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

All right. We'll kick this off. I'm Sara Senatore, BofA's restaurant analyst. I want to thank everybody who's joined us online in this room today, joining me up here are Scott Mezvinsky, CEO of KFC Division at Yum! and Matt Morris, Head of Investor Relations. We're going to treat this as a fireside chat. So we'll have a little bit of a dialogue here. And then towards the end, I will open it up for questions from the room. So we can have a good conversation here. So thank you both for joining.

Okay. You've been in the role for about a year. Maybe you could talk to us about the top priorities you have for KFC and kind of what you what you've done so far, what's near term and what maybe takes on?

1 Yes, sure. I mean I'm really excited to be in this role. I've been with the KFC brand for 17 years, and I'm going to talk about for 4 years prior to this role, it's a fantastic brand with great franchisees and team members all over the world. We're in 151 countries. So it's a big powerful brand, $35 billion in sales, total system sales. I'm really excited about where the category is going. Category is going towards chicken. It's the fastest-growing protein all over the world, every continent and QSR out of QSR, that gets me excited as someone that is leading a chicken centric brand where were the kings of chicken and so our priority really is to set the standard for the modern chick QSR. So it's not just that we're in chicken, but how do we make sure that we're as modern and as relevant as we need to be to meet the consumer where the consumer has got. So that's been #1 priority is coming in and make clear strategic alignment across the world with our teams and our franchisees. For us, that means we need to have winning chicken products mean to have the most relevant products we need and formats and flavors. So you'll see bigger crispier tenders. You'll see more sauces coming to life. You'll see more boneless in general. We will continue to make sure that we're famous for value because that's important. Second, applying to that is making sure that we're the most modern brand. So you may have seen yesterday as a similar of that change, we have updated our [VizID] So we have a new visual identity, including new logo, but it's more than just that. It's making sure that we have the right product range. You'll see us going into beverages in a bigger way. Kwench by KFC is our sub-brand. It's live here in the U.K. You're going to see us communicate in a more modern way, and you're going to see our assets continue to evolve and modernize. So there's a lot of good things happening to make sure the brand stays modern and relevant to the next generation of consumers. And then last, which is not new for KFC, it's one of our strengths, historical strength with an area that I think we continue to accelerate, and that's development, how do we continue to accelerate growth. We've opened nearly 10,000 net new restaurants in the last 5 years. We think there's opportunity for us to accelerate that pace in a profitable way with our franchisee partners.

Thank you. That's a great overview. As you said, we were in one of your stores yesterday in U.K. I want to ask you about the -- I want to ask you about the market because it feels like a real proof point also. As Matt pointed out when I said in my initial list of questions, I tend to have a U.S.-centric. And so this is actually -- it's really important to note, I think you said last night that U.S. is actually relatively small as a percentage of the 13% of sales and even less of operating profit. So we do want to focus on the rest of the world. U.K. has been very strong. I think, as you said, 7% same-store sales. Maybe you could talk a little bit about what distinguishes the U.K. whether it's operations or strategy. And more broadly, are there characteristics that define a lot of your strongest market?

Yes. The U.S. business is still symbolically and strategically important to us. I started my career in the U.S., but you're right, the financial materiality is just not that high relative to the rest of our business. So specifically to the U.K., one of the things I'm most excited about is they're probably executing the strategy, the global strategy as well as anybody. They have a strong local team here that's driving that execution with great franchisee partners. It is also the high -- most competitive chicken market outside the U.S. So there's a lot of competitors here. It's probably the most crowded chicken space outside the U.S. We're still very far ahead in terms of distribution, and we have 1,000 -- roughly 1,000 units here. I don't think there's any other of our competitors that are anywhere close to that. So we have the brand strength, the brand love and the distribution. Having been here 60 years to really take advantage of the opportunities and the trends in chicken. So specifically, yesterday, it was great seeing you and others in our restaurants. You noticed that we launched new tenders yesterday in the U.K. with a range of sauces, 7 new sauces, more adventurous sauces, more flavorable sauces than we've had before, but even where they came to the consumer was done in a more exciting way and a bigger more dip. They also a dippable kind of pot. They also had -- they launched a new sandwich as fully dunked or dripped as they call it here. So it's fully soft. So you're starting to see some of the things I talked about at the beginning come to life in a market like the U.K., which is a highly competitive market, but the results are coming because we are executing at a very high level. From a communications perspective, they are some of the best in class, how they communicate to the consumer, both in -- above the line, but also from a -- how they connect and culture, how they use their social channels. If you're living in the U.K., you probably heard the mania that we had and it went viral with a pickle puffer jacket. So that's an example of us just connecting with culture. So U.K., the team here are fantastic and a lot of the things that we talk about really, really well. And the proof point, as you mentioned, was 7% same-store sales in Q1 in a category that's not growing nearly that much.

