Q4 2023 Yum! Brands Inc Earnings Call

Operator: Hello everyone, and welcome to the Yum! Brands Inc. 2023 fourth quarter earnings call. My name is Charlie, and we'll be coordinating the call today.

Hello, everyone and welcome to the Yum Brands, Inc, 2023 fourth quarter earnings call.

Shirley: My name is Shirley and will be coordinating the call today.

Operator: You will have the opportunity to ask a question at the end of the presentation. If you'd like to submit a question, please press star followed by one on your telephone keypad. Please note that we will only take one question from each analyst before moving on to the next questioner. I will now hand you over to our host, Matt Morris, Head of Investor Relations, to begin. Matt, please go ahead.

Shirley: You will have the opportunity to ask a question at the end of the presentation, if you'd like to register a question. Please press star followed by one on your telephone keypad.

Shirley: Please note that we will only be taking one question from each analyst before moving onto the next questioner.

MS. Morris: I will now hand, you over to our host MS. Morris head of Investor Relations to begin ma'am. Please go ahead. Thanks, operator, good morning, everyone and thank you for joining us on our call today are David Gibbs, our CEO, Chris Turner, our CFO and Dave Russell, Our senior Vice President and corporate controller following remarks from David and Chris We'll open the call to questions.

Matt Morris: Thanks, Operator. Good morning, everyone, and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Before we get started, please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. Furthermore, all forward-looking statements are made only as of the date of this call. It should be considered in conjunction with the cautionary statements on earnings release and the risk factors included in our filings with the SEC.

Before we get started please note that this call includes forward looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements.

All forward looking statements are made only as of the date of this call should be considered in conjunction with the cautionary statements on our earnings release and the risk factors included in our filings with the SEC. In addition, please refer to our earnings release and the relevant sections of our filings with the SEC to find disclosures definitions and reconciliations of non-GAAP financial measures and other metrics that you used on today's.

Matt Morris: In addition, please refer to our earnings release and the relevant sections of our filings with the SEC to find disclosures, definitions, and reconciliations of non-GAAP financial measures and other metrics used on today's call. Please note that during today's call, all system sales growth and operating profit growth results exclude the impact of foreign currency. As a reminder, several of Yum! Brands' business units report on a period calendar basis, including all U.S. and Canada brands, KFC UK, and KFC Australia. When forecasting 2024, please keep in mind that this year will include an extra week in the fourth quarter for those entities. For more information on our reporting calendar for each market, please visit the financial reports section of our website. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback.

MS. Morris: Call. Please.

MS. Morris: Please note that during today's call all system sales growth and operating profit growth results exclude the impact of foreign currency.

MS. Morris: As a reminder, several of Yum brands business unit to report on a period calendar basis, including all U S and Canada brands, KFC U K and a KFC Australia my.

MS. Morris: We're forecasting 2024, please keep in mind that this year will include an extra week in the fourth quarter for those entities for more information on our reporting calendar for each market. Please visit the financial reports section of our website.

MS. Morris: We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback, we would like to make you aware of upcoming Yum investor events in the following our first quarter earnings will be released on May <unk>. The conference call on the same day.

Matt Morris: We would like to make you aware of upcoming Yum! investor events. Our first quarter of earnings will be released on May 1st, and the conference call will be on the same day. Finally, please mark your calendars for an in-person Taco Bell Consumer Day in December at the Taco Bell headquarters in Irvine, California. Stay tuned for more details and invitations to follow. Now, I'd like to turn the call over to David Gibbs.

MS. Morris: Finally, please mark your calendars for an in person talk about consumer day in December that talk about headquarters in Irvine, California.

MS. Morris: For more details and invitations to follow now I'd like to turn the call over to David Gibbs. Thank you, Matt and good morning, everyone.

David W. Gibbs: Thank you, Matt, and good morning, everyone. Before I discuss our results, I want to express our continued concern for those impacted by the ongoing conflict in the Middle East. We continue to prioritize the safety and well-being of our franchisees and employees in the region. Turning to 2023, it was a remarkable year for Yum! brands as we crossed the $60 billion system sales threshold and exceeded all aspects of our long-term growth algorithm. Despite facing numerous challenges around the world, our incredible teams delivered another exceptional year of growth across our business. We set an industry development record for the third straight year, we made massive strides in scaling our proprietary digital and AI-driven ecosystem, and we continued to build a talent base that I believe is the best in the industry.

David W. Gibbs: Before I discuss our results I wanted to express our continued concern for those impacted by the ongoing conflict in the Middle East, we continue to prioritize the safety and well being of our franchisees and employees in the region.

David W. Gibbs: Turning to 2023, it was a remarkable year for Yum brands as we cross through 60 billion dollar system sales threshold and exceeded all aspects of our long term growth algorithm.

David W. Gibbs: Despite facing numerous challenges around the world our incredible teams delivered another exceptional year of growth across our business. We've said an industry development record for the third straight year, we made massive strides in scaling our proprietary digital and AI driven ecosystem and we continued to build the talent base that I believe is the best.

