't lose. But not only do we know the hallmarks of a great franchisee, we know what it takes to be a great franchisor. Franchisees seek to partner with us because of unique benefits that you'll only find at Yum!. As you're going to hear from our brand leaders, we offer iconic brands. As you just heard from Chris Turner, we offer distinctive digital and technology capabilities. As you heard from Tracy Skeans, we have best-in-class leadership and functional expertise that shines during challenging times like a pandemic, supply chain challenges, geopolitical uncertainty and inflation. And we offer unmatched scale that we leverage through supply chain excellence, favorable vendor terms, including cutting-edge aggregator agreements. In other words, we offer nearly unlimited range of growth opportunities within our own system. And we do this through things like category restaurant design, flexible format options, leading market mapping capabilities, all of it culminating in compelling and consistent new unit returns. As you're going to hear from Sabir, over 80% of the world's KFCs pay back in 4 years or less. So I hope you can see, we believe we are the world's multi-brand franchisor of choice. Now I hope you -- our passion for growth is evident. But in my role as Chief Franchising Officer, I'm equally passionate about our ability not just to drive growth, but our ability to drive good growth as you heard from David. And there's something unique about the franchise business model. And that is -- it enables us to unlock opportunities for the communities we serve. Franchisees provide great entry-level jobs and development experiences with every new restaurant open in our system, we create about 25 new jobs. And our system of over 50,000 restaurants employees well over 1 million people, as Tracy mentioned. But our ability to unlock opportunity extends beyond the front line as we are able to unlock opportunity and create pathways to generational wealth for aspiring business owners and entrepreneurs who'd like to become franchisees. And we're focused on this by bringing more faces and more voices to the table to create a franchise system that's as diverse as the communities that we serve. But most importantly, our franchise system today is healthy. We have strong operators with healthy balance sheets. We have 15 publicly traded franchisees. You see many of them listed here. Notably, Yum China restaurant brands, Collins, [ Devine ], Sapphire and just yesterday, Americana, which is our Pizza Hut and KFC franchisee in the Middle East successfully completed their IPO. So our franchisees are strong, and we've redoubled our focus on their financial health and performance. Notably, these 15 franchisees through the third quarter of this year represents 60% of our net new unit growth. So we know at the end of the day, our ability to succeed and drive accelerated good growth hinges on our relationship with our franchisees. We've redoubled our focus on this relationship which has only grown stronger through COVID, and you're going to hear some proof points about that from Mark King. We've built muscle around managing through crisis and mitigating risk through COVID. We've increased our visibility to franchisee performance and health, and we're maximizing our unlocking opportunity initiative through the franchise business model. Because of these strengthened relationships, because of our 3C partners, and our focus on both of those things, we believe we're better positioned than ever to drive accelerated good growth through our franchise business model. And now I'd like to welcome back Chris Turner, who's going to talk to us about how we're partnering with our franchisees to drive bold restaurant development. Chris, welcome back.

Thanks, Scott. Okay. Back with hat #2. This, like all chapters in Yum! story is a really cool story to tell, bold restaurant development. Let's just look at what's happened the last couple of years in the Yum! system. Last year, 2021, nearly 3,100 net new units, a new all-time industry record. You go back over the last 2 years, the last 8 quarters through Q3, we have opened 7,800 gross new restaurants. If you think about that that's like opening a top 10 global restaurant company in just 2 years. For 2 years straight, we've opened a restaurant nearly every 2 hours. Just an amazing accomplishment by our teams. And the engine is getting stronger and more diverse. We had 111 countries that had development last year. 18 of those grew by 25 units or more. Yum China, which has an amazing development capability has always been our development leader, will continue to be our development leader. They'll continue their trajectory, but we are broadening the engine. More and more markets are stepping up their capabilities, and you'll see us continue to do that. So you ask what drives this amazing capability and results. It's a pretty simple formula. But I can assure you it is distinctive. It can't be replicated. This is something that is a defensible competitive advantage for Yum!. There are 5 reasons: First, strong unit economics. Scott talked about those amazing franchisees. They're putting their capital to work to build stores. They only do so when they get a strong return. Those franchisees that Scott mentioned, they are hungry for growth. Third, we have massive opportunity, lots of white space around the globe. Fourth, our scale gives us advantages in economics and in execution, and we have tremendous capabilities. And finally, we've got the best teams in the business driving development. Let's talk about a few of these. Unit economics. 80% [indiscernible] last year have been opened in markets with paybacks of 5 years or less. That is tremendous. There are tremendous levels of returns for our franchisees. We utilize our Red brands. You're going to hear from the brand CEOs and presidents to talk about our brand strategies. Our brands are so adaptable, can succeed around the globe that drives top line and our scale helps bring bottom line strength for our franchisees. Tremendous paybacks and return on the investments that our franchisees are making. Let's talk about those growth-hungry franchisees and also start to talk a little bit about that white space opportunity. Give an example in India, had the privilege of visiting the Indian market earlier this year and meeting with all 3 of the franchisees you see across the top. These are incredible franchisees. They see a massive opportunity in India. To bring that to life, look at the numbers at the bottom. We think in 2027, there will be 200 million consuming class customers in India, who -- their characteristics which show a potential affinity for our brands. Today, we have a little over 1,500, almost 1,600 restaurants in India. So that is 8 restaurants per million consuming class customer. In the U.S., our penetration is 60 restaurants per consuming class -- per million consuming class customers. And we believe we still have tremendous opportunity in the U.S. So if you just do the math on this, there's an opportunity for thousands and thousands and thousands more units in India. That's why our franchisees there are accelerating their development. We've opened 400 units there in the last year. So now if we scale that up and do this across markets around the globe, and you think about where we are today, there's still massive opportunity ahead of us. We do have scale in the categories in which our large brands play. But in total, we only have 6% share of the global QSR market, tremendous opportunity. You put all of that together, we believe there is a future opportunity for an additional 100,000 new restaurants or more to be added to our system. Opportunity is not our problem. There is tremendous white space for our brands around the globe. Let's talk about our scale and capabilities. Just a few that I'll highlight. Future forward formats. I had the opportunity this summer to go visit the Engler family in Minneapolis, I got to see the Taco Bell Defy restaurant. KFC, developing digital forward restaurants, opening them around the globe. Aaron will talk about the delco and Pizza Hut. These are formats that are right for the digital future. We're bringing digital capabilities to our development using analytics and market mapping to pinpoint high-return locations for our restaurants. Purchasing, leveraging our purchasing scale across brands helps us support bottom line economics, and of course, equipment supply chain is incredibly important in opening restaurants. It's been a challenge, but our teams have been the best in the business that's staying ahead, hasn't slowed us down. Of course, that visibility to the supply chain also gives us visibility to the development pipeline. And finally, our broader digital capabilities are supporting the business, as we discussed earlier. Finally, we've got the best talent in the business driving development. The thing that we do at Yum! as we put our very best talent on this function. A couple of examples. The first picture on the left, [indiscernible] talented finance leader in the KFC organization, so talented, she became the CEO of one of our key markets, KFC Canada, ran it very successfully for a number of years. She is now the Chief Development Officer for KFC, one of our best leaders on this important function. Joseph Call, the next picture. Joseph is the Chief Development Officer for Pizza Hut globally. Our current amazing Pizza Hut Global CFO, [indiscernible] went out on maternity leave. Joseph was the clear choice to also put on the CFO hat. He's that talented. I could go on and on with more examples around the system. Of course, not only are these teams talented, they are incredibly competitive. You might ask why? Well, you know that in reality, Yum!'s Chief Digital -- excuse me, Yum!'s Chief Development Officer is David Gibbs, and there is no more competitive human on the planet than David Gibbs, and our teams follow his lead and they play to win. So when you sum it up and think about those distinctive competitive advantages that drive our development capabilities, and you think about all of the other advantages that David brought to life earlier, best talent broadly, supercharge development engine, our brands more red than ever. Our brand CEOs and presidents are going to bring that to life for us here in a moment. Our power franchisee base, as Scott described, and those distinctive digital capabilities, those are the reasons why we are so confident in our ability to drive accelerated global growth and why we have confidence in the future growth algorithm that David shared. So at this time, we're going to take a short break. After that, our brand presidents will come up and talk about our red iconic brand. Let's reconvene at 9:30 Eastern here in the room and online. Thank you. [Break]

All right. If everyone could take their seat, we'll be starting back up in a minute, please. For those joining via the live webcast, we'll -- we're reconvening here in the room, and we'll be starting in a minute.

Good morning, everyone. It's a pleasure to be here. As Tracy mentioned this morning -- sorry, my name is Sabir Sami, I'm the CEO of KFC. As Tracy mentioned this morning, I've been with the Yum! KFC business for almost over 13 years. And over the course of the 13 years, I've had the privilege to travel to over 50 KFC markets around the world and having worked in many of those as well. And I experienced firsthand the passion that our team members in the restaurants and that our franchisees have for the brand and also seeing the strength of the brand in so many, many markets. And it's a real honor for me to be here and share the KFC story with you on behalf of all those people who run the KFC business around the world. A year ago, we presented a plan to grow sales, deliver explosive unit development and continue to grow profit as well. And I'm really delighted to share with you that we are on plan to deliver exactly that. We're delivering system sales growth of 9% across the division, fueled significantly by a 40% digital mix, which is up 8% versus a year ago, delivering an additional $1 billion in digital sales. Our unit growth is up by 7%, representing an additional 2,400 KFC stores, around 150 countries across the world. And our same-store sales growth is up 3% in a year where China has been significantly impacted by the pandemic and closures as well. In fact, actually if you remove China out of the business and you look at KFC ex China, our same-store sales growth is up by 9%, clearly demonstrating the strength and the momentum behind the brand as well. And this growth is not limited to a fewer markets or a few regions, it's actually pretty much consistent around the world. If you look at our Latin America and Caribbean businesses, the same-store sales growth is up by 24%, also driving 107 new units into that market. Similar performance in the Middle East, Pakistan and the African -- North African business where same-store sales growth is up 31%, and they've added another 129 units in the last year in that market. Similarly, we look at the India business with 30% same-store sales growth. And as Chris had mentioned and Scott had mentioned, India is one of our fastest-growing markets where they've added another 206 units as well. And you might say these are all emerging markets, but we see the same strong momentum looking at our Australia and New Zealand business, where they've added 34 units in a highly penetrated market and also growing at 5% same-store sales growth as well. If you ask me as to what are the key growth factors driving our business for KFC around the world, I put it down to these 5 factors. First and foremost, we are a global iconic brand that is highly recognized and well craved by consumers everywhere. Secondly, as Scott and Chris had mentioned, our 3C partners are absolutely amazing. I have worked and met many of them, and many of them are actually second and third-generation franchisees who have built the brand from store #1 in many, many markets, and they are highly committed and highly capable in running the branch. Thirdly, we have very, very strong compelling paybacks. And I think Chris mentioned that, and I'll talk a little bit more about our paybacks going forward in a couple of minutes. Then over the last few years, we started our digital acceleration program, and that has had a big impact in terms of how we have to continue to drive more and more momentum in more and more markets around the world. And last but not least, is the world-class talent that we have, both in our franchise community, but also within the Yum! businesses around the world. So it is this strong momentum together with these growth factors that give me great confidence that KFC will continue to be a very, very strong growth engine for Yum!. But today, I want to focus on 3 elements that I think will actually accelerate our growth even more than where we've been so far. And that's really what I want to focus on today. So Chris talked about easy experiences and how do we leverage technology and digital to make experiences easier for our consumers as well as for our team members who run our restaurants. Secondly, KFC has been a strong growth engine on unit development for Yum!. We believe we can actually accelerate that pace, and I'll talk a little bit about what we're doing to accelerate on that front. And last but not least, our unique world famous recipe, we think it has the ability to broaden its appeal to more consumers and more occasions as well. So on the technology side, we -- our bold ambition, as Chris has said earlier, is to be 100% digital. That ambition has 3 legs to it. First, we want to make sure that we digitize every single order. It gives the consumer a better experience. It also gives us the ability to understand our consumers better, collect their data, understand their preferences and then predict what they will be buying in the future. Secondly, in parallel, we want to invest in our kitchen technologies, making life simpler through automation and intelligence in our kitchens so that the team members can focus more on guest experience. And last but not least, once we have the data both from consumers and our kitchen technologies, we want to use data science and artificial intelligence to help our operations and marketing teams make better decisions. So I'll talk about the first one first, on the digitizing of orders first. There are 4 key priorities here. We are leveraging our own KFC e-commerce platform to digitize orders on every single access point. In fact, 86% of all KFCs around the world already have some capability on order ahead or delivery or pick up so that we are able to start collecting that data, and we're expanding more and more channels and upgrading that engine as we speak. Secondly, we look at kiosks as a unique accelerator of digitizing dine-in and takeaway customers. So moving business away from the front counter to kiosks gives us that capability. Thirdly, delivery is a fast-growing channel, and we are partnering both with aggregators as well as our own delivery channels to digitize those orders as well. And last but not least, we have started to test new frontiers to build the KFC of the future, testing ideas on the metaverse as well as gamification. But I want to take a few minutes to talk about kiosk as an example of what we're doing. In markets where we started putting kiosks in, we are seeing a rapid shift for consumers to move from front counter to kiosks. In fact, as you see here from 2019 to 2022, the business -- the mix on kiosks in stores that have kiosks has actually tripled to almost 40%. And we see this trend rising as we continue to do so. It also has the added benefit for the franchise partners, where we're seeing ticket growth, thereby giving them better paybacks, but also the consumers are enjoying the fact that they can personalize their experience as they order as well. And a great example of this is from our South Africa business, where they have gone in a single year with 87 stores with kiosks to 650 stores, thereby an increase of 7.5x. And they've done that in 1 year alone. Our South Africa business is one of our major markets, and we have close to 1,000 stores there. So what they have done is they have leveraged their scale to work with vendors to reduce the cost of integration and the cost of implementation. That, coupled with the 20% check lift that they saw reduced the payback of kiosk from 18 months down to 12 months. And that allowed the franchise partners to significantly accelerate the implementation of kiosks. So this is -- we now have kiosks in almost over 4,000 stores around the world, and we are rapidly accelerating those in more and more markets around the world based on examples like this where both franchisees and consumers are seeing the benefit. Now the first idea is to digitize orders. Our second pillar of the digital ambition was all about simplifying back of house operations. We recognize the fact that in order to serve customers better, our kitchen operations need to be more automated and simpler for our team members to focus on guest experience. So we are leveraging a whole host of technologies in the back of house to help them simplify operations. These include things like bluetooth temperature sensors that are placed both in our chicken walk in coolers as well as in a hot holding cabinets to make sure that the chicken we serve is within brand standards on temperature and also serves more [ field ] safety standards as well. Secondly, we're also using oil temperature sensors. So these are sensors that are especially designed to check the quality of the oil to make sure that the oil is within standards. We optimize -- minimize waste on oil, but also make sure that the chicken is according to brand standard. And over the course of time, our kitchens and restaurant managers have had to follow a whole host of written processes, which we are now moving to tablets and smartphones, thereby saving time and allowing the restaurant managers to basically collect all that data much faster as well. So whether it's bluetooth temperature sensors or oil sensors or digitized processes, all of these are now connected into a single platform, allowing the restaurant manager to run the store from a tablet. The system also prompts the manager to make decisions ahead of time if they need to start -- cook chicken ahead of time, if they need to shift labor deployment and thereby allowing them to optimize kitchen operations as well. So as we collect data from customers' digitization of orders and we collect the data from kitchen operations, we're able now to make more intelligent data decisions within our marketing and our operating calendars. A great example that -- this was from our Middle East and North Africa business where they've been doing this for a while. And what they've managed to do is to collect that data and as they better understand each single customer they're able to target creatives for every single customer based on their demographic, their history, their buying patterns and their historical kind of preferences. And the artificial intelligence unit generates 500 creatives a minute, basically targeting every single consumer that they have in the database. Through that, they have managed to grow digital transactions by 20%, also grow ticket averages by 24% as well. And therefore, they're significantly fueling their business overall as well. And we see that as an example that we're rolling out to more and more markets around the world. And using all of that data and the hub that we are collecting at the center, we're basically going to accelerate our loyalty program in more and more markets. This has been highly successful in China and in the Middle East, and we expect to roll it out in the U.S. next year as well and building a global loyalty program to reward consumers. And all these digital platforms are then accelerated and enhanced by Yum! technology partnerships. As an example, I think Chris mentioned this on TicTuk. We are using the TicTuk ordering chat platform to accelerate growth. So it's operating now in almost over 40 countries in South America and Africa, markets where traditionally it would take us much longer to get digitization of orders in those markets, but TicTuk has allowed us to basically step much, much faster. Similarly, Kvantum is working with over 20 countries around the KFC world, helping us optimize decisions on pricing while managing margins as well. Similarly, we are testing Dragontail as well as the Super App in a few markets before we scale them out to more and more markets. Earlier this year, our Thailand business actually launched and opened their first 100% digital stores with a suite of integrated technologies, both for the consumer and for our team members as well. I was lucky enough to visit them a few months ago. So I thought I'd share a video and give you a sense of what the consumer and the team member experience is like in that store. If we can please roll the video. [Presentation]