Right. And it's interesting you mentioned you've been here for 60 years. So it's not as if this is brand new to the market. You may been able to maintain that relevance for a long time. So maybe talk a little bit about other -- perhaps some of the other markets where you've seen something done and also a similar, I guess, similar success. And also, I think something that was mentioned yesterday, was there's a sort of a recipe sharing or idea sharing that happens. So this idea of like sort of global best practices, you can maybe...

Yes. I mean one of the things I'm trying to do as I come into this role is making sure that we're taking -- there's great ideas that happen all over the world, and I want to make sure we're exporting and amplifying the best ideas. So the encouragement is how do we collaborate as a system, but also maintain enough flexibility that there can be great innovation happening. So the example yesterday, was as simple as there's a WhatsApp group with all of our fit leaders from across the world, which is food innovation technology. They're the ones that develop the products. So they can share best ideas and launch them. Best example of that is in the U.K., the pickle promotion that I talked about started in Canada. So it was an idea that came from Canada. It did well in Canada. U.K. took it made it better or built on the success of Canada and did it in their own way, and that will probably travel. So those are examples. I think you'll see more of us collaborations where we get IP properties. In the past, we've done maybe in a country or a handful of countries. We really want to make sure that we're doing in as many countries as possible to really leverage the scale that KFC has.

I think you mentioned that LeBron?

Well, LeBron was Taco Bell example, but it's part the Yum! family. It's a good example of Taco Bell U.S. did something. I was at Taco Bell before. Taco Bell U.S. did something with LeBron and we were able to get the rights for global. And obviously, LeBron is -- well, not obviously, but LeBron is highly relevant in China. And so we were able to use LeBron in China. And historically, we've just been, okay, let's get LeBron in the U.S. do whatever the U.S. was doing. Sean [ Tresvant ], who's the CEO, who said, let's act more like a global brand in Taco Bell and took the LeBron IP and put it across the world.

Okay. Sorry about that. But again, best at this year. And I'm going to ask you about that a little bit because to your point, you had 4 years of really deep insights developed there. So -- but let me shift a little bit to well, the growth and algorithm for KFC. So you talked about accelerating unit growth I think about sort of the long-term average same-store sales growth has been somewhere in that sort of 3% range. I don't want -- I'm not asking you to sort of set out targets, but as you talk about the idea of accelerating unit growth, and possibly even just sort of system-wide sales growth in aggregate. What are the -- what are going to be the key drivers of that?

KFC has always been known as a development machine. I think that's the oneKFC International thing Kapinternational in particular, of opening consistently a ton of net new units last year was nearly 2,000 net new units. So we will continue to be a development machine, and we think there's more opportunities to accelerate those numbers, but one of the things I also want to bring to KFC is the same reputation of driving same-store sales. We want to be both a same-store sales driving machine and a net new unit development machine. So there's really or areas that we're focused on to hopefully accelerate our same-store sales growth from historical levels. Number one is where are the consumer use occasions that were -- that we need to go into in a bigger way. And how do we it could be tenders and sauces is going to make us more relevant for more occasions. It could be more individual locations versus we're more known for sharing occasions. How do we really get after these occasions in a big way and actually operate differently, too, it's not just about doing LTO here or there to get after. It's how do we create sales layers that are sustainable across the world. So that's number one. Number two is beverages, specifically Kwench, which you were able to try yesterday. Kwench by KFC, it's I think our first by real sub-brand within the market, within our portfolio on the menu. U.K., again, is the lead market. also helping drive their success. They've launched it in the majority of their stores. They haven't yet turned on the marketing machine. It's doing incredibly well in the U.K. and helping drive some of their results and making us more modern as well. The third will be loyalty. We're candidly way behind on loyalty. We know we have a lot of opportunity to accelerate the number of loyalty users we have. And what we know about loyalty customers from our own data, from Taco Bell data, from competitor data is loyalty customers access the brand more frequent. So it drives frequency. So there's a direct correlation to loyalty customers and frequency. So we know that there is nothing but upside as we get our act together on loyalty. And then the fourth is what we're calling retail rigor, which is essentially just the short-term getting value right every day, getting innovation right every day, making sure that when we come to market on the short term, our marketing calendar is as sharp as possible.