David W. Gibbs: And the industry.

David W. Gibbs: We delivered 6% unit growth, 10% system sales growth, and 12% core operating profit growth. We enter 2024 having opened just shy of 10,000 net new restaurants over the past three years and are well on our way to reaching 60,000 restaurants this year. This growth would not be possible were it not for our world-class franchise partners, who continue to deploy their own capital based on their confidence to invest behind the long-term potential of our brand. Along with the record-breaking success we've had in development, our digital strategy has helped propel top-line results and improve bottom-line profits. Digital sales approached $30 billion in 2023, up 22% year over year, with mix now exceeding 45%.

David W. Gibbs: We delivered 6% unit growth, 10% system sales growth and 12% core operating profit growth.

David W. Gibbs: We entered 2024, having opened just shy of 10000 net new restaurants over the past three years and are well on our way to reaching 60000 restaurants. This year.

David W. Gibbs: This growth would not be possible were not for a world class franchise partners, who continue to deploy their own capital based on their confidence to invest behind the long term potential of our brand.

David W. Gibbs: Hello, with the record breaking success, we've had on development of our digital strategy has helped propel topline results and improve bottom line profit.

David W. Gibbs: Digital sales approached $30 billion in 2023 up 22% year over year with mix now exceeding 45%.

David W. Gibbs: At the same time, we have accelerated the deployment of our proprietary technologies to optimize back-of-house operations and make it easier to run our restaurants. In doing so, we are equipping our franchise partners with distinctive capabilities that differentiate them from the competition, especially in emerging markets. I'll now share some more details on the fourth quarter specifics. During the quarter, top-line sales were impacted by the conflict in the Middle East region, with varying degrees of impact across markets in the Middle East, Malaysia, and Indonesia.

David W. Gibbs: At the same time, we have accelerated the deployment of our proprietary technologies to optimize back of house operations and make it easier to run our restaurants and.

David W. Gibbs: In doing so we are equipping our franchise partners with distinctive capabilities that differentiate them from the competition, especially in emerging markets.

David W. Gibbs: I'll now share some more details on the fourth quarter specifically.

David W. Gibbs: During the quarter topline sales were impacted by the conflict in the middle East region with varying degrees of impact across markets in the middle East in Malaysia and Indonesia.

David W. Gibbs: This represented a low single-digit headwind to Yum!'s overall fourth-quarter same-store sales growth. This trend has continued into the first quarter, and we expect the sales impact to decrease over the course of 2020. Key to our growth is the performance of our twin growth engines, KFC International and Taco Bell US, which account for approximately 70% of Yum's system sales and roughly 80% of Yum's division operating profit. In 2023, KFC International opened nearly 2,700 new restaurants, reaching 10% growth, with restaurants opening across 96 countries. Additionally, more than 80% of unit growth came from our 15 publicly traded franchisees. Entering 2024, I have strong confidence in the durability of KFC's global expansion, for which we continue to see an incremental 50,000 restaurant opportunity over the long term. On a global basis, Taco Bell crossed the $15 billion system sales milestone this year, reflecting the growing scale of this powerhouse brand.

David W. Gibbs: This represented a low single digit headwinds <unk> overall fourth quarter same store sales growth. This trend has continued into the first quarter and we expect the sales impact to decrease over the course of 2024.

David W. Gibbs: Key to our growth is the performance of our twin growth engines, KFC International and Taco Bell U S, which account for approximately 70% of Yum system sales and roughly 80% of young division operating profit.

David W. Gibbs: In 2023, KFC International opened nearly 2700, new restaurants, reaching 10% growth with restaurants opened across 96 countries.

David W. Gibbs: More than 80% of unit growth came from our 15 publically traded franchisees.

David W. Gibbs: Entering 2024, I have strong confidence in the durability of Kfc's global expansion for which we continue to see an incremental 50000 restaurant opportunity over the long term.

David W. Gibbs: On a global basis, Taco bell across the $15 billion system sales milestone this year, reflecting the growing scale of this powerhouse brand.

David W. Gibbs: Turning to Taco Bell U.S., which contributes more than 75 percent of our U.S. divisional operating profit, the brand maintained its two-year same-store sales trend in the fourth quarter, outperforming the QSR index. Taco Bell continued to deliver industry-leading margins at 24% this year, while at the same time leading the QSR industry in several key value perception indicators. Now, I'll discuss our relevant, easy, and distinctive brands, or REDD for short, followed by our unrivaled culture and talent and smart growth strategy. Chris will then provide an update on our fourth-quarter results and balance sheet position, followed by our bold restaurant development and unmatched operating capability. Starting with the KFC division, which accounts for 50% of our divisional operating profit and will soon cross the incredible milestone of 30,000 units. For the year, system sales grew 12%, with 8% unit growth and 7% same-store sales growth. For the quarter, KFC achieved 7% system sales growth, owing to 8% unit growth and 2% same-store sales growth. However, sales trends decelerated during the quarter in several markets as a result of the conflict in the Middle East.