It's quite an amazing store. And I was talking to the restaurant manager there, and he said, it really allows the team members to shift and focus more on customer experience issues around product quality, speed of service, and order accuracy, which continues to be one of our biggest opportunities for us as a brand around the world. So that was the first priority in terms of leveraging technology to make experiences easy for our consumers and for our team members, which I think is going to accelerate our growth in same-store sales and average unit volumes around the world. The second pillar of growth for us is how do we accelerate our unit development. KFC has always been known as one of the fastest unit developers for the Yum! business as well as for all QSR industry. In fact, over the last 8 years, as you look it from this slide, we were opening a new store every 8 hours in 2015. We have doubled that pace now. In 2022, we opened up a new KFC every 3.5 hours. Now last year, we told you that 2/3 of the world's KFCs are yet to be built because we clearly see the runway and the opportunity globally for KFC to open more and more stores around the world. Since then, over the course of the last 18 to 24 months, we have been using data sciences as well as technology to understand the market better. And using market mapping, we have now market mapped -- basically mapped our entire markets around the world, and we see a clear line of sight to 25,000 new trade sites and zones. These are basically trade areas where we identified that there is an opportunity for a KFC to be built. We have understood the population size, the density, the income graphics, the flows, the competitive landscape of each of those. And through that, we also understand what type of KFC needs to be built there. Is it a drive-thru store free standing drive-thru? Is it a dine-in store only? Is it at a carryout or in-line store? And through that, we believe that we are diversifying our growth engine around the world. So this year alone, these markets of India, Middle East, North Africa and the Latin American markets are constituting 30% of our growth and we are seeing more and more opportunities for these emerging markets to continue to grow. But similarly, we've seen the same opportunities in the Western European markets of Germany and France, in Italy and Spain. So we just see opportunities in almost every single market that we operate in. And for 2023, specifically, right, it gives me great confidence because 80% of our planned build is already signed and contracted with franchise partners. Clearly demonstrating the fact that they see these opportunities as well. They're committed to the brand. They are well capitalized and basically ready to go. And for us, as a system that's really powerful because we are now able to develop plans for ordering equipment for construction as well as for labor planning as well for restaurant managers, which is really something that, for us as operators we need to focus on. And the reason why this is relatively important and easier for franchisees to do is because of the compelling paybacks that the brand delivers I think as Chris and Scott mentioned earlier on, 80% of all the new units that we build have a payback of under 4 years. And the franchisees see that, and therefore, it is a great investment for them to make. Now I talked a little bit about occasion-based formats and how market mapping is allowing us to do that. And these are 2 examples that I want to share with you from our Africa and India businesses. This store in South Africa was built based on the market mapping exercise, and we determined that this trade zone only needed a drive-thru store. So this store has no dine-in seats, has no washrooms as a result of that. It's just basically a kitchen with a carryout counter and a drive-thru lane at the back thereby reducing the CapEx of the project, bringing down the payback under 3.5 years for the franchisee. So that is a big market opportunity. As an example, in Africa as we're expanding more and more penetration around the continent. Similarly, India, as we penetrate smaller towns and smaller cities, we are seeing more opportunities for in-line stores where people don't really drive around, they actually walk up to the store and carry product out. So this store has only a few tables, seating for only 15 or 20 people, but no drive-thru lane as such. And therefore, reducing the payback down under 3 years. And again, in India, we have a huge pipeline of opportunities as we penetrate more and more towns and cities around the world. But in parallel, while we are building new stores, we want to make sure that we take care of our current assets as well. At this point in time, around 3/4 of our stores around the world are according to brand standards, based on graphics, designs and finishing. We have a bold goal to accelerate and improve that up to 90% as we build more stores as well as we renovate and hold franchisees accountable and they keep investing in renovating their stores, we believe that numbers can get to 90% and thereby building the brand, building the relevance and holding the brand contemporary as well. I want to show small video just to give you a sense of the type of stores that we have around the world so that you get a sense of what consumers are experiencing and engaging on the brand as well. So if we can please roll that video. [Presentation]

Perfect. There was a store earlier in the videos from Indonesia. I was there earlier this year. That store was at the opening ceremony, and that store is basically powered by solar panels. And the Indonesian franchisee has done a joint partnership with the solar power company of Indonesia together with the government to basically convert their entire real estate onto solar panels across Indonesia, just demonstrating our franchisees are also forward thinking and how they truly believe in doing the right thing for the business as well. The third element of our strategy to accelerate growth even further is around our menu. Our menu is incredible. Our product is highly craved by consumers around the world. And we believe that we have the bandwidth to expand that appeal to more consumers. We have a global innovation every single market around the world. And there are a few trends that I want to talk about. So first and foremost, we are seeing consumers move towards more spicy formats. Consumers are preferring more spicy formats. And as a result, we are using sauces and sprinkles and different types of mechanisms to enhance the flavor where necessary to leverage that appeal and that desire from consumers. So such things are szechuan chicken or ghost pepper chicken, we're seeing that basically coming to our menus around the world. Similarly, our zinger sandwich and our twister wrap are very, very popular around the world amongst young consumers. And again, using different types of cheeses and sauces, those are things that we're seeing come across in more and more markets. And last but not least, in Europe and in North America, we're seeing plant-based options coming on to our menu. And through plant-based, we are bringing in new consumers who perhaps did not feel that KFC had an offering for them, and making sure that those plant-based proteins -- plant-based products also have a unique KFC flavor and taste, so there's no compromise in terms of the experience that consumers get. We also see the fact that the KFC brand has great appeal in many markets to young people, but we also have the opportunity to make it so in other markets. In Europe, we launched this poke bowl in Poland with great success, a whole much of new younger consumers into the brand who perhaps did not think that KFC is relevant for them. And through that, we basically took the poke bowl and are now launching it across other markets of Europe because it's going into Germany and France and other markets because we see that as a great way to contemporize the brand and also appeal to younger consumers. Similarly, in the U.S. this year, we test marketed KFC nuggets for the first time with huge success. And again, it brought in new consumers but also give us the opportunity to target the lunch and the snacking occasion, something that we see as a big opportunity to drive our unit volumes in those categories as well. And in 2023, we plan to launch this out nationally across the U.S. as well. And last but not least, in addition to innovation, value is a key driver of our business as well. We always want to make sure that we have value front and center on our venues. So our value has 3 key pillars to it. The first is disruptive value. This is bold value that we do occasionally and the idea is to shake up the consumer as they go around their daily life to basically bring them back into the brand in case they haven't experienced KFC in a while. Secondly, as we broaden digital access for more and more consumers, we are bringing in new consumers into KFC, and we want to make sure that they also have a great experience of value at KFC. So our digital strategies and digital calendars follow a different pattern, leveraging pricing occasionally there as well to make sure that these new consumers also experience and enjoy great value at KFC. And last but not least, our daily value is critically important for our loyal customers who come to KFC on a regular basis, and we want to make sure that we appreciate them on a daily basis as well. So in summary, KFC has been a very, very strong growth engine. We think that the momentum that the brand has to date across global all markets will continue to drive that growth are global key factors based on the talent that we have, the franchisees that we have, the brand presence that we have will continue to drive the momentum. But more importantly, these 3, we think, are accelerators, and we have line of sight. We have clear strategies and plans that are already in motion that can only take the brand to stronger momentum and greater heights as well. So thank you. With that, it's my pleasure to introduce my good friend and colleague, Mark King to talk about Taco Bell.

Thanks. Awesome. Good morning, everyone. Good morning, everyone. Thank you. I know this is not a big deal for you, but I'm going to have a great story on Saturday morning for my golfing bodies, never been to the New York Stock Exchange, certainly never been in a room like this. So this is a big moment for me. So I'd like you to give me a little round of applause for this moment. Thank you. This is big. I love it. So anyway, I really truly am excited to be here. I'm so proud to be a part of the Yum! organization. You've been following Yum! for many, many years. I've been here for 3.5 years. It's been just an amazing ride for me. I was sitting on the sidelines with nothing to do. And David Gibbs called in Tracy Skeans and said, "You want to come and be a part of Taco Bell. And at first, I didn't and then I said, "Oh My God, this is a great opportunity." And it's just been -- even though we've had some rough waters for the last 3 years, it's been really a fantastic opportunity for me. So my job today is to tell you about the U.S. business and the journey that we're on and where we're going and how we plan to get there. Julie Masino is going to come up because our international business is so key for us in the future that we wanted Julie, who's really driving that success to tell that story herself. So my focus today is really just the U.S. You're going to hear a lot of things today from all of the presenters. But if you're going to think about Taco Bell and you want to take away 3 things, these are the 3 things I'd like you to take away. One, the brand momentum that we have is very, very real, and I'm going to talk a little bit about that as we go forward. Lots of upside in the U.S., both in AUVs, same-store sales growth and net new unit growth. We're going to talk about that. And then Julie will talk about the limitless. She doesn't really like that target of limitless growth in the international markets, but you will see from her that we have amazing upside outside the U.S. So before we get going, I want to show you a little video. [Presentation]