And I think one of the other sort of distinctions you talked about, I guess, is this launch and love. So maybe...

Yes, that's great. I think if we're self-critical in the past, we would launch things and then leave them. It's like it's fun to launch and then you don't support it after the launch, you get a big pop in sales once you launch it and then you go on to the next flavor of the month thing. So now I think we need to operate differently in that if there are big ideas and big categories that we should be in, we need to launch and love, which means we need probably dedicated teams launching these, but then also thinking about a 3-year plan towards supporting it so that it becomes a bigger -- and that can mean not just putting media investment against it. It could also mean innovation, right? So if you think about Kwench, Kwench has a range of products today. We're going to launch it in a big way. But at some point, we probably need to refresh some of the -- bring more excitement and bring innovation towards that range of products. and continue to build that sales layer over time and have targeted objectives from a sales layer too, not just, hey, we're going to launch it and love it, but also have strong KPIs against that, that will measure ourselves.

Okay. That's -- yes, it's so helpful to hear you talk about kind of the sort of the differences you're real expert and to your point, retail rigor. I guess one thing you mentioned was sort of, I guess, expanded dayparts or use occasions. Maybe you could talk a little bit about what you see as the biggest opportunities. I know you mentioned like tenders and sauces. I think you said the U.K. was actually I think 70% boneless at this point. Is that an outlier among the -- in the system? Or is there a desire to kind of move in that direction?

We go where the consumer is going. So it's consumer defend network, consumer-centric. And what we won't do is fight the consumer. And so we're not going to try to tell the consumer what they like. So we're not going to force chicken on the bone with consumers if they don't want chicken on the bone. Specifically, I think there's many markets that today still have a high chicken on the bone mix, particularly in the emerging world. That's great. We have a great product and the consumer to use in other markets. There are some markets we have 0% chicken on the bone. France, for example, we don't have icon we have wings, but it's 100% boneless if you count wings as kind of a new format towards that. So that's all where the -- that's all driven by the consumer. And the one thing we are -- as I said, we're not going to do is have rules you must sell this. You must we don't want to drive complexity for operators and our franchisee partners just for the sake of having a product range that may be what historically our brand was that our consumers no longer want. So that will hope enable us to drive better execution against what the consumer do want. And the one thing we see across the world is whether you have a high COB chicken on the bone mix or a low chicken the bone makes the younger consumers are gravitating towards more boneless. So for now, I would say, boneless is going to here to stay and become a bigger part of our menu globally.

Right. And so that -- I think you mentioned. So you said I think snacking was a big opportunity is lunch still an opportunity?

Yes. I mean I think if you look at how -- this is a broad comment because again, we're in 151 countries, so there's different dynamics everywhere. But generally, we skew towards dinner and group occasion. And so one of the things that we need to continue to work on is being more relevant at lunch, having a great burger range or chicken sandwich range. I don't know if it's American audience or a European audience, but thickeners and chicken sandwiches. It's is an opportunity for us to continue to increase our relevancy to lunch, and lunch is obviously a big part of the category that we under generally underindex in and we want to get our fair share more than our care here much.

Okay. And so you mentioned one thing you did mention also just now is operational complexity. So I wanted to ask you in terms of the sort of the unit, I guess, the performance of the individual units. One of the things that Chris has talked about is and then I think you have echoed for sure, improving franchisee unit economics. So maybe we could talk a little bit about the opportunity there and what the implications might be then for unit growth?