David W. Gibbs: Turning to Taco Bell U S, which contributes more than 75% of our U S. Divisional operating profit the brand maintained its two year same store sales trend in the fourth quarter outperforming the <unk> industry.

David W. Gibbs: Taco Bell continued to deliver industry, leading margins at 24% this year, while at the same time, leading the <unk> industry in several key value perception indicators.

David W. Gibbs: Now I will discuss our relevant easy and distinctive brands or red for short followed by our unrivaled culture and talent and good growth strategy.

David W. Gibbs: Chris will then provide an update on our fourth quarter results and balance sheet position, followed by our bold restaurant development and unmatched operating capabilities.

David W. Gibbs: Starting with the KFC division, which accounts for 50% of our divisional operating profit and will soon cross that incredible milestone of 30000 units.

David W. Gibbs: For the year system sales grew 12% with 8% unit growth and 7% same store sales growth.

David W. Gibbs: For the quarter KFC achieved 7% system sales growth, owing to 8% unit growth and 2% same store sales growth.

David W. Gibbs: Sales trends decelerated during the quarter in several markets as a result of the conflict in the middle East.

David W. Gibbs: KFC China grew system sales by an impressive 20% during the quarter. We had several other standout markets this quarter, including 16% system sales growth in Latin America and 13% system sales growth in both Africa and Thailand. In Latin America, we targeted new consumers and day parts using compelling value offers, and we expanded our KFC Original Nugget. In Africa, the team boosted its breakfast offering with new beverages, including signature coffees at a great price. The Thailand market saw strong transaction growth driven by smart value offerings across all dayparts. At KFC U.S., same-store sales were flat this quarter, with trends on a two-year basis remaining consistent from the prior quarter.

David W. Gibbs: AFC, China grew system sales by an impressive 20% during the quarter.

David W. Gibbs: We had several other standout markets this quarter, including 16% system sales growth in Latin America, and 13% system sales growth in both Africa and Thailand.

David W. Gibbs: In Latin America, we targeted new consumers and day parts using compelling value offers and we expanded our KFC original nuggets.

David W. Gibbs: In Africa, the team boosted its breakfast day part with new beverages, including signature coffee is at a great price.

David W. Gibbs: Thailand market saw strong transaction growth driven by smart value offerings across all day parts.

David W. Gibbs: At KFC U S same store sales were flat this quarter with trends on a two year basis remaining consistent from the prior quarter and.

David W. Gibbs: In Q1, the team has planned a range of exciting initiatives, including the Smash Potato Bowl, the first bowl innovation since 2019, and the rollout of KFC's first Loyalty Rewards program. Moving on to the Taco Bell division, which represents 36% of our divisional operating profit. At Taco Bell U.S., fourth-quarter same-store sales grew 3% and 15% on a two-year basis, outperforming the QSR industry by three points. Taco Bell faced tough times early in the quarter, but finished the year strong with comps up over 5 percent in the final period. The quarter included a record digital sales mix, which reached 31%, up 7 points year over year.

David W. Gibbs: In Q1, the team has planned a range of exciting initiatives, including the smashed potato Bowl. The first ball innovation since 2019, and the rollout of Kfc's first loyalty rewards program.

David W. Gibbs: Moving on to the Taco Bell Division, which represents 36% of our divisional operating profit.

At Taco Bell U S fourth quarter same store sales grew 3% and 15% on a two year basis outperforming the <unk> industry by three points.

David W. Gibbs: Talk about U S faced tough left early in the quarter, but finished the year strong with comps up over 5% in the final period.

David W. Gibbs: The quarter included a record digital sales mix, which reached 31% up seven points year over year.

David W. Gibbs: Growth in kiosk sales was a large driver, with the in-store kiosk sales mix increasing 15 points from Q4 last year. Optimizing our digital channels is also contributing to growth in Taco Bell's loyalty program, with active loyalty users growing 17% in 2023. The team plans to bring exciting enhancements to the loyalty program in the second half of 2024 to capitalize on digital engagement and provide an easier experience for customers to earn and redeem points.

David W. Gibbs: Growth in kiosk sales, where it was a large driver with in store kiosk sales mix, increasing 15 points from Q4 of last year.

David W. Gibbs: Optimizing our digital channels is also contributing to growth and Taco Bell's loyalty program with active loyalty to users growing 17% in 2023.

David W. Gibbs: The team plans to bring exciting enhancements to the loyalty program in the second half of 2024 to capitalize on digital engagement and provide an easier experience for customers to earn and redeem points.

David W. Gibbs: Well, not surprising, I'm always proud to see our incredible Taco Bell team's efforts being recognized, with Entrepreneur Magazine naming the brand the number one franchisor for the fourth year running, and with Nations Restaurant News crowning Taco Bell the 2023 brand icon. With an unprecedented range of exciting innovations launching this year, including at least one new product every five weeks, twice the rate of 2023, I'm confident Taco Bell will remain a brand icon for years to come. At Taco Bell International, we delivered 14% unit growth this year. The majority of this growth was contributed by our big four scaled markets, including Spain, which opened 19 new units this year and is on track to reach 150 units in Q1. As we enter 2024, we will work with our franchise partners in these markets to build brand and category awareness for Mexican food, particularly in Europe and Asia, leaning into fan favorites and expanding protein offerings.