I love that video. It's high energy, and it really captures the spirit of Taco Bell. And it also represented -- you saw a lot of numbers on there, really the momentum of the brand right now, and this slide really captures that, whether it's system sales, same-store sales, margins, which we're really proud of, which I'll talk about how we maintain and got to these margins and we'll maintain those going forward. A little sense of pride for us really is the #1 franchisor. Entrepreneur magazine selects the #1 franchisor not in the QSR space, but of all businesses in the U.S. every year, and we've won it the past 2 years. They're announcing the next year's winner or this year's winner in January, and there's a lot of rumors out there, but I'll leave that unannounced to you for future information for you. But anyway, the reason for that great franchise system is because of our franchise ease. And there's just this really collaborative spirit between franchisor and franchisee. And it's really, really true. And I heard that this -- that you can have tension between the two, which obviously it's built into the system. But we have an amazing relationship with our franchisees, and I really think it's the way we're able to overcome some of these rough times that we've had the past few years and continue to drive real momentum. Okay. So growth. You've heard a lot about that today, accelerated global growth from the Yum! Brands. And so let me talk to you now about how we think we can grow and continue to grow the business in the United States. We start with what we call our magical or a magic growth formula. I could tell you, 3 years ago, this formula would have looked very different. Instead of these 4 boxes, which I'll talk to in a second, it was really value and drive-thru time. That was really at the center of what drove our success. Yes, we have this really cool brand for young people, but we have really great value and our ease of operations at drive-thru really was our key driver of our business. Now really, there's 4 buckets. And the first really is this idea of brand buzz. And what we've learned -- and I'll talk about Mexican pizza in a second, but what we've learned is not only value drives transactions and interest in the brand, but when we have big moments like the hotel in 2019, the Super Bowl campaign, like Mexican pizza, the PR that we did around Defy, the restaurant in Minneapolis that Chris mentioned, it creates not only brand buzz, but it creates transactions in business. So where we used to have just a calendar of being on TV. Now we have a calendar of being on TV and creating brand buzz through events and moments. And we'll have 12 of those moments next year, some bigger than others, but a lot of brand moments to drive buzz business transactions. Next box on the right is value. The perception of Taco Bell in terms of pricing is that we're the leader in value, and that is really, really important that we maintain that. I'll talk more about that in a second. So we're certainly not leaving our position in the value space. Más Occasions is the biggest opportunity for us to grow. When you look at our competitors, they have way more reasons, specifically McDonald's to go to McDonald's, dayparts, coffee, treats, all these different reasons to go to McDonald's. And although we have a core group really to expand our offerings in dayparts and category entry points will really give us the opportunity to continue to grow our sales number, our top line. And then everybody is talking about digital. And I could tell you 3 years ago, we weren't even in the digital game. We had just launched kiosks, in 2019, but we didn't do delivery. We had an app. We didn't have a loyalty program. And the reason we didn't was our business was so good. It was so good with the traditional -- like I said, this page would have looked like value, TV and drive-thru. Digital has really opened up on a huge opportunity for us, not just in transactions, not just on increased check, but really on connecting on a personal level to our consumers because we believe that this personal connection which is connecting to the heart of a consumer, not just the head of a consumer, but the heart is what will maintain that consumer over an extended period of time. So digital for us is not only transactions, but it's a personal one-to-one relationship with that consumer. Mexican pizza. We learned -- is everyone here familiar with what happened last summer? It's probably the biggest single event in 2022 in America, not just QSR, in America was the relaunch of the Mexican Pizza. So just so you know a little bit about it. It had been on the menu for 30 years, and it was a little cult following. We didn't sell very many, but we had a big following. During the pandemic, we took it off because it had 4 or 5 special ingredients. We're trying to simplify the menu, and we took it off. We thought no big deal. Well, oh my gosh, we had this uproar from consumers. You got to bring back the Mexican pizza. And some of our marketing people noticed the Doja Cat, the Pop Star and Dolly Parton, both were very vocal on social media saying, bring back the Mexican pizza. So our clever marketing people partnered with Doja Cat, partnered with Dolly Parton and created this amazing event around the relaunch of the Mexican pizza. We teased it at the Super Bowl. We teased it through social media. We never went on TV, not one time. It was never on TV, all social media channels, which was the big learning for us is that our core consumer which is really Gen Z. They don't watch TV so much. They're on these -- we all know this. Really, it was a learning for us for how do we connect with our core consumer, how do we create this amazing buzz and then translate that to transactions in business. So this learning really will -- is the evolution of how we market our brands to a consumer base. So it was a big deal for us. Value. Everyone is going to talk about value today. And honestly, we have different terminology, Sabir, but we have the same thing, really. So we have promotional value. And those are price points on TV. We can turn those up or turn those down depending on what we need to do if we need to drive more transactions, if we have new innovations. We can use that lever. Everyday value for us is the $1, $2, $5 menu. This is really important to us because when you drive into that drive-thru or you go online to look at our menu, that $1, $2, $5 products that are there every single day. So that's really kind of the cornerstone of our value strategy and then digital strategy. And that, to us, is really driving people to loyalty because loyalty brings more frequency, higher check, but it also brings this one-to-one connection. And so we use digital not only to drive transactions in business, but really to engage our consumer with us. So we ask them to vote on what products to bring back. We have the Taco Lover's Pass. We have all these different promotions and activities that really asks the consumer to engage with our brand. And we believe that engagement will lead to extended life cycle with that consumer, more frequency, more purchase, higher check. This page is confidential. Can I trust this group? I'm not getting the feeling that I can trust you. David Gibbs was very nervous about this page, but we convinced them that we should let it go. No, we think we could share it with the world because nobody else can actually do this. Let me explain this page to you. This is really the secret to our margins. And our store margins are around 24%. Here's why? We know through all of our data that when most of our consumers come to Taco Bell for one of our core items, Taco, Burrito, Quesadillas, Nacho, Crunchy Wrap. That's why they come to us. That's in the 75% bucket. Those consumers are willing to pay a little bit more for that product because that's their favorite product. So we take a little bit more pricing on the biggest part of our business. The 75% of our transactions, we take a little more price in. We're able to take more pricing there. On our everyday menu, our everyday value, we don't take much pricing. That's $1, $2, $5. When I came here, we had the $1, $2, $5. So that's very consistent over a long period of time. And then we have our innovation, which is this dynamic pricing that we can take on 15% of our transactions. So we have this ability strategically to move pricing between these 3 buckets, taking more pricing where consumers are willing to pay a little bit more, it allows us to bring consumers in, still have value perception but maintain great margins for our franchisees. Confidential, remember that. We have 65 million consumers that come to our brand 12x or more a year. We have 100 more million consumers that only come to us once a year. So really, our drive to more business is not only to keep our cult as we say, coming to us, but really to expand to these what we call light users. If we can get them to come more frequently, we can do that. So how are we going to do that? We're going to do it with differentiated products. We're going to do it with digital. We're going to do it through this one-on-one connection. We're going to do it through focusing on breakfast and lunch. I'm going to talk about that in a second because those are big dayparts that we're not as strong as we need to be. But our opportunity for growth is right in front of us. We have 100 million consumers that come to us once a year. If we can get those to come twice and 3 times and 4 times, you can do the math. This is an interesting slide. If you were to look at how we compete against McDonald's in dinner and late night, we're absolutely even. When you look at breakfast and lunch, we're significantly behind. So why is that? Well, it's product. So let me talk about lunch. We don't -- we offer fries half the time. People that go to lunch want to have French fries. We know that. So we're looking at and testing, bringing fries permanently on to the menu, which would increase our lunch business dramatically. That's our belief. Breakfast, we've been in and out of breakfast for 7 years. So we have to commit to breakfast, not only commit to it in product, marketing, communication and understanding what consumers want from Taco Bell for breakfast. We're very committed as a system to both those categories. If we can close this gap, our AUVs are closing in on $2 million. There's a big opportunity just in those 2 dayparts to increase our business significantly over the coming years. Again, digital is what everybody talks about. We didn't have a digital business 4 years ago. We literally didn't have one, and we weren't even talking about it in '19. We were rolling out kiosks and yes, kiosks, as Sabir said, amazing the difference in the check when you can control that, transaction more -- when the consumer controls the transaction more. So we believe that another big opportunity for Taco Bell growth is this digital business. We had no delivery business. Our delivery business is now more than 10%, sometimes 12%, 13% a day. We didn't have any order ahead and pickup. We now have that. We have our kiosk business. And most importantly, we now as an organization understand the power of digital and what it unlocks. So a big opportunity for us there. And yes, we would like and love 100% of our transactions to be digital. When is that going to happen? I don't know, probably sooner than all of us expect because the world moved so fast. But we look at it as if we have 100% of our relationships with our consumer to be digital. We know more about them. We know their patterns. We know what they want. We can customize things, personalize things. So our big initiative is to really know all of our customers, how would we do that? We would do that through loyalty. And that's our biggest initiative right now to increase this cult from cult to culture to get our light users to buy more products. Okay. This is a bit -- I know you guys are analysts and you're all about the numbers, but I'm going to get emotional with you here for just a second because when I was going to talk about food, I'm like, what am I going to talk about because I could talk about our core items, our Taco, Burrito, Quesadillas, you know all about that. We have Chalupa, we have Mexican Pizza. We have all these really cool products. But I want you to feel. I really want you to feel the spirit of Taco Bell, and I experienced this last week. We had 40 of our top franchisees in. They were in the kitchen, looking at future products, and this woman named Nancy reads this description of the fries that are going to be launched next year. So as soon as I heard her, I go, I have to read this at the New York Stock Exchange. So here we go. Are you ready? You're going to get a little teary eyed, I promise you. This is a description of a product coming next year. We start with our golden crispy, boldly seasoned fries, Chargrilled marinated lean grilled steak, smooth and rich nacho cheese sauce. Then we add our new creamy spicy Chile Verde sauce with craveable heat with kicks of jalapeno peppers, line juice, fresh [ oats ] infused with cilantro and parsley, but it doesn't stop with the flavors, the sauce also gives it a pop of beautiful color against the bright, vibrant crunchy textures of the tri-colored Fiesta strips. Lastly, we add our flavorful 3 cheeses for that extra savory touch, along with the dollop of heat quenching cool, reduced fat, sour cream. The whole masterpiece is like a beautiful and delicious artwork for your taste buds. When I heard Nancy read this, I ran over to Liz Matthews, our Food Innovation Officer. I said, I need to read that next week. She goes -- but what you really need to say is Taco Bell is all about the details. All of these descriptions, the passion and the love for the products that we make, it just resonates through our employee base, through our franchise system, and it really is what separates us, I think, as a food company, as a food provider for our -- against our competitors. It just really moved me. I hope you guys have the same feeling. Any feeling? Okay. Good. Thank you. You have the same feeling I did. Okay. I'm right on time. So all of this said, look, we have -- we have great food, and we have a pipeline of food that's coming. We're evolving the way we do our marketing, and it's much more digital, it's much more personal. It's a connection to the consumers. It's instant. It's not just mass TV advertising. So we're in this evolution. And what we know is there's this tremendous amount of upside for our brand, and it's really paying off here on this page because our franchisees are more excited today about opening new restaurants than they ever been before because of all those reasons. So we really believe that we have line of sight on the current economics, our unit economics, to 3,000 additional restaurants. So we're really, really excited about the future. I'm going to end before I introduce Julie, I'm going to end with a video from our franchisees because this is another reason that I think Taco Bell's future is so bright. So watch this video. [Presentation]

Hey, I just want to introduce Julie Masino. She is an amazing person, a great leader. 3 years ago, we asked her to take on this international business, which really had no momentum and she has done an amazing job with her team to get us in the game and she has an amazing presentation for you today. So here welcome Julie, Julie Masino.

Thank you. I'm just going to go back. Mark stealing all my thunder. It is so hard to follow Mark King, so you got to give me a little bit of grace on this one. But it is a pleasure to be here with you all today, be back at the Stock Exchange. And really, the theme of today, global growth is absolutely perfect for what I'm going to spend the next 10 minutes with you about. The Taco Bell brand is on fire globally, and it's my honor and privilege to represent the team that's making that happen around the world as well as our franchise partners. So let me show you a little bit about what we've been up to in the last year, and then we'll talk. [Presentation]