Yes. So first of all, we're 98% franchised. So unit economics is the biggest enabler of development and growth. So we need to make sure that we're always mindful of that. I think 80% of our markets have 4-year [indiscernible] or less. So that's a big driver of our existing growth. Still the main the needs to remain in focus. There's opportunities for us to get even sharper as I think about as the next finance guy and a next development guy, how to drive shopper unit economics, there's really 3 areas that we work on. One is sales. That's the best way to drive unit economics. It just get sales going and flow through from that. We talked earlier about how we're going to do that and how we can hopefully sharpen or increase our AUVs that will make economics easier. Second would be taking costs down in the middle of the P&L. We have a global supply chain team for the first time to help us enable taking advantage of our scale, and we have local supply chain teams also working really hard every day to make sure that we're buying efficiently, and we don't take from the consumer. So there's just how do we get sharper and sharper on the efficiency of our operations. And then technology can play a role in that, too. We've talked a lot about Byte and the [indiscernible] but tech in general, will help us, I think, from a unit economic perspective both from driving check in many cases and sometimes also helping adopt efficiency. And then third would be CapEx and we're always looking to improve our CapEx across the world, including evaluating where we source our equipment from and what the supply chain is from that [indiscernible] one of you.

Right. So you can sort of raise the numerator and also lower the denominator to get that.

Yes, exactly.

That makes sense. I guess maybe since you mentioned technology, I do want to talk about that. I think it's something that Yum! has invested heavily in and has created an advantage. But maybe -- so maybe let's talk about it just with respect to KFC specifically, where are we in terms of the Byte rollout? And if you could help us understand here in sort of the broadest terms, but it was, I think, split into 2 bundles. There's digital and then there's operations. So maybe you can talk us through that a little bit.

Yes. So Bite Digital would be e-commerce. So our app. We -- just -- sorry, the U.S. is on that for KFC, for Taco Bell. So talk about U.S., I think, has the full big platform in suite, which is the most developed bike market for us for Yum!. Outside the U.S., we're -- for KFC, we're working on 2 lighthouse markets. Australia is going to be the light house market for Byte commerce or e-commerce, Byte digital as we get Australia up and running, then we will expand into more markets or the smart ops or the back of house POS, kitchen display system, the whole system for making your operations work -- that is the U.K. So we're in the process of rolling out here, again, is a lighthouse market. And those are 2 of our -- both of those countries are probably 2 of our top 5 countries in terms of size and scale. And we have teams, we have a relatively sizable teams in each of those markets. So as we get those rolled out there, it will make it more easy to roll out in other parts of the world.

And so remind me, so franchisees have to be on board with this. So is that -- so these are -- essentially, these are franchisees who have seen the use case and our

Yes. I mean, look, franchisees had to have a tech platform regardless. So we believe -- we believe that restaurant company building a tech platform for or a restaurant company is going to be the most effective way to do this, and the franchisees are buying into that because known -- if there was a better third-party solution that existed that we could scale globally, we would. It doesn't exist, which is ultimately why Yum! decided to make the decision that we have to do this ourselves because that's going to be the only way to support our franchisees in the most efficient way and take advantage of our scale of our operating tens of thousands of restaurants all over the world. So franchisees are excited, I would say, but we also -- it is a tech rollout. So it's not necessarily an easy thing that you just go like this. And you can imagine the complexity of transitioning to systems all over the world.

And just how could -- why did you sort of did you -- I guess, you mentioned [indiscernible] Australia for the digital and U.K. for the smart ops? Is it a function of the operational complexity in the U.K. or maybe just...

I mean the implemented -- those are 2 different implementations. So what we don't want to do is task 1 market to including 2 things at one time, which would probably not work out well. So we've said, let's get one done really, really well. then we can see what we've learned from that and expanded to other parts of the world in case of Australia, then we can kind of come up here and say, okay, now are we ready to go to the back of house solution. But to do both together would be difficult and not -- you can talk about data that way. Talk about in the U.S., they did it module by module versus everything at once.