David W. Gibbs: While not surprising I'm always proud to see our incredible Taco Bell team's efforts being recognized with entrepreneur magazine naming the brand the number one franchise or for the fourth year running and with Nations restaurant News crowding Taco Bell the 2023 brand icon.

David W. Gibbs: With an unprecedented range of exciting innovations launching this year, including at least one new product every five weeks twice the rate of 2023, I'm confident Taco Bell will remain a brand icon for years to come.

David W. Gibbs: At Taco Bell International we delivered 14% unit growth. This year. The majority of this growth was contributed by our big four scaled markets, including Spain, which opened 19 new units. This year and is on track to reach 150 units in Q1.

David W. Gibbs: As we enter 2024, we will work with our franchise partners in these markets to build brand and category awareness with Mexican food, particularly in Europe, and Asia leaning into fan favorites and expanding protein offerings.

David W. Gibbs: Additionally, we are working on scaling and entering new markets that will enable a broader base from which to grow. Next, the Pizza Division, which comprises 15% of our divisional operating profit and will soon eclipse 20,000 units. In Q4, system sales grew 1%, with 4% unit growth and a 2% decline in same-store sales. However, sales trends decelerated during the quarter in several markets as a result of the conflict in the Middle East.

David W. Gibbs: Additionally, we are working on scaling and entering new markets that will enable a broader base from which to grow.

David W. Gibbs: Next at the Pizza Hut Division, which comprises 15% of our divisional operating profit and will soon eclipsed 20000 units.

David W. Gibbs: In Q4 system sales grew 1% with 4% unit growth and a 2% decline in same store sales.

David W. Gibbs: Trends decelerated during the quarter in several markets as a result of the conflict in the middle East for.

David W. Gibbs: For the full year, system sales grew 5%, including 4% unit growth and 2% same-store sales growth. However, at Pizza Hut International, same-store sales were flat for the quarter. The team continues to roll out melts across the globe to build the individual eater occasion. Strength in the aggregator channel continues to be a bright spot across several markets, including Canada and Latin America. Buy one, get one deals, coupled with aggregator promotions, drove transaction growth in Canada during the quarter. In Latin America, the promotion of our own digital channels in Brazil, combined with a New York-style pizza, helped boost sales in that market. At Pizza at U.S., same-store sales declined 4% for the quarter while growing 1% for the full year. The Melt's launch and the promotion of the Detroit-style pizza in the prior year contributed to a difficult lap this quarter.

David W. Gibbs: For the full year system sales grew 5%, including 4% unit growth and 2% same store sales growth.

David W. Gibbs: At Pizza Hut International same store sales were flat for the quarter. The team continues to rollout melts across the globe to build the individual either occasion.

David W. Gibbs: Strength in the aggregator channel continues to be a bright spot across several markets, including Canada and Latin America.

David W. Gibbs: Buy one get one deals coupled with aggregator promotions drove transaction growth in Canada during the quarter and.

David W. Gibbs: In Latin America, the promotion of our own digital channels in Brazil, combined with the New York style Pizza helped boost sales for that market.

David W. Gibbs: Our pizza U S same store sales declined 4% for the quarter, while growing 1% for the full year, the <unk> launch and the promotion of the Detroit style pizza in the prior year contributed to a difficult lap this quarter pizza.

David W. Gibbs: Pete.us will face another challenging lap in Q1, as same-store sales increased 8% last year, reflecting a full quarter of sales from the Melts platform and the Big New Yorker. However, we expect performance trends on a two-year basis to improve in the first quarter. In Q1, the team will launch two limited-time offers, including hot honey pizza and wings, a perfect pairing for fans to enjoy in the run-up to the Super Bowl.

David W. Gibbs: Pizza Hut U S will face another challenging lap in Q1 as same store sales increased 8% last year, reflecting a full quarter of sales from the <unk> platform and the Big New Yorker. However, we expect performance trends on a two year basis to improve in the first quarter.

David W. Gibbs: In Q1, the team will launch two limited time offers including Hot Honey Pizza and wings are perfect pairing for fans to enjoin the run up to the Super Bowl.

David W. Gibbs: In the months ahead, the team will be announcing some exciting innovations to the MeltSplit. Lastly, at the Habit Burger Grill, for the full year, system sales grew 6%, led by 8% unit growth. Reflecting on 2023, Habit's new leadership team focused on improving all elements of Habit's operations, including expediting a robust kiosk rollout, implementing a sales-driven labor optimization model, and harnessing Yum!'s co-op purchasing group to lower procurement costs and rationalize SKUs. As a result of these efforts, the team achieved a 380 basis point increase in full-year store-level margins despite softness in sales.

In the months ahead, the team will be announcing some exciting innovations to the melt <unk> platform.

David W. Gibbs: Lastly, at the habit Burger grill for the full year system sales grew 6% led by 8% unit growth.