Well, hopefully, what you feel after watching that is the energy that I feel when I go to a restaurant, I get to meet with the people who are bringing the brand to life, serving our delicious food, it's crunchy, cheesy, messy delicious and, oh my God, they love it everywhere around the world. I want you to feel that, but I also want you to feel that this business momentum is real. Mark talked about that having that real momentum in the U.S., but it's also happening here across all core metrics. So you see that system sales are growing. Our digital mix is growing. It's a very healthy 35%, some markets are much higher than that. And we have 3 markets that as I stand here today, have over 100 units. Now that doesn't seem like a lot when you think about the 7,000 in the U.S. and the numbers that Sabir put up, but for us, it's a tipping point. It's a very important moment in our history. This slide is one of my favorites because this really shows what we've been up to, while everybody has been working from home the last couple of years, we have been accelerating. It's phenomenal. 40% of the Taco Bell International system has been built in the last 3 years. This year is going to be phenomenal. You can see there, we're going to end the year at over 1,000 restaurants. I don't think that's too much of a giveaway for Q4, but we are really excited about that inflection point and what that means for our franchise partners around the world and the scale and the size of the brand outside of the U.S., what that means for consumers, and it's a brand that they want to be a part of. I mentioned this a minute ago, and you probably saw it in the video, but we have 3 markets that today have over 100 units. And as China -- Yum China declared in their Q1 earnings call, they're going for 100 units this year as well. So they'll be our fourth market to hit 100 units by the end of 2022. So we are excited and grateful for this momentum, and it is really paying off for our franchisees. The question I get the most, though is, okay, like you're in 31 countries around the world, Julie, you've got these 4 flagship markets. How are you thinking about growth? Well, what I would tell you is, as everybody has been saying, the white space, not only for KFC and for Taco Bell in the U.S. but for Taco Bell internationally is massive. If you just look at these 4 flagship markets that I'm talking about, you can see the unit counts as of the end of Q3 2022. Look at the consuming class metrics that we have here at the bottom to show you kind of what Taco Bell in the U.S. looks like. KFC and McDonald's across these geographies. And then you can see where we are. We have so much white space. This alone is thousands of units just in these 4 markets. This amount of white space. And then you multiply that times all the countries in the world where we aren't yet. Remember, we're only in 31 markets. So this brand has so much runway in front of it. What should give you confidence in what we're building in Taco Bell International is not only the amount of white space that we have, but that we've spent the last few years honing our playbook for growth. The other question I get a lot is, why is it working now? Why hasn't it worked in the past? And I would tell you there's a couple of pieces to that. One, our strategy of focus and getting our franchisees to scale in their markets versus really indiscriminate flag planting is a key part of that. The second is really honing in on the brand, making sure that we understand how to launch the Taco Bell brand, how to get consumers loving the brand the way they love it in the U.S. and our markets around the world, helping them understand tacos and see tacos everywhere, and I'll talk about that in a minute. It's about that digital-first experience. The beauty of building 40% of your system in the last 3 years is that it's new. It looks fantastic. So that is a great asset for us as well. So consumers have wonderful digital experiences with us as well as wonderful in-store experiences with us. And then finally, it is all about having the right partner. And so I'll talk through all of these quickly. Let's start with brand. As you saw in the video, and I hope you felt the energy, not only is the brand that we're building in the U.S., phenomenal but we're doing the same thing outside of the U.S. making it a distinctive and relevant brand that is ripe for Gen Z to want to be a part of. Our delicious food anchors all of that. But we've created some great global experiences in the last 2 years that consumers can really be a part of, and they're being localized in our markets around the world. So the first one you see there on the left is Taco Swap, we ran this in May. You saw some of the video of this in the video that I shared, but we really invited consumers in a locally relevant way to swap out their boring lunch for a delicious crunchy Taco Bell taco. You can see here what we ran in India, it was like, trade in your samosa, have a Taco, come on. And it really was a great promotion to get people to come in who weren't familiar with the brand to try the brand in a very safe way. It landed on the shoulders of a campaign that we've been running for 2 years now that we call #ISAT or #ISeeATaco. In Latin American countries, that shows up as Bao tacos #BaoTacos, so it's you see a taco, you want a taco. It's really that simple. And we show people how tacos are all around them. If you look around this room today, we are surrounded by tacos. I mean it is -- you guys should be very hungry for lunch right about now. But it has been a great campaign that has really brought our brand to life in markets around the world. Thirdly, you saw this in the video, gosh, I hope you were paying attention, but National Taco Day, I know you all have it on your calendar. It's October 4, 4th write it down, you'll want to be there next year. October 4, we gave away almost 2 million tacos around the world. Let me just tell you that 1 million of those were in Guatemala. Those lines around the block, cars were stopped, cops were in directing traffic, it was absolute mayhem all for the love of tacos. So these are the kind of things we're doing around the world to really drive the brand. Another key part of that is making tacos famous. So this is really kind of #ISeeATaco coming to life. You'll see a couple of the campaigns we ran. The Malaysia one is one of my favorite. There are 2 types of people in this world, crunch people and soft people. I'd like to say there's 2 types of people in the world. People who love Taco Bell Tacos, and people who've never had a Taco Bell taco. We are trying to make everybody #1, and we're on our way to doing it. The India campaign is also noteworthy and worth mentioning because those of you that are cricket fans out there, you might not have ever noticed it, but the arc of a six looks a lot like a taco. So we invited our cricket fans in India, which is one of our flagship markets to when a six happened in the last cricket championship to come on in and experience at Taco Bell taco. So really kind of fun things that really are resonating with consumers and making the brand relevant around the world. Experience. You've heard my colleagues talk about this. We are running a really amazing digital-first brand around the world. We've got app, we've got e-commerce through TicTuk, one of the Yum! partners that Chris highlighted earlier. We pair that with wonderful operations standards. Make it super relevant for our team members, and we have some beautiful omnichannel assets out there. You've seen a lot of stores today. I didn't bring a lot of store stuff. I didn't have a lot of time, but our stores are beautiful, kiosks in most of the places, all digital menu boards. So really a wonderful elevated and easy experience for our consumers because we know that they demand it. They expect to live their life in this sort of digital world where everything is easy for them and we have to be that way as well for -- as a brand. Finally, none of this is possible without great partners. We are 100% franchised in Taco Bell International. So we have world-class partners around the world who bring the brand to life. They build wonderful teams, who create this delicious food, who serve it with a smile, who create wonderful restaurants and none of it is possible without them. I put 3 examples up here for you today. You already heard about Burman Hospitality from Scott Catlett earlier. They're our franchise partner in India, doing a wonderful job, one of the biggest builders in our system this year. And one of our newer partners. That's why I kind of put them at the top to kind of show the breadth of what we've got going on here. So India, hundred store market. In the middle is Casual Brand Groups. Ignacio Mora-Figueroa is the leader of that team, they are a wonderful partner. They've been with us for a little over a decade. And he will tell you that the thing he wishes he had done earlier is build more faster. And so a great testament to what we're doing and helping our partners get to scale faster. They are wonderful partners. And I love to tell the story of Aaron, who is the first store manager they ever had when they opened their first store 12 years ago. He is now a regional director with 50 stores reporting into him. So that's the kind of growth that we're creating around the world. You saw the stat of all the jobs we've created, but this is really changing people's lives. When we come into a community, when we go into a country with a great franchise partner like the Burman, like Casual Brands Group where they want to create a legacy, where they want to create generational leadership for these people. It's really, really exciting. And then finally, I put Bell Uno in there because Mario Ibarguen is our franchisee in Guatemala, and he's been with us for over 30 years. Little unknown secret, Guatemala is our fourth largest market in the world. They're at 72 stores today, and they keep growing. He's an excellent, excellent visionary and someone who believes in growth who would think Guatemala is such a big market for Taco Bell, that they're giving away 1 million tacos, the brand is on fire. People love it there and this guy and what he's built and the way he takes care of his people and his team and grows them and is relevant in the communities is so, so very important. So none of what we do would be possible without these great partners. But if I leave you with anything today, I want to leave you with this. This is probably my most important slide. We are just getting started. 1,000 stores is incredible. We are so excited about it, but we have a bold ambition to 2.5x this business as quickly as we can. We want to get to 2,500 restaurants, a $2.5 billion business. And we're not going to stop there, but that's our next rally in [indiscernible] division. That's our bold ambition because we know when we achieve that, coupled with the incredible growth that Mark and the U.S. team are driving. The Taco Bell will truly, truly be globally on fire and unstoppable and a dominant force in the global QSR industry. So with that, let's bring Mark King back up. Thank you for your time.

Opportunity for development. And we have line of sight to many, many more stores, and we think we're about 1/4 of the way. So you can do the math on that one, too. Look, I'm really, really excited about Taco Bell and the potential the brand has, both in the United States and outside the United States. We're really learning to be a better marketer in today's new world of marketing and consumer behaviors. That's a big evolution for us. We have all kinds of opportunity both in sales growth and net new unit growth. And as Julie just got done talking about really the biggest opportunity for us is to really unlock this flywheel outside the U.S. and really start to develop at a really rapid pace. So we're really, really excited about that. So thanks for listening to the Taco Bell story today. 25 years ago, David Novak instituted this recognition culture at Yum!. And of course, David was there when Novak did it. And over the years, it's really turned into leaders of the company have a recognition award that they give out to recognize really cool performance or going above and beyond the call of duty. And this award -- that these awards started 25 years ago, they're still as much a part of the company today, probably more David than they were 25 years ago. And we wanted to recognize 4 really cool people today at Taco Bell because they cooked your breakfast and they're going to cook your lunch. And it was very hard to come to the New York Stock Exchange cafeteria and to be able to produce the food that they did for breakfast and lunch. So I want to recognize these 4 people. So before they come up, I want to just, Nola, who I've spent a lot of time with runs product development for Liz Matthews, She's amazing. [ Imelda ] who's going to has spent a decade in the restaurants, RGM and now runs our test kitchen. Gabbie just got engaged last week. So that's pretty awesome. And she works with the [ Imelda ] in the kitchen, and we have a brand-new chef. And when you see him, you'll know that he's the chef because he looks different than the rest. But Josh, so I want the 4 of them to come up and we have a little. Okay. Nola, get right over here, then we'll give a big round of applause. Imelda, Gabbie and the chef, you look like a chef. I just want you to know how -- what this is. My first day at Taco Bell in August of '19, they asked me a question, my first all-employee meeting, they said, "What's your favorite go-to item," and I said, bean burrito with green sauce. And somebody yelled out, we just eliminated green sauce from the menu. It has now snuck its way back on to the menu, and it's my award for outstanding performance. So -- here they are. Thank you very much for today. Okay. That's awesome. Okay. Right. Okay. And with that, I will bring up Mr. Pizza Hut. I was a part of interviewing Aaron when he first came and he brings a lot of everything, courage, smarts, guile and he understands the consumer and he's going to lead Pizza Hut to heights, it's never known before. So our friend, Aaron Powell. [Presentation]

Okay. Good morning, everybody. I'm not going to make you do it again. It's okay. I am the newest brand CEO to join Yum!. About 1.5 years ago, I was living in Singapore. I spent 10 of the last 15 years living in 6 different countries and consumer products. And I got the call from David and I cannot resist joining Yum!. Two simple reasons. #1, these are beautiful, iconic brands, and I love brands. #2, it's what Tracy talked about. It truly is a special culture, and it's my honor and privilege to be with those ladies and gentlemen and all of Yum! is just an amazing company. So if you take away 2 things from the next several minutes, it will be this. We are modernizing Pizza Hut. And secondly, Pizza Hut will materially add to Yum!'s growth. Modernizing and growth. Obviously, I've been learning the industry going around getting to know all these spectacular people, and I want to give some amount of context that's very important on the journey within Pizza Hut to modernize. COVID-19 did meaningful things to propel us to where the consumer is going. In particular, the consumer is becoming more digital. We are already a digital business. 60% of Pizza Hut's transactions are digital. #2, the consumer wants to eat their food wherever, more takeout, more delivery. And you will see that over the last 3 years, we have become substantially more takeout and delivery or fits of our businesses that globally and the assets that we are building are now overwhelmingly delivery-focused assets. And that's important because they're optimized to have better paybacks and be more effective with takeout and delivery. Other piece of context, prior to me getting to the meat of the conversation. Overall, we are the ninth largest global QSR. We have a very strong unit development of 5%. I'm proud of that, and I'm going to try to express to you why that is going to continue. The same-store sales growth is flat. I'm going to also try to share with you why I believe that we will be a material growth driver and that will increase going forward. 3 key areas of focus. #1, it really is digital first. You've heard every one of us talk about it. I'm going to give some more emphasis, but that is super core, super critical to Pizza Hut. #2, as I said, I'm proud of our development engine, and I want to share with you why it's only getting stronger. And then the newest thing, this is an area that would be new information for most of you. It's how we're tilting the brand, how we're pivoting the brand. And that is for Pizza Hut to become younger and more every day, and I will explain exactly what that means. First, when it comes to digital first, same themes you've heard from everybody. It's not just the consumer interface, it is everything that we do, how the kitchen operates, how we get insights, how we connect with the consumer. I'm going to double-click a little bit on the operations side and bring Dragontail to life a little bit more, so you understand why it's important to our overall business and our business growth and profitability. First, I'll start with my explanation of what Dragontail is. It is the overall system that connects when an order comes in to all of your capacity to make and deliver pizzas so that you can have hotter, fresher pizza. There's lots of benefits to that. Pizza Hut saw how great this was, started using Dragontail, convinced Yum! that we should bring Dragontail into the family. And now, as Chris was sharing, we are scaling. 2023, after successful tests in the U.S. We are scaling to many of the U.S. restaurants. And that's why by the end of 2023, we'll be in at least 7,000 restaurants. You see how fast we are scaling on. Let me tell why it's important with another anecdote. Colombia was one of the first countries we had that went all in with Dragontail. Simple fact about pizza, the hotter, the better. Hot pizza is great. Within Colombia after Dragontail, the time from average time the pizza goes in the oven until when the consumer eats it, went down by 8 minutes, hotter, fresher pizza. Let me give some more context as to what that really means by people that live it. [Presentation]