Yes. No, the one thing about covering restaurants is I've had to be a little bit more of a technologist than -- I mean that's a very little. So size it, but that thing that we spend a lot of time talking about and I guess on that, maybe on that sort of front, as you think about maybe one of the questions that always comes up when people are talking about technology is AI. And so I'll mention, I know Taco Bell, for example, speaker boxes right now for the drive-through. But so maybe talk about KFC and how AI is positioned there?

Yes. And first of all, I think having a common tech stack is going to allow us to take advantage of all the benefits of AI that exist today that are coming. So that's a key enabler is for us to get on the same tech stack, which is going to be important. The way I look at AI, there's roughly 2 areas of focus for us as a brand. One would be the consumer. How do we make the consumers journey better life easier or talk on them in a more convenient way. The example I used there is as we get more and more loyalty customer data, there's be areas where us to personalize much greater or traditionally, we do A/B testing, which was very manual. It gets you a lot of insights as you may AB testing. There's no reason why we can't take AB testing with AI and just really explode that and do that, what I would say, be testing on steroids, that's going to allow us to provide a better experience for our consumers in a more personalized way. And ultimately, you could probably have a unique offer for every single consumer in the world based on what they want. I mean, that's an extreme example, but you could technically do that. The second area that I think AI is going to have a lot of edits for us is to make our team members' life easier and that's important. So I use the example of our restaurant general managers. A lot of their activity today would be things that are not team-member-facing or consumer-facing. So back office stuff, labor scheduling, ordering inventory, making sure they're planning the product flow for the day. Those are probably the least exciting part of their job. And the things they don't want to do. AI can do that for them, probably ultimately in a more efficient way and that allowed the RGM to focus more on the consumer and more on his or her team.

And so should we think about the sort of customer-facing technology is more like a top line driver and then the -- like you mentioned team members, that more back of the house or maybe that's too artificial of a distinction because I guess if somebody is ordering digitally is a faster and maybe...

Yes, I think they both be top line drivers. It's more obviously, I guess, the consumer-facing 1 to show that if you're more relevant for the consumer and/or for on how to get them to spend more because you're being more relevant to their order either there and come back more or they're going to spend more on their existing, that's clear top line. If you provide team members more ease, one, it's going to allow you, enable you to put potentially more the consumer is demanding more complexity. I mean they don't say it that way. They want more parity. They want more there's more channels, more customization, more flavors. So that shows up in the back house is complexity. So as we're able to -- if we don't change how we operate back of the house, we're not going to be able to meet consumers where they're going. We are through technology, then I think we can provide an even better experience for our consumer, which will show up in pipeline. And then secondly, if you give the team members more kind of spend with the consumer and give -- and you're always hurried or rush, they can be friendlier, they can understand the consumer more. That will also, I think, have top line benefits.

Yes, that this idea of like AI not replacing people but rather freeing up time for them just spending to the part that creates value, but also presumably they enjoy more, which is interactive answer that. Yes. I guess maybe last question on this or maybe you could just remind us. So where is KFC, would we, as customers see it yet? Is it in the sort of AI or is it visible to us or it's still...

Yes. I mean there's a call center in South Africa, for example, that is leveraging AI. I think there's pockets of it in a lot of places of the world that we're using it in the U.K. to help make our organization more effective. But hopefully, you only see the benefits and you don't realize it's AI and I think the talk about Drive through example is a good one. We got consumer when a takes when we implemented it. We got consumer research that said that the AI has got more scores more friendly than the human. And while that was counterintuitive, the reason was is the human is trying to do 3 things at once. And so they don't have time to be friendly. They're hurried, they're rushed. So it's not that they aren't friendly people is that we were asking to do too much. So it's an example of how AI can help make the consumer experience better and the team member experience better.