David W. Gibbs: Reflecting on 2023 habits, new leadership team focused on improving all elements of habits operations, including expediting, our robust kiosk rollout implementing a sales driven labor optimization model and harnessing <unk> co op purchasing group to lower procurement costs and rationalize skus.

David W. Gibbs: As a result of these efforts the team achieved a 380 basis point increase in full year store level margins despite softness in sales.

David W. Gibbs: Now I'll turn to our good growth strategy, starting with our people pillar. We take great pride in developing our talent and ensuring we have a strong bench to drive performance, and we were thrilled to be recognized in Time Magazine's inaugural list of the best companies for future leaders, with Yum! Ranking an impressive 32nd among U.S. companies. The strength of our talent is evident through Sean Tresvant's official transition to Taco Bell Division CEO on January 1st. Sean joined Yum!

David W. Gibbs: Now I'll turn to our good growth strategy, starting with our people pillar, we take great pride in developing our talent and ensuring we have a strong bench to drive performance and we were thrilled to be recognized in time magazine's inaugural list of the best companies for future leaders with Yum ranking and impressive 32nd among U S companies.

David W. Gibbs: The strength of our talent as evidenced through Sean <unk> official transition to Taco Bell Division CEO on January one.

David W. Gibbs: Sean joined <unk> in 2022, and as a visionary business leader with a proven track record of driving transformative brand building through his previous role as the Taco Bell Global Chief brand and strategy Officer.

David W. Gibbs: in 2022 and is a visionary business leader with a proven track record of driving transformative brand building through his previous role as Taco Bell's Global Chief Brand and Strategy Officer. I'd like to again congratulate Sean as he takes the helm at Taco Bell, and I'm confident he and the rest of the team will continue to successfully deliver the brand's long-term global growth strategy. I'd also be remiss if we didn't take another opportunity to recognize Mark King for everything he did as Taco Bell Division CEO to set the brand up for future success, including handpicking Sean as his successor and ensuring that Taco Bell would be in more than capable hands.

David W. Gibbs: To again congratulate John as he takes the helm at Taco Bell and I'm confident he and the rest of the team will continue to successfully deliver the brand's long term global growth strategy.

David W. Gibbs: I'd also be remiss, if we didn't take another opportunity to recognize mark King for everything he did as Taco Bell Division CEO to set the brand up for future success, including hand picking Sean as his successor and ensuring the Taco bell would be and more than capable hands.

David W. Gibbs: On behalf of the entire Yum! system, I want to thank Mark for his people-first leadership that drove strong results, inspired restless creativity, and solidified Taco Bell's unique brand identity that makes it an undisputed global icon. Additionally, Pete's Global Chief Technology Officer, Joe Park, will be moving into the Yum! Chief Digital and Technology Officer role, currently held by Clay Johnson, who will continue as a Senior Advisor.

David W. Gibbs: On behalf of the entire Yum system I want to thank Mark for his people first leadership that drove strong results inspired ruffles creativity and solidified Taco Bell's unique brand identity that makes it an undisputed global icon.

David W. Gibbs: Additionally, Pizza Global Chief Technology Officer, Joe Park will be moving into the <unk> Chief Digital and Technology Officer role currently held by Clay Johnson, who will continue as a senior advisor.

David W. Gibbs: I want to thank Clay for his incredible leadership since joining Yum! in 2019, including developing our digital and technology capabilities from the ground up and establishing Yum! as a clear leader in technology in global QSR. Since joining Yum!, Joe formed our first ever long-range innovation team before moving on to Pizza Hut, our most digital brand, where he partnered with our global operations and technology leaders to deliver new levels of ease to our customers and improved unit economics for our franchisees. I'm confident he is the perfect person to lead us into the next chapter on our digital and technology journey. Moving on to the planet pillar of our good growth strategy. In 2023, we will remain focused on efforts under our priority areas of greenhouse gas reduction and sustainable packaging.

David W. Gibbs: I want to thank clay for his incredible leadership since joining <unk> in 2019, including developing our digital and technology capabilities from the ground up and establishing <unk> as a clear leader in technology and global <unk>.

David W. Gibbs: Since joining Yum, Joe formed our first ever long Rage innovation team before moving onto Pizza Hut are most digital brand, where he partnered with our global operations and technology leaders to deliver new levels of ease to our customers and improved unit economics for our franchisees.

David W. Gibbs: I am confident he is the perfect person to lead us into the next chapter in our digital and technology journey.

David W. Gibbs: Moving on to the planet pillar of our good growth strategy in 2023, we remain focused on efforts under our priority areas of greenhouse gas reduction and sustainable packaging.

David W. Gibbs: We've made progress on our goal of reducing greenhouse gas emissions by nearly 50% by 2030 through investments in renewable energy and energy efficiency in our restaurants and through ongoing commitments with our food suppliers. In terms of packaging, we are increasing our global use of more widely recyclable plastics in our consumer packaging, and we continue to remove plastic packaging in the form of bags and cutlery in addition to eliminating styrofoam.