So first chapter I wanted to express is digital first and give some real examples as to what it means. Second chapter, we are very proud of our development engine. And I want to share with you why it's not a fluke, it's going to continue. Looking at the background, we have always built restaurants in Pizza Hut, nothing to be ashamed of. You look at more recently, we've really stepped up our game. I shared before. We are the ninth largest QSR. We built the fifth most restaurants. Let me unpack a little bit of the why. Similar to what Sabir talked about for our expected net new units of next year, 85% of them are already under a development agreement. And building on what Sabir said, that means we have a committed franchisee, that means we are already doing site selection. That means we've ordered ovens. That means we know where we want to place them. Those are a solid foundation within which we should build. Why do our franchise partners want to do that? 60% of our gross builds are in payback periods of 4 years and less. And we've done a lot of things to make those paybacks stronger and stronger from lowering capital cost to becoming more sophisticated. These are the foundational points as to why our development engine is strong. I want to go in a little bit of a different direction and talk about the U.S. We are now acting as one Pizza Hut. I'm the Global CEO of Pizza Hut. One reason I was hired is because I've led U.S. businesses, and I've led businesses throughout the world. The truth is, outside the U.S., Pizza Hut is a growth engine and has been that for a good period of time. We are now bringing more magic back into the U.S. business. So I want to give some sense, not only about development, but overall, what's happening with the U.S. business by looking at the development lens. You'll see, in the past, we had some closures. That's just what it is. That lessened last year, we expect for the first time since 2014 to be positive at net new units this year. But that's not what I want you to take away. I want you to take away the why. 65% of our U.S. restaurants are in the hands of franchisee owners that have joined us since 2015. 65% joined us since 2015. 90% of our gross builds are with those new franchisees. Let me say it differently. We have brought into the system some well-capitalized, very capable, very committed franchisees. The best that we're with in Pizza Hut are still with us, and we have some great ones that have been with us a long period of time. And those that were not [ 3C ] are no longer in the system. That's a much stronger foundation for development and for a lot of things. Different lens. Pizza Hut has different formats. I'm going to keep it simple into 3 buckets. Nontraditional; malls, movie theaters, airports, that's nontraditional. Secondly, it's the historic Pizza Hut. Dine-in, focused. They can oftentimes deliver, but they have a lot of seats optimized for dine-in. And I shared with you before, 80% of our business is now away from dine-in and it's even higher than that in the U.S. And then the rest is delivery-focused assets. Delivery-focused assets are optimized for takeout delivery. They are better paybacks, lower capital costs. You'll see that the U.S. system of 6,500 restaurants are transforming, are already becoming more and more delivery-focused assets. Again, it's a development story, it's also a story of our business health, and that's quite important to the U.S. business. So that's the information that I wanted to share when it comes to the development engine. Now I want to spend some real time on what is the newest part. The area that you all would have not have heard that much about, and that's where we're taking the brand. And we are taking the brand to be younger and more every day. Let me explain what that means very briefly. The younger is pretty straightforward. It's not a secret that Pizza Hut historically has been more popular with older people than with younger people and their challenges with that. And to make the brand younger, it's not just what you communicate. It's a lot of things to really resonate with the younger consumer, and I'll explain some of those. More every day is also important. The restaurant industry is changing in front of us, and you all see this, you all know this. Everybody is competing with everybody today. So we've got to get out of being the special occasion pizza. We cannot be focused on only Friday, Saturday, Sunday nights with the family. We still want that, but every day means for us to really compete in different occasions than before, and I'll share some of the things that we're doing there. Let me unpack it. When it comes to having a young and modern attractive set of assets, it's the physical and the digital assets are quite important. What I'm sharing with you right here, it's our latest design package that's in over 30 countries. Delivery focused called Pizza Your Way, and we are proud of how modern it is, has great success. This is not yet in the U.S. We are going to have the U.S. execution of this in 2023. I'll highlight a few things. One, open kitchen, show the consumer their food, show the fresh product right in front of them, gives a great impression and a great consumer experience. #2, a lot of technology coming in. An example here, we have digital takeaway cabinets being tested in Mexico. That's just one example of us bringing in the right type of technology. The third is what I've been talking about, much better paybacks, much lower capital costs. This is an important way that we're becoming younger and more every day. Another thing I'll spend a little bit of time on are the channels. With aggregators, we have a different strategy than some others in QSR pizza. I'll state it this way. Some in QSR pizza have relied on aggregators for the entirety of their growth, like as the core growth strategy. Others have had a decision to not be on aggregators. Our approach is different and it's pretty clear. If the consumer wants to be there, we need be there. We think that aggregators will be an ongoing channel and we're going to treat it as such. However, we want to encourage our most loyal customers to be on our own channels, and we are not ashamed of doing that. A couple of data points. 95% of our U.S. restaurants are now on at least 1 aggregator. That is a substantial change versus 12 months ago. Rest of the world, over 80%. Beyond that, our marketing calendars now include aggregators, we have been testing and doing more national campaigns. We have capability we brought in externally from the aggregators themselves to get smart on it. We're going to be there. It's going to stay, but we're going to build our own for our most loyal customers. Okay. Final area on being younger and more every day is what I was talking about, everyone is competing with everybody. Let me explain it this way. Within QSR, 45% of the occasions in overall QSR are the individual occasion, not just lunch. It includes launch, but just for 1 person. QSR pizza is 25%. We want to keep the family night we have, but we want to expand a couple of things we're doing. You see the My Box execution brings a ton of variety of food. It's in 50 countries. It's doing it extremely well. The other thing I'll spend a little bit of time on is the Pizza Hut Melt launched in October. It really explains not only the individual use occasion, but everything we're doing across our business to be younger and more every day. It's intentionally designed for young people to like it. Value is very important. $6.99, we are competing with everybody. Our people are not looking at other pizza competition. How is this a filling competitive meal against all categories? When it comes to the communication, we are proudly trying to get younger and more relevant and do more digital activations. What's happened today, -- all I'll say at this point, we're very pleased with our same-store sales growth, our transaction growth, our number of new customers and our number of repeat purchases since this has launched, all going in the right direction, more were to come as we closed the quarter. Let me give you some flavor as to what the melts looks like just by rolling the advertisement. [Presentation]

I hope it starts to make sense, the direction that we're taking in. As I shared, 25 years in consumer products. Here's just a little interesting fact. It's just there between my wife and myself, we have spent time with Dan Carney, the founder of Pizza Hut and with Colonel Sanders. I have to be in this job with this company. I have no choice and I have to tell you, we are making Pizza Hut more modern. We are getting started. We're acting as one overall Pizza Hut. The way that we're doing that, it's through really living the digital first, just like all my peers are -- just like Yum! is committed to. It's about proudly building on the development engine that's already going, and then very importantly, taking the brand so that it's as popular with my daughters as it is with my generation. We will grow in Pizza Hut, and I can't wait to show you the results in the future. It's now my distinct pleasure to bring up last but not least, a wonderful leader who has done great things in different parts of the company, also just a very kind, warm and brilliant woman. Shannon Hennessy, the President of Habit Burger.

Hi, everyone. I'm Shannon Hennessy. I stepped into the role of President at The Habit Burger Grill earlier this year coming in from KFC, and it's my distinct pleasure to introduce The Habit to this audience as the newest brand in the Yum! portfolio. But Habit isn't actually altogether that new. We served our first charburger more than 50 years ago in Santa Barbara, California. I have just 2 simple objectives today. The first is to help all of you get to know The Habit and what makes our business special. And the second is to hopefully excite you about our growth. In terms of getting to know us, I'd tell you that the absolute best way to do that is to go to one of our restaurants and eat our food. But since the nearest restaurant is about an hour away, and I know that's about the other side of the moon for a group of New Yorkers, we thought we'd take you there via video. You'll also get to hear from our long-time CEO, Russ Bendel, who couldn't be with us today. He grew The Habit from 16 stores to the 350 we have today, and he'll tell you what it's been like to join the Yum! family and how it's helping accelerate our growth. Roll the video, please. [Presentation]

For those of you that know Russ, and if I know Russ, that's pretty much all of you. You know what a pleasure it's been to learn from him over the last several months. I've got more than 20 years of experience working with iconic brands at KFC and as a McKinsey consultant. And I can tell you with that experience, I know a winning concept, what I see one. For me, The Habit was love at first bite on a sunny patio in Scottsdale, Arizona. But how it went over my mind as well as my stomach is, I got to learn more about our consistent focus on quality and taste, our advanced digital options and our strong kitchen culture. So I uprooted my family and moved to Southern California this summer to become part of the team scaling this global -- this brand into a global powerhouse. My confidence in Habit's growth trajectory is based on more than just my own opinion. Consumers tell us that we have a highly relevant and distinctive value proposition anchored on 3 core elements: Handcrafted quality, meaningful variety and choice and hospitality. No other fast casual brand wins on all 3 of these things the way that we do. Let me give you a little flavor for what I mean. In terms of handcrafted quality, there's nothing I could say to you right now. It would have the same impact as each of you biting into a juicy charburger. Once consumers try our food, they come back and they come back often. And many of them, we call our avid customers food fans actually post their own pictures of our food on social media because our food looks like the pictures and it is a thing of beauty. In terms of meaningful variety and choice, we're a burger player, but we sell an equal amount of non burger entrees. I'm talking about seared ahi tuna on a freshly toasties or salad, 10 per green beans, and my personal favorite, the Chicken Club with crispy bacon and freshly prepared avocado. In terms of hospitality, it's quite rare in the category to get the kind of feedback that we get today, warm, friendly, welcoming -- or is one customer put it, The Habit is her families happy place. We have bold ambitions for growth as well as a strong track record. As you can see here, our category of Fast Casual Burger is growing very, very quickly. And it's a category without a clear win. The Habit is one of the leading players today with our 350 stores across the U.S. and Asia, and we're well on our way to win in this rapidly growing category. We're growing faster than the category is. We've grown our system sales by 30% since joining the Yum! family. And later today, I get to head out to New Jersey to visit 1 of the 32 stores we've opened so far this year as well as 1 of our highest volume stores in Fair Lawn, New Jersey. My time at KFC impressed upon me that the #1 driver of growth in a franchise business is an industry-leading payback. With the backing of Yum! and the confidence of our franchise partners, we've aggressively grown our footprint outside of California, where we're less known and we have yet to reach the $2 million or more average restaurant volumes we enjoy in California. We feel very lucky to be part of the world's largest restaurant company and not have to sacrifice our long-term brand health or customer experience for short-term profits. Our payback is very attractive in markets where we have high awareness and scale, including California, Washington and Nevada. And you can see the confidence that we and our franchise partners face in our growth potential -- have in our growth potential based on the fact that we've grown our footprint by 10% or more for 15 years running. We have a strategic framework, we call it our growth recipe, which will deliver industry-leading payback while continuing to grow. And we've based it on our award-winning and very delicious double chart with cheese. At the center of that recipe, the meat, if you will, is winning unit economics. Here, we're adding sophistication to our strategic pricing by leaning on our smart Yum!'s friends at Kvantum and continuing to drive down cost in food, labor and construction by leveraging Yum! scale while protecting Habit levels of quality. Right above the meat, we have our topics, building an iconic brand. We have some of the healthiest repeat and frequency I've seen in my career. So we're focused on driving awareness and trial, particularly in our newer markets. Just below the meat is our crunch powered by data and technology. Here we're leveraging our world-class technology stack to deliver habit hospitality across all touch points. We've made a massive pivot to become an all-channel brand with more than 30% of our orders coming in through digital channels. And we're leveraging that technology stack to deliver great hospitality while making it easier for our kitchen staff to deliver a [ midback ] complexity. And finally, at the top, our Crown, our top button is scaling our winning model. We're continuing to expand our equity footprint by scaling -- filling in some of our expansion markets, including the Carolina and Arizona. We'll also continue to expand our franchise footprint through refranchising and greenfield growth. We have a bold aspiration of doubling our footprint in the next 5 years. We have truly become an all-channel brand with unprecedented options for our customers. I'm absolutely thrilled to announce here today. You heard Sabir talk about TikTok, and you heard Chris talk about it as well. We will be the first Yum! brand to launch TikTok in the United States. We're launching chat ordering via the WhatsApp platform, truly Habit at your fingertips. Our development strategy is based on that age old staying location, location, location. We have a flexible portfolio of formats that enables us to be able to slot in the right store in the right space. I'm incredibly proud to be part of the team scaling The Habit to become a global powerhouse. Through the combination of our strengths in technology and operations, coupled with Yum! level scale and sophistication, we have all the confidence in the world that we'll be able to deliver growth well in excess of the algorithm. So with that, I get to welcome back for the third time to the stage, my good friend and longtime mentor, Chris Turner.