Right. I actually remember hearing about that or something similar, which is like the part of people like digital ordering, even though it's slower, they feel less and so they feel more efficient, but also to your point, the rush is really somebody -- if they're talking to somebody is trying to get them through the line and computer doesn't do that. [indiscernible] years also pretty good at upselling in a way that a human might say. Is that -- so you mentioned loyalty, you have a loyalty program in the U.K., I think, for -- you said

Yes. I mean one of the thing we're behind on loyalty. So the way I look at the world is -- it's really through our top 20 market lens, our top 20 markets, ex China or 70% of our business ex China. So when you're 150 countries, you got to focus a bit. So the top 20s where I look at how we're doing against the strategy overall. And the reality is when I got into the shop over half our markets didn't have a loyalty program. So that's been a big focus of ours is how do we make sure we have loyalty programs, just to start with. That's a good starting point. U.K. is one of those markets that has a loyalty program, and they're doing a good job with it.

Okay. So let me shift a little bit. You mentioned

End of this year, that all 20 will have a loyalty program.

Okay. That's good. Does the U.S. have one?

Yes. I get a pop-up notices from them all the time. So then I will need to opt in. I know I have the app, but yes, that's it can use the ad.

My older son in particular is a huge fan. I think he likes -- he actually likes the bone in. Don't get rid of it.

Yes. No danger that in the U.S. chicken like white meat though, which I know is going to be hard to find outside the U.S., but that's -- he's in Americas truly.

Okay. So when you mentioned Taco Bell and some of the things they do well, obviously, you were there for 4 years. So maybe and it represents a lot of the young profitability pool, and it's just been very consistent. So I guess maybe especially because there are probably fewer of them here, maybe just help the audience or us understand kind of what has mean Taco Bell such a good -- such a strong performer for so long.

Yes. I mean we talked about big category of one it's truly differentiated and uniquely positioned as QSR Mexican essentially dominates that category, which I think they're 60 years old as well or something like that. When Glen Bell came, there was no -- if you think about the U.S., if you go to the U.S. grocery aisle, there's tortillas everywhere. -- also is now the #1 condiment -- it's over catch-up. This or macro trends that have happened probably in the last 20 years. That's very different for the 60 years ago, that wasn't the case. Mexican food was not popular as overall. So we've been able to Glen created a fast food category, but now the whole macro economy in the U.S. is going towards and actually outside the U.S. as well, they're not as far, but as we look at what's the fastest growing food across the world. Mexican is up there. So they're able to participate in that, they're able to be authentic there. But I think more importantly, they just take advantage of those trends. I think they're a fantastic brand that's been built over lot of years, a lot of great people live in part of that brand. They're relevant culture. They connect the culture really well. They're very innovative from a product perspective, a lot of the things that they do well are things that we're trying to do as well with KFC, especially outside the U.S., how do we connect culturally more relevant culture? How do we lean into innovation, provide more excitement and flavor for our consumers because that's a winning formula, we think.

You mentioned, I guess, trust his magic formula I guess he's remarked, but is So you talked about the pillars, I guess, that are underpin it and maybe how they apply or what you see as an opportunity for KFC?

Yes. And so the magic formula for those aren't as familiar of it, as you and I is really 4 things. It's brand buzz through product innovation, it's value, it's consumer use occasions and it's digital. So things I have been talking about as well, but I think the brand buzz, in particular, how they do it through product innovation is really something that they do a fantastic job. Best-in-class. I think they're best in class on value as well. They are consistently known for value. They have the top value scores in the U.S. I think they're very innovative in value, so it's not just offering food at a low price when the $5 box has historically been very strong for them. When everyone else in the category went towards an example, went towards $5 price point. And from our lens, we're cost engineering to beat that $5 price point. They came out with the lunch box at $7, which was a way to say, just for a couple of others more you can get what you really want and not have to compromise to get it cost engineered. So they've really hit the value well and consistently, and they've always been known for value. They will continue to be known value. So those are 2 areas that I think we can take inspiration from digitally. I think there's been a lot of great things with their app in the U.S. as well. So things that I think KFC is proud of and Taco Bell can take inspiration from, but vice versa, we can take inspiration talk about as well. And that's a great thing about being part of Yum! is that we can learn from each other. We can inspire from each other. We can connect and talk about these things collectively, sometimes there's people that move back and forth. So it's really how do we take advantage of 2 POWERHOUSE brands, 1 really strong in the U.S., one really strong outside the U.S. and grow and learn from each other.