David W. Gibbs: We've made progress on our goal of reducing greenhouse gas emissions nearly 50% by 2030 through investments in renewable energy and energy efficiencies in our restaurants and through ongoing commitment with our food suppliers in terms of packaging, we are increasing our global use of more widely recyclable plastics in our consumer packaging and we continue to remove plastic packaging in the <unk>.

David W. Gibbs: <unk> bags in cutlery in addition to eliminating styrofoam.

David W. Gibbs: Our continued progress in sustainability has been underscored by several recent recognitions, including being named to the 2024 Dow Jones Sustainability Index North America for the eighth consecutive year and being listed by Newsweek as one of America's most responsible companies for 2024. Before I wrap, I want to pay tribute to our incredible partners at Yum! Chime.

Our continued progress and sustainability has been underscored by several recent recognitions, including being named to the 2020 for Dow Jones Sustainability Index, North America for the eighth consecutive year and being lifted by Newsweek as one of America's most responsible companies for 2024.

David W. Gibbs: Before I wrap I want to pay tribute to our incredible partners at Yum China.

David W. Gibbs: In December, my team and I traveled to Shanghai to meet with CEO Joey Watt and her executive team. That trip reinforced our view that Yum! China is without question the world's most capable restaurant operator. They enable rapid growth and structural cost efficiencies through their dynamic development capabilities and their robust in-house supply chain. Our team sampled amazing new menu items in their innovation kitchen, and we saw firsthand the digital capabilities that enable Yum! China to engage with an astounding 470 million members in its loyalty program.

David W. Gibbs: In December my team and I traveled to Shanghai to meet with CEO, Joey Wat and her executive team.

David W. Gibbs: That trip reinforced our view that Yum, China is without question the world's most capable restaurant operator, they enable rapid growth in structural cost efficiencies through their dynamic development capabilities and their robust in house supply chain.

David W. Gibbs: Our team sampled amazing new menu items in their innovation kitchen, and we saw firsthand the digital capabilities that enable yum, China to engage within astounding 470 million members in its loyalty program.

David W. Gibbs: These advantages enable consistent paybacks of 2-3 years in KFC and Pizza Hut despite evolving market conditions, further testament to their clear competitive advantages in the market. As I look back over the last year, the unique advantages of our diversified system shone through. While the business faced persistent inflation across the globe and navigated shifts in consumer sentiment stemming from regional conflicts, we responded with a focused determination to execute our growth plan, including growing units in 110 countries, meaningfully scaling our technology systems, deepening collaboration across our brands, and delivering both sales and profits well above our long-term growth algorithm. We're confident 2024 will be another banner year with a number of exciting sales driving opportunities, such as enhancing the range of protein offerings at Taco Bell, expanding new category entry points, and significantly boosting the impact of our loyalty program. With a world-class team, globally iconic brands, industry-leading franchisees, and a relentless appetite for growth, the future is brighter than ever, and I am confident that we will continue to maximize value for our With that, Chris, over to you.

David W. Gibbs: These advantages enable consistent paybacks of two to three years in KFC and pizza hut, despite evolving market conditions further testament to their clear competitive advantages in the market.

David W. Gibbs: As I look back over the last year, the unique advantages of our diversified system shown through while the business faced persistent inflation across the globe and navigated shifts in consumer sentiment stemming from regional conflicts.

David W. Gibbs: We responded with a focused determination to execute our growth plan, including growing units and 110 countries.

David W. Gibbs: Meaningfully scaling our technology systems deepening collaboration across our brands and delivering both sales and profits well above our long term growth algorithm.

David W. Gibbs: We're confident 2024 will be another banner year with a number of exciting sales driving opportunities such as enhancing the range of protein offerings at Taco Bell, expanding new category entry points and significantly boosting the impact of our loyalty program.

David W. Gibbs: With a world class team globally iconic brands industry, leading franchisees and a relentless appetite for growth the future is brighter than ever and I am confident that we will continue to maximize value for our shareholders.

David W. Gibbs: With that Chris over to you.

Chris Turner: Thank you, David. And good morning, everyone. Today, I'll discuss our financial results, our bold restaurant development and unmatched operating capability growth drivers, followed by an update on our balance sheet and capital strategy. As David mentioned, 2023 was an exceptional year with Yum! exceeding all components of our long-term growth algorithm. Full year, same store sales grew a very robust 6%. We opened 4,754 gross new units, the equivalent of 13 restaurants a day, or one restaurant roughly every two hours. KFC set a brand development record, opening over 2,700 new units across 97 different countries. I also want to extend congratulations to the Yum!

Chris Turner: Thank you David and good morning, everyone today, I'll discuss our financial results, our bold restaurant development and unmatched operating capability growth drivers followed by an update on our balance sheet and capital strategy.

Chris Turner: As David mentioned 2023 was an exceptional year with <unk> exceeding all components of our long term growth algorithm for.

Chris Turner: Full year same store sales grew a very robust 6%.

Chris Turner: We opened 4754 gross new units.

Chris Turner: Equivalent of 13 restaurants, a day or one restaurant roughly every two hours.