Well, that was terrific. And if you're like me, you can't hear those brand stories come to life without having incredible confidence in our ability to drive accelerated global growth. Those 4 iconic brands and our teams, the leadership, our franchisees are just incredible. Thanks for sharing those stories and strategies. So now I get to put on hat #3 for the day, my finance hat and we're going to talk about how we translate that strong performance from the brands into strong shareholder value. So the main thing I want you to take away from this is Yum! will deliver accelerated global growth with blue chip resilience. Three things that we'll talk about. One, our brands and business model are tuned to win in any sort of macroeconomic environment. Second, we'll continue to drive a highly efficient business model that translates to the top line into strong profitability. And third, we'll continue to drive an asset-light capital strategy that ensures high cash returns for our shareholders. So let's talk about winning in any environment. I think this should be evident after you've seen the brand strategies come to life, but it's important in this environment to rehit the reasons why we think we have such resilience. First, we have a portfolio of 4 red brands. They each serve slightly different customer occasions, slightly different brand positioning, but they have something in common. They all provide craveable food, tremendous brand buzz, great customer experience, all at great value for our consumers. That's a recipe that wins in any environment, and these brands are so translatable around the world, they can serve customers globally in any sort of environment. Next, we have a portfolio of 150-plus countries. This gave us resilience during the pandemic. We saw pandemic headwinds in some markets, and we saw tailwinds in others. Same thing from a macroeconomic standpoint as you have ebbs and flows around the globe. Our global portfolio gives us resilience. Third, our unmatched scale. You want to deal with inflationary headwinds, the scale player wins, largest restaurant company in the world, give us other advantages as we move forward, think about in the digital space, where many of the investments are fixed cost, scale gives us economic advantages for Yum! and our franchisees as we drive that strategy. Fourth, that strategy provides us tremendous resilience. During the pandemic, it gave us a way to serve customers when our dining rooms were closed. Going forward, the insights that we have with customers and the relationships that we develop with customers through digital will give us further resilience. And finally, we'll continue to drive a highly franchised business model. As Scott shared, we have scaled sophisticated franchisees, we appreciate that they invest billions of dollars to grow our store base around the globe, and we're really proud of the strong returns they enjoy as a result. So all of these things allow our business to win in any environment. Let's look at the proof. If you take the last 3 years of the pandemic, remember, in 2020, we had negative system sales growth. But still, over the 3-year period, we grew our system sales by 19%. Go back to the previous recession, 2008 through 2010, keep in mind at that time, our business model from a development standpoint was not as healthy as it is today. We've elevated our development engine. But even with that development capability we had then dealing with the recession, our business still grew by 12% over that period. Another proof point. We took a sample of blue-chip companies like Yum!. Those are some amazing logos you see at the top of the page. We took a set of 5 performance factors, assessed them over the last 3 years during the pandemic. Yum! exceeded the median for that group on every dimension. I think the proof is in the results. Yum! can win in any environment. Let's talk about our highly efficient business model. So you know we set some bold goals in the transformation to achieve a more efficient level of G&A. We achieved that in 2019. You see the ratio here. This includes an adjustment to normalize for the acquisition of The Habit in 2020. Despite the incredibly inflationary environment in which we've operated over the last 3 years, we're still at that same efficient level. And we're committed to continuing to manage our G&A efficiently going forward. Next year, we're planning to grow G&A by 4%, which is a deceleration from the last couple of years. We will continue to drive an efficient business model. Just as importantly, within that, we will continue to invest our dollars in the most important places, things that will drive the long-term growth of our business and ensure that we have tremendous health in our business for the long run. As one example of that, within that efficient G&A envelope that I just described, over the last 3 years, we have redirected 10% of our G&A toward digital and technology. So we will continue to be efficient, we will ensure we're spending our dollars in the highest return areas. Finally, let's talk about our asset-light model that generates high cash returns for our shareholders. You see our capital priorities here, they have not changed. Let's dig in on the balance sheet, maintaining a resilient balance sheet. Our approach to designing our balance sheet is based on optimizing by taking into account the factors you see at the bottom of the page. We continuously reassess and we determine what is our optimal leverage ratio to maximize shareholder returns. That's what we do. It just happens that the last few years, that leverage ratio has been 5x, and that's where we currently are. We'll continue to use the same approach going forward as we hit decision points around leverage, we'll assess across these factors. And if a different leverage ratio is indicated to optimize shareholder returns, we'll move to that. Now for the debt structure that we do have, we think it's very advantaged. We have low cost of debt. We've played [ offense ] in the last couple of years to take advantage of historically low interest rates. We're primarily fixed rate, 94%, no major maturities due for the next 3 years. And as we've played offense to bring the cost down, we've moved our debt to less restrictive parts of the structure. So our 5x levered today is much more resilient than our 5x leverage was in 2019. Of course, after we maintain a healthy balance sheet, we also make investments in the business. This year, we'll have $200 million in net CapEx on a business of our scale. That shows the power of an asset-light approach. Then we return cash to our shareholders. We first do that through the dividend. We're very proud of the consistent growth that's been shown in Yum!'s dividend over the years. And we're proud that currently we're paying above the S&P from a yield standpoint. Of course, after we paid the dividend, remaining cash, we returned to the shareholders through repurchases. Over the last 3 years, our repurchase strategy has allowed us to reduce net -- or outstanding share count by 6%, nice tailwind to EPS growth. In total, across our dividend and across our repurchases in the last 3 years, we've returned more than $4 billion to shareholders, well in excess of our free cash flow. So if you take all of these elements in total, I hope you come away with real belief in the resilience of our business model and you couple that with our confidence in growth, David shared the 2023 and beyond algorithm earlier, we have high confidence in our ability to continue to deliver growth. You can put those together, we think Yum! presents the most attractive combination of growth at scale with blue-chip resilience that you can find. So with that, I have the pleasure of reintroducing our CEO, David Gibbs to the stage for some closing comments.

Well, big thank you to Chris, who did triple duty today and all the other presenters, the secrets out, I told you guys we're very confident in the business. You heard the story today. But most importantly, you got to meet some of our other leaders. And you know why it's such a privilege to work with such an amazing group, anything thrown our way, I'm confident we can tackle. We know that it's never perfectly smooth selling, but with brands like we have and the business model we have, the franchise partners we have, we are set up for success. I'm going to just have a few more slides to wrap this up. We're going to do a little bit of recognition just like Mark King did. Then we're going to take a break, reset the stage, and then we'll take all your tough questions. Okay. So as far as slides to wrap up, you've seen the strategy. The great thing about our strategy is it really hasn't changed. It's working, and we're just leaning in further and further and making more and more progress on the elements that are critical to it. But most importantly, the reason we have this amazing competence is because of these unique strengths that we have at Yum!. As I mentioned earlier, if you really pull apart every one of those 5 things, it's hard for anybody to compete with us. And we think that we're widening the distance to a lot of the rest of the category, nobody is closing the gap. I do want to end on the one issue that I know a lot of people have on their mind in this audience. We get it a lot and it still mystifies me, but we get this question of, can you keep growing? Aren't you running out of space? I think we've been asking that question about our brands for the 70 years that they've been around as if all of a sudden, the development opportunities are going to disappear. Chris gave you a lens into that during the development presentation about the consuming class and how he saw that 100,000 units are attainable for us. I'll give you just another look at it because I think we can't talk about it 2 months to try to get everybody off of this concern. If you just take a look at the U.S. penetration, right now in the U.S., we have 54 units per million people. On the right side of that page, you see that in our top 10 emerging markets, we just have 5 units per million people. If the right side of that page, actually someday look like the left side of the page, and we filled in all those little green people so that we had 54 of them, that's 180,000 more stores in the rest -- in those 10 emerging markets. By the way, in the U.S., we're not done building stores in the U.S. We really believe every one of our brands can double their store count over time. And that's not a stretch when you start to look at the competitive landscape and other people's penetration. So that would be 360 units. Now I'm not standing up here and saying we're going to build 360,000 restaurants. I want to be really clear about that. We raised our algorithm, but we didn't raise it to that. But what I am trying to make the point of is, you shouldn't be worried about how many units we're going to -- whether we have opportunities to build. You should be worried about, do we have good brands, do we have the right business model, do we have the right franchise partners. And I think what you heard about today is, yes, we do. And we're very confident of that, and we're excited about that growth ahead of us. Now I do want to do a little bit of recognition. Some of you know the recognition award that we've used historically at Yum! that David Novak kicked off our recognition culture, what he called it, Walk the Talk award, and it was a little mouth with some feet underneath it for people that Walk the Talk, didn't just talk a good game but they actually delivered results. So this is my iteration of the award. Greg Creed took the award, by the way, and put flip flops on it because he's in Australia, and that's the official footwear of Australia. I put basketball shoes on it because I'm a big basketball fan, but also basketball is a great sport as a metaphor for our business. It's a team sport. You can't win with just an individual star as the Lakers are proving. You need a team working together, it's a diverse sport. It's a global sport. It's played everywhere. So it really is a lot like our business. When we get our teams all working together, we can do amazing things. And I want to give this award to somebody that sadly isn't going to be in this room probably the next time we do an investor conference, but has been for many years, has been a great partner. We work together, you guys are all part of our extended family to some degree. We spent a lot of time together. And this individual has done an amazing job, being respectful, high integrity partner that challenges us with the right questions, but it can always be counted on to be approaching the business the right way. I've enjoyed every bit of time that we spent together. He will be missed. You probably all have figured out who I'm talking about, and that's John Glass, who's moving on to bigger past here. So John, if you could come on up. We'll get a quick picture. So there you have it for the formal part of the presentation. The headline is accelerated global growth, powered by digital and technology. We're going to take just a 5-minute break to stay on schedule, and then we'll redo the stage, and we'll come back and take your questions. Thanks, everybody. [Break]

All right. We'll now begin with the Q&A portion of today's event to wrap this up. You see we have all of our presenters from today on the stage with us. A few housekeeping items just to help us kind of manage the Q&A process. We want to make sure everyone has a mic when you ask your questions. So just like, you would expect, please just raise your hand. We'll make sure we have mic runners in the back. Matt and Catlin from our Investor Relations team will bring you a mic. When you get it, please just state your name and your firm for those that are on the live webcast for us, and please try to limit your questions to one at a time. We should have enough time to circle back for additional questions, but it'll help us just direct kind of traffic flow up here for those that are responding to the questions. Additionally, just like the form of our quarterly earnings call, we're asking to limit questions to the sell-side analysts, please. And with that, I think we can go ahead and begin. So to the extent of questions, please raise your hand. We'll have Matt, if you don't mind covering this slide, Catlin this slide, and Eric, we can start with you up here. Can I direct the team.

It's Eric Gonzalez from KeyBanc. You talked a lot about payback periods during the brand presentations. And I'm wondering if there's been any change to those payback periods given what we're hearing about inflationary pressures on build-out costs, higher interest rates and the margin environment. And if the base case is that those payback periods might be somewhat higher in the near term, or at least in the near term, why is now the right time to promise a higher level of unit growth in the algorithm?

I'll start, and Chris, you can jump in. Look, Taco Bell is a great example. Taco Bell margins from pre-pandemic to today have remained rock solid. So we've passed along pricing pressures to consumers. It hasn't affected our model, but our top line is much higher. So the cash that we're getting back from a Taco Bell at those same margins with higher sales is obviously stronger. And I think in general, we've seen an improvement in paybacks around the world in the current environment. And that's why we're confident we've now put up -- it will be 2 years in a row of higher development. We have visibility into the pipeline for future years. That's the thing about development unlike same-store sales, you have really strong visibility into what's going to happen in future years, and therefore, we felt comfortable raising guidance. Anything to add, Chris?

Yes, I think David is right, Taco Bell is a great example. Of course, it is in -- every market, we're working closely with our franchisees to ensure the economics stay strong. So every market is and brand are fine-tuning their strategy to do that. But if you look at those payback levels that we talked about, KFC 80% at 4 years or better, it's a strong payback proposition. And even if you had a little pressure there, there's still tremendous returns for our franchisees when they make these investments.

It's David Tarantino from Baird. My question is for Mark and maybe Julie. I think, Mark, you mentioned that you you're about 1/4 of the way to your ultimate potential at Taco Bell, which would imply over 30,000 restaurants, if my math is right. So that's a really big number. I was just wondering if you could elaborate on how you arrived at that number? Is it a matter of kind of building out the markets you're in? Or is it more getting the markets you haven't been in? Or just sort of what gives you sort of that line of sight to that many restaurants.

I'll take the U.S. and Julie, you can talk about the international. I think we believe we've set a big aspiration. The McDonald's has approximately 13,000 and we have approximately 7, so we believe as we grow AUVs, margins stay strong, there would be no reason why we couldn't have the same number here in the U.S. So that's kind of where the U.S. number has come from, which would be approximately half of the total.

And just building on that, as I shared in my presentation, it truly is a white space for Taco Bell International. We're only in 31 markets today. If you just took the 150 markets that Yum! operates in around the world, there's just so much white space there. Our top 4 markets that I shared with you, there's multiple thousands still available to be built there. So we're very confident that even your numbers, there's a lot of runway there.

The only thing I'd add on Taco Bell is, remember, up until about 7 or 8 years ago, Taco Bell was managed as part of somebody's responsibility that was also running KFC and Pizza Hut. It got very little focus. So if you're wondering like why are things changed, why are we so excited all of a sudden. It's because we have people like Julie. I mean, we took -- we were taking our best talent and throwing it against it. She's put together an amazing team, we've recruited new franchise partners. All of that is different from back in the old days, and now that's reflected in the numbers. And I think that's -- and you're seeing more and more people want to get into the brand. So everything is pointing up when it comes to Taco Bell International.

Andrew Charles from Cowen. I want to stick with Taco Bell. And Mark, very encouraging playbook in place to Taco Bell U.S. We've seen a sluggish quick-service traffic backdrop for the industry in 3Q, seems to be getting better in 4Q, as you guys alluded to in your presentation. And I'm curious if you could speak about your confidence in the brand's ability to drive positive traffic in 2023 just given the momentum that you guys have seen exiting 2022. And just for the elevated pricing that's probably driving most of the industry's comps next year?

We're very confident on next year. Actually, we're really bullish on improving transactions next year for 3 reasons. One, I think we have a pipeline of innovation and anybody that launches new exciting innovation drives transactions. Two, I think we really believe in this model that we learned from the Mexican pizza that we can take products that existed, for example, the [ interino ], which we're relaunching in a similar way. And we have a lot of momentum, I think, in new assets, which are much more digital friendly. So as our digital business and loyalty increases, we think we'll increase our transactions. So yes, we feel good about it.