It's a good segue to take us the last sort of gone topic I'm going to ask and then we can open up for questions, but -- which is essentially the competitive advantages that or KFC part of Yum! or [indiscernible] and KFC perhaps because I know there's -- you talked about how the U.K. is probably most competitive second only in the U.S. Certainly, I'm sure people here have seen emergence of other U.S. brands in chicken brands. So I guess how -- I guess, first of all, how important is it to be first that you've been for? Is like that a big sort of the advantage that you have, the scale, you mentioned that. Maybe just talk just a little bit about what gives you confidence that even as you see some of these other brands emerge in these markets where you're already #1 share that you can sustain that.

Yes. I mean, I think there's a lot of advantages we have given that we've been building these advantages over the last 50, 60 years. Team first helps, but also just developing that brand strength, that brand love. That's not easy to do overnight. And we've been doing that really well in most parts of the world for decades. I think there's another thing that is not quite as easily understood, which is if you were to go with a brand X into a new market, you would likely do with a franchisee partner. Generally, we have some of the top franchisee partners, and we've had them for decades. So we've also been first not only is helped with the consumer, but it's also helping with the franchise landscape to say, here's the person in this country or the group in this country that's absolutely the right partner. And so that's been helpful as well knowing that we have a great franchise community all over the world. We've been -- got the infrastructure to support the brand in addition to taking advantage of our scale. We have 14 business units all over the world that are generally local teams supporting the brand. Here's a good example. We have a business unit here we've invested in over, again, over the last 30, 40 years. We have a great team executing. So there's a lot of benefits that we have that at best will take decades to replicate at worst, it's probably impossible to replicate what we've built over the last 30 or 40 years.

Yes. I know this, the 3C franchise partners, the thing that gets talked about and those are committed, capable and well capitalized.

Yes.

And to your point, being first, you kind of -- you can lock up those best-in-class franchisees.

But within that, so capital is usually the one that people are on to. Capital is the easy part. There's lots of money. Capability is the one I would say is the biggest -- the hardest to do and probably the biggest differentiator that we have is generally speaking, again, everything is generality when you have 100 countries. But generally speaking, we have highly capable franchisees. They are well capitalized, but they also have the capability to execute and not just throw money in it but make sure it actually works. And then the commitment is make sure we're aligned together to grow at the same pace and work together. So there's a lot of partnership that happens in the field.

Right. Yes. No, and I think we can see in some of your peers or competitors, how that has -- there have been hiccups for sure by partnering with -- based on who can -- who's best capitalized as opposed to who's a really good operator, dealing with both. The one of the things in addition to this, I just wanted to -- I do want to touch briefly on the U.S. because one of the things I think that we've seen is as I said that is a very competitive market. And yes, Steve, actually, I think kind of maybe turn the corner on comps. So while it's relatively small from an operating perspective, symbolically, it's important and it is such a competitive market. So maybe if you could talk is a little bit about how

Yes. I mean the first thing I made when I got this job was to put in Capita Golsby into the President roles, Katherine, someone I've known for many years within KFC system. She was the global CMO for KFC. So she's a marker and heart. She knows the consumer really, really well, which is important. She also was a GM of our Canada business and which is the most similar to the U.S. and turned that business around. So I knew she was the right person, and I know it starts with the right team. Just like we have a great team in the U.K. We needed to make sure we have an A team in the U.S. She's to be built her leadership team and it's early days, but it's very encouraging to see that there are some signs of success. They were going a couple of years of minus kind of 5% same-store sales the last 3 quarters have been positive for the first time in 2 years, positive comp. So we're not claiming victory yet, but it's certainly good to see positive same-store sales. And there's a whole comeback plan that I know you know about that Catherine team put together that they're continuing to execute against that. we believe will be what will help turn the brand around.

I see. Okay. So it's -- yes, it's not as if everybody vacated the category.

So did not make it category. It's still a fast-growing category.