KFC set a brand development record opening over 2700, new units across 97 different countries.

Chris Turner: I also want to extend congratulations to the Yum, China team, who crossed 10000 KFC restaurants, this quarter with nearly 40% of those restaurants built in the last three years.

Chris Turner: The China team, who opened 10,000 KFC restaurants this quarter, with nearly 40% of those restaurants built in the last three years. Turning to our results, full-year system sales grew 10%, with fourth-quarter system sales up 5%, led by 6% unit growth and 1% same-store sales growth. Yum!'s twin growth engines, KFC International and Taco Bell U.S., grew system sales 12% this year. Fourth quarter ex-special general and administrative expenses were $344 million, down 4% year over year due to strict cost control. Reported G&A was $353 million for the quarter, including $9 million in special expenses related to an ongoing resource optimization project. For the full year, ex-special general and administrative expenses were $1.17 billion.

Turning to our results full year system sales grew 10% with fourth quarter system sales up 5% led by 6% unit growth and 1% same store sales growth <unk> twin growth engines, KFC International and Taco Bell U S grew system sales, 12% this year.

Chris Turner: Fourth quarter ex special general and administrative expenses were $344 million.

Chris Turner: Down 4% year over year due to strict cost control.

Chris Turner: Ported G&A was $353 million for the quarter, including $9 million and special expense related to an ongoing resource optimization project.

Chris Turner: For the full year ex special General and administrative expenses were one $1 7 billion.

Chris Turner: Core operating profit grew 8% for the quarter and 12% for the full year. Reported operating profit included a negligible impact in the quarter from foreign currency translation and a $49 million headwind for the full year. Our ex-special tax rate was 26% in the quarter and slightly under 21% for the full year.

Chris Turner: Core operating profit grew 8% for the quarter and 12% for the full year.

Chris Turner: Reported operating profit included a negligible impact in the quarter from foreign currency translation, and a $49 million headwind for the full year.

Chris Turner: Our ex special tax rate was 26% in the quarter and slightly under 21% for the full year fourth quarter ex special EPS was $1 26 a.

Chris Turner: Fourth quarter ex-special EPS was $1.26, a decline year-over-year stemming from a 23-cent headwind from fluctuations in our quarterly tax rate that drove our effective tax rate above our guided range in 2023 and below our guided range in 2022. Full year ex-special EPS was $5.17, a 14% increase year over year. Now, let me share some greater detail on our fourth quarter unit growth in the context of our bold restaurant development growth record. Yum!

Chris Turner: A decline year over year stemming from a 23 cent headwind from fluctuations in our quarterly tax rate that drove our effective tax rate above our guided range in 2023 and below our guided range in 2022.

Chris Turner: Full year ex special EPS was $5 17.

Chris Turner: 14% increase year over year.

Chris Turner: Now, let me share some greater detail on our fourth quarter unit growth in the context of our bold restaurant development growth driver yes.

Chris Turner: opened just shy of 1,900 units in the fourth quarter, with approximately 87% of that growth coming from our international market. The KFC division was the largest driver, finishing the year with units up 8%. China, India, Thailand, South Africa, and Spain drove KFC's development this year and were part of a group of 15 countries that grew their unit count by more than 25 restaurants.

Chris Turner: <unk> opened just shy of 9800 units in the fourth quarter with approximately 87% of that growth coming from our international markets.

Chris Turner: KFC Division was the largest driver, finishing the year with units up 8%.

Chris Turner: China, India, Thailand, South Africa, and Spain drove Kfc's development. This year and we're part of a group of 15 countries that grew unit count by more than 25 restaurants.

Chris Turner: In December, we were pleased to announce that we signed an agreement to acquire 218 KFC restaurants from our largest franchisee in the UK. This is an exciting opportunity for us to purchase restaurants with average unit volumes above $2 million and healthy store-level cash margins in a market where we have an exceptional local management team who run our existing KFC UK equity store base. We expect the addition of these units to provide approximately $40 million of incremental EBITDA in the 12 months after acquisition, although the benefit to our operating profit will be largely offset over the next several years due to depreciation and amortization, including amortization of reacquired franchise rights, which will be reflected in store level margins post acquisition. We anticipate this transaction to close during the second quarter. At Pizza Hut, the division opened 575 units for the quarter and nearly 1,600 units for the year, a record for the brand. There were 73 markets that contributed to the brand's development.

Chris Turner: In December we were pleased to announce that we signed an agreement to acquire 218, KFC restaurants from our largest franchisee in the U K.

Chris Turner: This is an exciting opportunity for us to purchase restaurants with average unit volumes above $2 million and healthy store level cash margins in a market, where we have an exceptional local management team who run our existing KFC U K equity store base.

Chris Turner: We expect the addition of these units to provide approximately $40 million of incremental EBITDA in the 12 months after acquisition, while the benefit to our operating profit will be largely offset over the next several years due to depreciation and amortization, including amortization of reacquired franchise rights, which will be reflected in store level.

Chris Turner: <unk> post acquisition.