Jeff Bernstein from Barclays. Just a question on balance sheet and cash usage. So it seems like the priorities are effectively unchanged, which is good to hear. I'm just wondering if you could talk about the opportunity or the appetite to add another brand or 2 of the portfolio, it would seem like we're talking about hundreds of thousands of more stores. It would seem like additional brands would fit in well, considering you already have chicken pizza, Mexican, the categories that usually big categories will be breakfast or burgers or whatnot. I was surprised when The Habit was initially announced just because it seemed like it was in a different category and didn't necessarily have the global scale versus maybe a traditional burger QSR. So just wondering your thoughts on appetite to add another brand or 2 to the portfolio, what potentially you're looking for -- or whether or not you're totally comfortable over the next 5, 10 years at these 4 brands can collectively deliver that growth.

Yes. So from an M&A standpoint, if you step back, obviously we brought The Habit into the fold in 2020. I'd say we're more excited about it now than we were when we did the deal. The Habit brand is incredible. As Shannon shared, they're able to leverage our scale. They've had to deal with a lot from a COVID standpoint, but I think the future is very bright for Habit. Of course, we've done lots of other acquisitions. We talked about the technology enablers. We talked about Collider a few years ago. Heartstyles, we haven't talked about today, but it's an acquisition that we made of a firm that helps us drive coaching and leadership development around the globe. All of these are adding tremendous value in our system. Of course, we also work with our franchisee to help facilitate M&A. When they see restaurant acquisition opportunities in their markets that we might be able to convert to our brands. Back to the brand side, I think we're open and always scanning the market for opportunities where we think we've got a brand that we could bring into our system. But the things that would be required, one, we have to be uniquely positioned to help that brand unlock tremendous growth. But any proposition is going to be grounded in growth. We need to see that the brand could leverage our scale, and of course, there would need to be strong shareholder value created in any deal that we do. So the bar is really high, but we have developed our integration muscle, and we're keeping our eyes open.

The only thing I'd add to that, Jeff, is that our long-term growth algorithm that we shared today and the white space and the runway and visibility and line of sight is significant from the existing brands in the portfolio, right? So we don't need another brand to deliver upon the growth that we have just outlined to this community. So it truly could be value created. If we see a value-creating opportunity, it would be incremental to the growth that we just presented here today.

David Palmer, Evercore ISI. Chris, a question for you on tech. I love that presentation. I wanted to get maybe a couple more examples of ways that you think the results might be affected by some of the stuff that's literally more on the [ come ] here. One of those was Dragontail Pizza Hut was getting 5,000 more units getting that. But anything that comes to mind in terms of what will be a measurable benefit in terms of the new tech that's being rolled out from this point forward?

Yes. It's -- as I mentioned, we've accomplished a lot getting to 40% digital mix and we're proud of the capabilities that we've built. But we truly are still early in the game in terms of bringing that integrated system to life across the network. And so everything that, we had in that capability set, has significant more opportunity. And hopefully, you got a feel for the type of impact that it drives, whether it's a tailwind on sales or whether it's a productivity boost in the restaurant, helping our franchisees maintain strong unit economics. And then we're really still in the early innings on leveraging the insights from all of this data as we continue to expand loyalty across the network. So there's a big opportunity ahead. Mark, do you want to talk a little bit about...

From our standpoint, the e-com platform will help us tremendously because we don't have enough scalability right now. Our system has gone down 2 or 3 times every time we have a big day. So the e-com platform is big for us. I didn't talk a lot about the connected kitchen, but one of the biggest challenges we have today is to make the job in the back of house easier. And we have so many technologies that we're rolling out right now at Taco Bell. The kiosk has been rolled out, the KDS touchscreen for employees to take orders, we have the POS, we have tracks, when all of that and will be done with all of that integration in about end of the 2024, it will dramatically help the profitability and the efficiency of the restaurant. So those are big game changers for us.

Lauren Silberman, Credit Suisse. So extremely impressive development globally. Can you just talk about how much of growth is coming from existing franchisees relative to new franchisees? And then specific to Taco Bell International, but maybe you have other examples. To what extent are you leveraging existing franchisees in the Yum! system to grow into new markets?

Scott, do you want to start at a high level for Yum! and then maybe pass it to Julie to share.

Sure. The beautiful thing about our system is our franchisees see the opportunity for growth. Obviously, in the U.S., the Taco Bell brand is in high demand. And frankly, every time when a market comes open, there's incredible competition for it. So a lot of our franchisees are looking for other markets to grow in, and there's a lot of white space, both within the Taco Bell brand and our other brands. So frankly, as Chris shared, our issue is not a shortage, our issue is connecting those franchisees with the right opportunities, whether that's new franchisees or existing franchisees. I think the percentage of growth that comes from new and existing would probably vary by brand, and I wouldn't want to speak to that because I'm not sure I have those data points, but it is a healthy mix, and we have no shortage of demand. Do you want to speak to Taco Bell?

Thanks for the question. For Taco Bell International, our mix today is about 50% of our franchise base is only with Taco Bell and the other 50% is shared across Yum! sister brands. That doesn't mean that the 50% that's only with Taco Bell doesn't franchise other concepts, but they're not with any other Yum! brands. Growth is coming from everywhere for us in Taco Bell International. So both our shared franchisees and the ones that are only with us are driving extreme amounts of growth. So we're super excited about that. And we meet lots of sister brand franchisees as well as talk to people who are outside of the Yum! family today.

From KFC standpoint, given that we have long-standing franchisees in 150 countries, the majority -- vast majority of our growth comes from existing franchisees. Then whenever we have new franchisees coming in, they usually start with a few stores in the first year just to get understanding of the brand. And ironically, by second year, they're no longer a new franchisees. So they've become part of the base franchisee -- so the vast majority of existing franchisees. And with those compelling paybacks and the long-standing relationships, it's an obvious kind of strategy for them to continue to invest in KFC.

Jon Tower at Citi. Chris, just a question for you. In meetings past, the company has outlined an annual EPS target as well as the total shareholder return target, didn't seem like that was something formally offered today. So should we expect it or believe that it's just reiterated based on what you offer today. And then separately, I was hoping you could offer insights into the balance sheet to the franchisees globally. It's often a question that we get asked is how healthy they are. You offered a lot of detail around, how large they are, but curious if you could offer insights into, say, leverage levels and stuff like that.

Yes. So first, on the algorithm, we're focused on driving the 3 factors that David outlined. We think it's helpful to our teams around the globe, and hopefully, your community to just simplify and say, "Hey, this is what we're focused on driving and we think strong shareholder returns will flow from that. So we didn't have EPS or a total return to shareholders in the algorithm in the last couple of years. We're not adding it back at this point. But again, we think it's strong growth that we have confidence in delivering in the future. In terms of franchisee health, I'd say versus 2019, we have significantly enhanced our ways of monitoring franchisee health. Scott and his team in the franchising office, you want to speak a bit more on this in a moment. I'll hand it to you. So we have stepped up our visibility, as Scott described, I think our franchisee base is very healthy. And he mentioned those 15 publicly traded franchisees who all have strong business models. Obviously, that gives you an opportunity to go a bit deeper into those. And of course, with that, if you go to the private franchisees, you've got companies like Flynn Restaurant Group, incredibly strong. So they've all got sort of typical levels of leverage that you might expect for companies of that size. But in general, as we look at it, we feel like those are healthy levels, and we don't have big concerns around leverage in the system.

What I would add, I mentioned the 2 shifts that we've seen in our business. So we obviously are more franchise than we were last time when we were here. And we went through the pandemic. And just like every other business in the world, stared into that a bit and wondered what was on the other side. We knew at that moment, we needed greater visibility into the performance and health of our franchisees. Frankly, we weren't where we needed. So we've been much more intentional about requiring those reporting -- regular reporting, annual reporting from our largest franchisees. And we do that now on a regular basis. We track our leverage, we track their same-store sales, and we track other metrics that we believe give us insight and comfort into their ability to grow, their ability to pay royalties and whether they're the right partner for us. I think, obviously, with 1,500 franchisees, there's going to be a variation in performance across markets and brands. But as a whole, we feel confident through the visibility that we have now to our franchise base, and we're trying to continuously improve that and get more real-time data and have more and more visibility in sharing with our franchise. As Mark mentioned, there's often a healthy tension between us and our franchisees, and there's some tension about what information they want to share and what purposes we might use it for. But the reality is we've got a business to run and we run this in a partnership, we provide great growth opportunities for them. And in return, we need that transparency and visibility. So we're working our way through that to what will be an optimal place, but we're much better off today than we were pre-pandemic.

Dennis Geiger, UBS. I wanted to ask a bit more about some of the newer or still more untapped sales or AUV opportunities that several of you spoke about today, whether it's breakfast at Taco Bell, maybe a bigger lunch focus at Taco Bell as well, on the Pizza Hut side, the individual occasions and lunch perhaps. Can you just chat a little more about some of these untapped opportunities, if that's the right way to frame it to potentially be sustainable sales drivers for the brands themselves.

Briefly, just a little more context on the individual meal occasion. For Pizza Hut, it's really going after a couple of things. Not only is it existing customers to use us during more frequency but also to bring in new customers. And what we've seen so far with the melts in the U.S. this quarter is we have brought in more new customers that are younger actually more new customers that are at a lower income level and we have driven more frequency with our current customers. Now as I think Mark talked about when it comes to breakfast, any brand to own a new use occasion, it's a long-term thing, not a short-term thing, but I'm encouraged by our start.

We have so much opportunity in this space. Breakfast is a big opportunity it was shocking to us to see the data that said we actually have a bigger opportunity at lunch than breakfast. So we're really looking at how we're constructing the menu. I talked about we're testing, should we have fries full time, which would dramatically change how we look at that then drinks. David and I talk about it all the time. There's energy drinks out there right now, and we're into the basic Mountain Dew, Pepsi, and we have our freezes, but we think there's a big opportunity in drinks. And we really -- we kind of come in and out of what I would call treats. You can see I'm not an industry guy since I call it trades, but we need ice cream and desserts and things like that all day long. So just in 5 or 6, those areas. And then chicken for us is a large percentage of our business is in beef. And right now, the Gen Z consumer wants chicken. So for us -- the way we look at the opportunity, it's breakfast, it's lunch, it's late night. It's new consumers. It's drinks. It's -- so we have a big opportunity, we think.

Sara Senatore with Bank of America. I have two questions, actually, one on Pizza Hut and one on Taco Bell, Pizza Hut, just -- can you kind of update us on where the asset base is globally. There's been this sort of ongoing trend towards off-premise and away from dine-in. And so sort of as an artifact of history, Pizza Hut's been more, I think, exposed to that dine-in. So how are you feeling about that and that sort of ongoing shift if it's persistent? And then on Taco Bell, can you just sort of address the fact that some of the varied menu restaurants that you're comping against, they have higher volumes but also much lower margin. So is there any kind of inherent margin volume trade-off you have to make in order to broaden that appeal.

So I'll start off with the Pizza Hut, one of the more interesting things, as I came in and I learned the business and I did my roadshow went to several countries throughout the world is COVID-19 really made it to every market embraced the idea of takeaway and delivery. And even though we, as a brand, have been talking about that for several years, it wasn't until that experience that we all kind of got on the bandwagon. And as I shared with you, 80% of our business is now take away and delivery. There are a couple of markets where that's much stronger. If you exclude those, most of our markets are 90% or more, and the asset base is coming along with that. So the key difference now is it's not a question of whether we should be driving towards more digital and more what we call HMR, it's just a question of how fast. But that number of our delivery-focused assets, it's growing every year throughout the globe, and it will continue to grow.

I don't believe there's a trade-off between the AUV, the volume and the margin. We have many, many restaurants that do over $3 million that are at the same margin. So for us, it's about getting more people in at different occasions, but we don't believe there's a trade-off there.

Yes. And if you're getting at whether the competition would drive our margins down, remember, we're a category of one in Taco Bell. We don't wake up in the morning and worry that somebody is having a sale on chalupas. What we sell is very unique. And I think we can continue to provide amazing value and sell a unique set of products that separate us from the rest of the industry. We don't have to go head-to-head on comparable products. Peter?

Great. Pete Saleh, BTIG. Just a quick question on the technology side. I know Yum's! made several acquisitions over the past couple of years, and it sounds like you're still integrating some of this technology. Are you comfortable with what you have today? Or are there specific capabilities that you're looking to acquire that you don't have?

Yes. So if you look at that capability set that we showed across the build and acquired columns and across the easy framework, -- we think it's a pretty comprehensive set of capabilities. There's four acquisitions that are included there. As I mentioned, they've all been small, but they've been incredibly powerful in the system. So right now, we feel good about the capability set. As I mentioned, we'll continue to scan the market. We'll continue to see things that maybe from a leading edge standpoint are having an impact in our business. And if there's the right kind of opportunity to bring something else in where we see a critical need, we'll do that. But for right now, I feel like we've got a pretty comprehensive set and we're focused on integrating and getting maximum value out of it.

Danilo Gargiulo from Bernstein. So I was wondering, now you're collecting a lot of data on your franchisees and their profitability. I was wondering if you can identify the top three reasons why there is a discrepancy in performance among your franchisees and what Yum! can do to help close this gap? And then specifically maybe on KFC, if kind of the refreshing of the stores could be one of the levers to play, what kind of incentives are you willing or planning to offer to your franchisee base?

So in terms of the performance of our franchisees, it always starts with capability. And I think that's the #1 thing we would see across our brands and across markets. And it's just like any business, the franchisees with the best talent and the best focus on talent will always win. I couldn't tell you what the other two distinguishing characteristics are, maybe David or Chris...