Yes. But she's implemented some really important changes. I think we have maybe 5 or 10 more minutes, so I'm open it for questions for people in the room, but also I will keep asking if we don't have anything. I think one -- okay, so I will ask 1 question that came up last -- in the meetings yesterday, GLP-1, it's funny as an American, I it seems like the perspective is different. We just don't see it. I think in the data, and I'll give you sort of leap to talk about it, but it is something that has come up a lot in my conversations since I've been in Europe. So maybe if you could talk about the U.S. specifically and kind of what you are or not seeing?

Yes. I mean, you know better than me the GLP-1 usage has been increasing over the last few years. If I talk about U.S., they're saying store sales rate has increased during that same time. So they were gone from kind of mid comps to the [indiscernible] KFC U.S. went from minus 5 to plus 1 or plus tubes. So there's -- we haven't seen in the data a material impact from GLP-1. And I would say we have more control on how to move the business that is outside of our control. So there's always going to be some macro trends that we do anything about it is how do we lean into them. So I think one trend that's happening in regard with or without GLP-1 is more protein is what a consumer wants. They want smaller sizes, more snackable. So we talk about the snacking occasion is one that we're trying to lean into. Protein is good if you're in the chicken business because that's high in protein. So we can maintain our relevancy across folks want more smaller portion sizes and more protein. We can deliver that. It's just saying in touch with our consumer and making sure we meet the consumer where they are. And the benefit snacking occasion for me is also that you can get a lower price point, sometimes allows consumers access your brand that maybe wouldn't have otherwise, especially outside the U.S., if you can get that price point, right?

That's interesting right. I mean I think we've seen a little bit of it in the U.S., which is -- it's hard to distinguish how much of these smaller portions are consumers gravitating label, a lot of is the value proposition. So it's sort of -- it plays to both of those trends, which is a good question here.

Question I just saw these are -- what does that you can comment on that?

Well, yes. So the news was May, this morning Eastern time that we concluded the Pizza strategic review. So what that means going forward for Yum! is that we have more resources, more management attention to dedicate 2 of our higher growth brands. We'll see that the transaction landed in a very good place in China acquiring their revenues, their royalty stream and long-range capital acquiring the rest of Pizza Hut, which is a tremendous operating partner in the private equity space. So I think we landed in fantastic areas for both parts of the business, and it really allows you to unlock shareholder value. both with what we can do with the proceeds, but also the attention on KFC.

And from a KFC perspective, it doesn't really change how operate on a day-to-day basis or how the team operates on a day basis, Chris, CEO has made clear that Sean and I, Sean, my counterpart at Taco Bell, you be 100% focused on our brands, we have been and will continue to be. So I think there's probably a more question for Yum!, but for KFC, it's business as usual.

Yes. So thank you. Maybe I'll close out a little bit. I think we're -- I think we have a few more minutes, but I'll keep [indiscernible] Maybe I'll end with Chris he's new, right? -- ish, I mean we typically or historically, we've seen people in his role have been young lifers. I guess, to the extent that you can or will, maybe you could just talk about like what has that meant in contractors, predecessors, I guess, what has he done differently? Maybe how would you characterize his leadership style as you think about kind of the strategic priorities, maybe how they've shifted or what we should expect from here?

Yes. I mean I've been around a long time, so I've seen all 4 of our CEOs. All 4 them are very different and they all have been very effective. I think Greg Grey added something to what David Novak had done, who was our original CEO and amazing David Gibbs that is something that Gregory did, and Chris is going to add something to what David did or their legacy. So Chris, one made a big bold decision very early on, which just referenced, which I think was not an easy decision to make and very bold. So it shows how he thinks and that he's not in afraid. But I think just on personality, he came from McKinsey originally, so he's got a big broad strategic mind. He challenges me strategically. He helps make our strategy sharper as KFC and as a Yum, he is very data driven, which I appreciate as well that there's a lot of data that goes behind all of our thinking of our decision-making. So I think I'm confident that Yum!'s in a good spot with Chris, we will continue to grow, and it's been great so far in the last, I don't know, 6 to 9 months since he's taken over. It's been good timing because I relatively new in role as well. So we've gotten to grow together in the role.

Great. I think that's a good place to close. Thank you so much for joining us.