Well, it's the flip side of our 3Cs, right? If they're not capable, if they're not well-capitalized and if they're not committed, the downside of having larger franchisees sometimes is that we don't have people that don't check all those boxes. But I like to say about all of our brands around the world. When we bring the brand to life the right way. What I've learned in my 33 years, whatever brand it is, is it works. So if it's not working, it's because we're not doing something in executing the brand playbook. And it usually is they're not committed, they're not that close to the business, they didn't hire the right operators to run the business or they're trying to skimp on capital when they should be investing and maintaining their stores. So that's what the 3C framework is. It really helps us really think about our partners and making sure they're working on the right things.

The only other thing I'd add is keep in mind that in some parts of the world, there are -- our franchisees are in a different phase of the business model. So if you think about what Julie has done, one of the things she changed in strategy was this focus on scale. So previously, we were opening a handful of Taco Bell restaurants in each market. We weren't getting scale in our marketing spend, for example, we even had supply chain challenges where you just couldn't get chip or tortilla manufacturing lines that have an efficient supply chain in those markets. So for those franchisees who are investing ahead to get us to that 100 unit mark and beyond, they know that they're going to be making investments for the long term that will pay off out there. So you got to think about -- in some cases, we've got people who are building our brands in new markets and they know that the return will be tremendous. It just may be a bit further out.

John Ivankoe at JPMorgan. I'm going to do my best asking these questions, so be patient with me, if you don't mind. I mean, obviously, a lot of today has been focused on some of the big numbers on unit development, the big numbers that global comps, global brand initiatives. And I know it's impossible in an event like this to really start to get into country level, brand level conversation about how each brand is maximized in each country and how you maintain or expand a #1 position. In other words, really a bottoms-up approach to kind of getting to your headline numbers, which you've been talking about a lot today. I was curious if there is any changes that have been made in Yum! or maybe any changes that could be made in Yum! of, hey, we are a collection of 150 countries and each brand is maximized in each country and whether from a marketing perspective or a product perspective or physical asset perspective or technology, whatever it is, do you just talk about and give us confidence of how each brand is maximized in each country versus, obviously, what you can do today on the stage in the 3 hours that we have is obviously very top down in terms of the umbrella. Thanks for the patience.

Yes. I mean, look, there's lots of ways to answer that. One response would be, look, we went through this transformation of becoming an asset-light model. That was a game changer. It clarified the role of everybody you see on stage. Our role is to get the best franchisees in our countries and support them in the best way possible and develop all the tools for them to be successful and take a franchisee-first mindset in terms of unit economics is what really drives the business. When you're worried about, can I -- do you have company stores and you get outsized profit from a few company stores, it can distract you from the franchise business. It's a harder way to run the business. This has been a real jolt to the system in terms of how we all see our jobs. And I think that's what's happening in every country. We're just getting closer to the business, working harder to make sure we have the right partners. We've made some tough calls on franchise partners that we might not have done back in the old days, we might have looked the other way all of that -- so there's no one answer to your question, John, but I think that has been a catalyst to what you're seeing and what you're hearing us talk about and the confidence you see in the leaders.

Tracy, would you like to add potentially some of the examples like marketing planning meetings, elaboration. And just giving you a few tactical examples of how you're sharing best practices across brands.

Sure. I mean I think the root of your question is you've got country by country by country. And even though to David's point, our roles are clarified, it can be difficult for our teams to keep up with the 150 countries and the franchisees in each one and how do we make sure that capability stays there, which I think is where this collaboration has really come into play that when you've got our GMs, they know that their focus is, here's the countries I run, here's the franchise groups and which of those franchisees have the best capability and using, like I talked about Collider to help span this. It's not unusual for now for us to pull 100 franchise marketers together in a certain region because we know that, that region has certain fundamentals that they need to learn. Collider can train them, our GMs can train them. So there is a -- we're able to do both which is a more broad stroke of keeping everyone at a certain level of capability and then when we need to, go deeper country by country, what's happening in a certain region that requires extra capability and our teams can go in and train that quite easily.

I think one other thing that Sabir can illustrate for us is we've really worked around the world to be -- much better understand our competitive position. And I think in the past, is it -- when you're on a big business it's easy to not get into level of detail on every market and understand what you need to do to be number 1. Sabir has done a great job leading that thinking at KFC.

Yes, we have regional offices, all kind of business units around the world. We operate like I said, in 150 countries. We know that in 86 of them, we are market leaders. We are the #1 QSR brand. In another 40, we are #2 or #3. And so it's that level of detail. Now we dominate in Africa, Latin America, and some markets in Asia. In other markets, we have opportunities, we're #2 or #3. So our business units based in all the markets, whether they're in Europe or in Dubai or in Singapore or South Africa, those general managers are looking at each business units, each country level. And the goal is for us to become a market leader in every single market that we operate. That really is the simple goal that we need to achieve, and they're all basically focused on that.

Yes. Just to reinforce that last point, Sabir made, I can't think of a country where we are maximized today. We have opportunity in every market, and that's the expectation that we're raising. Growth in all brands, all markets.

John McNamara for Guggenheim Securities. David, you talked about how well Yum! shares knowledge across geographies and brands. What are your thoughts on essentially managing some of your brand level departments, maybe real estate, supply chain or areas of the business like that?

Look, our goal is always to take advantage of our scale without becoming bureaucratic, and that is a balancing act. I think what we've learned over the last few years is that some things on the technology side needed to be centralized. There was just an enormous argument for that. But we've been very careful to hire leaders that are collaborative, that aren't bureaucratic so that we continue to partner in a way that we're very efficient. But we do not -- just to be clear, we do not have a strategy of going on mass centralization. Technology was one that really lended itself to that. We do have a strategy to be mass collaborative, but not mass centralization. And I think our leaders around the world more and more are wired to collaborate in the structure we have and it's working.

Just to build on David's point, to me, I think on supply chain, we see a lot of regional collaboration across brands. So like in the North America market, we have a regional buying co-op. Same thing in Europe, Aaron and I kind of counterparts support each other on the European buying strategy. So distribution and logistics is more regional rather than global. So that's really, I think, where we see the more important strategy similar in Asia as well, we see synergies across brands.

Fred Wightman from Wolfe Research. I was hoping you could just give an update on the consumer. I know that you guys are talking a lot about sort of the company-specific things that are within your control. But if we think back to 2Q, you started talking about some softer the low income. You gave us an update on 3Q. So understanding that, that is sort of the backdrop for a lot of these initiatives. Can you give us the lay of the land as far as what you're seeing today?

Yes. From where we sit, we don't see massive changes from the comments that I made in 2Q. There were a couple of lower income consumers that we could see possibly pulling out of the category a little bit. But frankly that's been made up for in our business because we've done such a great job of having offerings for those consumers that others are buying more frequently. Pizza Hut Melt is an example of that, to Taco Bell Cravings Menu, the things we talked about today. So there's -- where we sit, and that doesn't mean that we speak for the entire economy, there's not some wholesale shift in consumer behavior that's occurred in the last few months. You saw the results that we're putting up. They're consistent with what we had in Q3.

Brian Harbour from Morgan Stanley. To the point about kind of all markets contributing to growth. Well, do you think there will be more development from KFC and Pizza Hut U.S. given that there hadn't been in the past. Does anything need to change to enable that? You've had some franchisee turnover, but do you need to see more of that, for example?

The thing I would add -- so a couple of things for Pizza Hut U.S. in particular. As mentioned, it's going to be a net positive this year. What was also mentioned is that the asset base is getting stronger and stronger. When it comes to overall Pizza Hut, I do think in the future, the U.S. will be a material part of the Pizza Huts development, and it's just getting that flywheel going. It's getting that flywheel going. I would add that the years when it was averaging minus 129 to now, we're estimating a plus 10, that alone will be a material upside to our overall development numbers.

Yes. I mean, simple answer to your question is yes, for the U.S. for KFC as well. And I think the single biggest factor that we've put in is a new leadership team in the U.S. business. The new President of the U.S. business comes a long-standing track record of KFC. So the numbers that I showed in my presentation for Middle East and Africa, he was running that business until 3, 4 months ago, delivering plus 20% same-store sales growth. But the new stores that we are opening in the U.S. in the last couple of quarters are actually achieving very, very strong AUVs. So we know that when the brand is executed well, and built really well, the brand is successful. We just need to get more of those on the board and then slowly, I think the franchisees will kind of support us as well. We have a long-standing partnership with franchisees who are fully committed as well. So the answer is yes. I think the future is there for sure.

Chris Carril, RBC. So you clearly remain committed to the asset-light model, but do you see opportunities to drive growth via company store growth, perhaps in certain markets. I think you've talked about this in the past, but curious how you're thinking about equity store growth in the context of the updated unit growth target today as well as CapEx spend going forward.

Chris, do you want to start potentially with just general capital allocation? And then maybe, Sharon, you could bring it to life Habit.

It's I'd say, look, our capital allocation includes three primary areas. We obviously have to do some renovation and maintenance on our existing equity store base. We then do make investments in building new equity stores within that envelope of being asset-light. So as the system grows, we'll continue to grow our asset base as well. If you think about building equity stores in the Taco Bell U.S. system, for example, with those really strong economics, those are high-return propositions for our shareholders. And then, of course, we have some technology investments that get capitalized, but we'll continue to have an overall efficient CapEx envelope. But that will be a part of -- wer'e going ot stick to the asset-light strategy. Habit is another area where we've been building some equity stores.

Yes. I think Habit is a great example of how we're strategically driving equity growth. So we're a bit unique in the Yum! portfolio that we're 85% owned and 15% franchised. And as we think about become a global powerhouse, clearly franchising will become a bigger piece of our story. But given what we've been trying to drive -- and with the global pandemic, it's been fantastic to have the backing of Yum! to accelerate our expansion, particularly into newer markets where we're lesser known.

Zaki Colabawala from Stifel. I wanted to touch on the Pizza Hut strategy moving forward. It sounds like you're trying to make the brand a little more dynamic than it has in the past. I was just curious what sorts of cross learnings are you using, whether it be from KFC or Habit or talk about to pull into that strategy and to kind of use your scale to inform that?

Thank you for the question. I'll give two different answers. One is going to be different than how you asked it. A lot of the story for Pizza Hut is to get into the best version of Pizza Hut. We are the brand that has innovated the most. We are the one that has the most craveable pizza. We have spectacular franchisees. We're just tapping in and getting back to some of what our best routes are, but doing it in a modern context. Now the second part of it is absolutely, we leverage the scale and work with our peers a whole lot. One example that I will give of that is no secret that KFC is a global powerhouse. Sabir and I go on market trips together. We are thankful to share some of the same franchisees and how you can work together, we absolutely learn from our sister brands, absolutely.

All right. We have time for two more questions.

Jared Garber from Goldman. You clearly outlined a lot of growth opportunities today across the brands and across geographies. A lot of that growth though lies on the shoulders of franchisees and putting that capital to work. So in your discussions with your franchisees, what are they more sort of concerned about as we look out into the next year or 3 to 5 years and achieving that growth? Is it cost of capital? Is it food cost? Is it labor cost or the availability of labor, competition, just to maybe name a few, but just curious what you're hearing and seeing from your franchise operators.

I'll give you some general answers because, obviously, everything varies by country and brand. But generally, they're concerned that they want to make sure they have access to more development opportunities. So a lot of franchisees -- we went out at the dinner the other night with a very big franchise who's trying to convince us of what other countries we should let them into like and we get that a lot now that people that are looking to expand. But I don't know that there's anything -- one big looming issue out there that franchisees would be worried about, they most -- because of their scale, they have access to capital. So yes, interest rates are rising a little bit, particularly in the U.S., but not to the point where that's going to materially impact their ability to develop they've seen that we can navigate cost pressures. I keep -- the only public data we really have on margins that we can talk to is what Taco Bell is doing, but the same would hold for other brands. Taco Bell's margins haven't changed in this environment. So I think it's really sort of the reverse. They have more confidence now than they ever have because they went through such a difficult period. And so maybe some of the things they might have been concerned about back in the day are less concerns for them right now.

Last Question from Andrew.

Andrew Charles from Cowen, again. I'll close it out. Chris, just big picture, should we think of the roughly 3,000 net store openings the last 2 years, a terrific number, that excludes Russia, of course, as the foundation we're off in '23 and '24. I asked this because if I hold this number in each of the next 2 years, you're going to be tracking north of your stated 5% guidance. And you guys spoke about the pipeline of just openings across all three brands. It's very impressive as well as the improved paybacks. And so kind of think about an elevated level of growth here in the next few years before ultimately settling at 5%.

Yes. So we're proud of the accelerated development engine that we have. We're proud of the results the last couple of years. I'll let the algorithm speak for itself going forward on the 5% unit growth rate. That's what our teams are focused on driving. Of course, as David said, we're all wired to try to over deliver when we can, but I'll let the algorithm speak for itself.

Anything you want to add, David? All right. With that, we'll conclude our Q&A session and today's event. Thank you so much for all of you that are in the room for traveling, for those that have joined us via our live webcast. If we didn't get to your questions today, I know there are many investors joining us in person today as well. So thank you. Please feel free to follow up with the Investor Relations team. The closing thoughts are -- I hope you leave today as confident in our global business as we are. This team is incredible. You got to see them in action today. They have leaders behind them, right? They're equally as incredible. And we see an incredibly bright future for Yum! as we celebrate our 25th anniversary, the best is yet to come with 25 years ahead of accelerated global growth. Thank you so much.