Chris Turner: We anticipate this transaction to close during the second quarter at Pizza Hut. The Division opened 575 units for the quarter and nearly <unk> hundred units for the year a record for the brand.

Chris Turner: There were 73 markets that contributed to the brand's development, China, India, Turkey, Japan, and Canada led pizza huts growth internationally with more than 900 units opened across those countries. The.

Chris Turner: China, India, Turkey, Japan, and Canada led Pizza Hut's growth internationally with more than 900 units opened across those countries. The Taco Bell division opened 201 units in Q4 and 417 units for the full year. In the U.S., unit development was also on fire with 244 gross new units. Our longer-term growth engines, which include Habit and Taco Bell International, opened 208 units on a combined basis and grew unit count by 12 percent. We finished 2023 with unit growth occurring in 110 countries. We now have units in 293 brand-country combinations, providing an unmatched level of diversity geographically, as well as in consumer preference with leading brands in the chicken, pizza, and Mexican categories. Looking ahead, we expect development in 2024 to continue at a robust pace.

Chris Turner: Taco Bell Division opened 201 units in Q4, and 417 units for the full year in the U S unit development was also on fire with 244 gross new units.

Chris Turner: Our longer term growth engine that include habit and Taco Bell International opened 208 units on a combined basis and grew unit count by 12%.

Chris Turner: We finished 2023 with unit growth occurring in 110 countries.

Chris Turner: We now have units in 293 brand country combinations, providing an unmatched level of diversity geographically as well as in consumer preference with leading brands and the chicken pizza and Mexican categories.

Chris Turner: Looking ahead, we expect development in 2024 to continue at a robust pace in.

Chris Turner: In the first half, KFC will reach an incredible 30,000 units, and Pizza Hut will top 20,000 units. At KFC, we enter 2024 with more development commitments than last year. We recently returned from an inspiring visit to China in December and were reminded of the incredible runway for KFC's growth in the market, where Yum! China has over 10,000 KFC restaurants yet serves only one-third of the population.

Chris Turner: In the first half KFC will reach an incredible 30000 units and Pizza hut will top 20000 units.

Chris Turner: At KFC, we enter 2024 with more development commitments than last year.

Chris Turner: We recently returned from an inspiring visit to China in December and we're reminded of the incredible runway for Kfc's growth in the market, where Yum, China has over 10000 KFC restaurants, yet serves only one third of the population.

Chris Turner: Taco Bell International will continue to expand its footprint, though the growth rate will temporarily slow as the brand looks to stabilize same-store sales performance in emerging markets and partner with franchisees to optimize site selection, leveraging KFC and Pizza Hut market mapping data. Moving on to our unmatched operating capabilities growth driver, which I'll speak to through the lens of our digital strategy involving our easy experiences, easy operations, and easy insights pillars. 2023 was a landmark year for successfully scaling our suite of proprietary technologies across our global restaurant base. Beginning with our Easy Experiences pillar, we have successfully deployed our Yum!

Chris Turner: Taco Bell International will continue to expand their footprint, though the growth rate will temporarily slow as the brand looks to stabilize same store sales performance in emerging markets and partner with franchisees to optimize site selection, leveraging KFC and pizza hut market mapping data.

Chris Turner: Moving on to our unmatched operating capabilities growth driver, which I'll speak to through the lens of our digital strategy involving our easy experiences easy operations and easy insights pillars.

Chris Turner: 2023 was a landmark year for successfully scaling our suite of proprietary technologies across our global restaurant base.

Chris Turner: Beginning with our easy experience as pillar, we have successfully deployed our young commerce platform to KFC U S and Taco Bell U S and are continuing to onboard the pizza Hut U S system.

Chris Turner: e-commerce platform to KFC U.S. and Taco Bell U.S. and are continuing to onboard the Pizza Hut U.S. system. Looking ahead, we will start to deploy this platform to two Pizza Hut international markets in the first half of 2024. Kiosks remain an important priority in delivering a consistent customer experience, driving ticket uplift, and streamlining our restaurant operations.

Chris Turner: Looking ahead, we will start to deploy this platform to two pizza hut international markets in the first half of 2024.

Chris Turner: Kiosks remain an important priority and delivering a consistent customer experience driving ticket uplift and streamlining our restaurant operations globally, we've increased our kiosk penetration in KFC restaurants by 70% over the past year outside of China. We ended the year with kiosks in approximately 500.

Chris Turner: Globally, we've increased our kiosk penetration in KFC restaurants by 70% over the past year outside of China. We ended the year with kiosks in approximately 500 KFC U.S. restaurants, a huge step up from nearly zero only two quarters before. Our KFC Latin America markets also began to roll out of kiosks using our proprietary TikTok platform this year, and they plan to triple the restaurant count in 2024.

Chris Turner: KFC U S restaurants, a huge step up from nearly zero only two quarters before our KFC Latin American markets also began the rollout of kiosks using our proprietary tick took platform this year and plan to triple the restaurant count in 2024.

Chris Turner: Within easy operations, this quarter, we continued to fire on all cylinders, significantly expanding the rollout of our world-class technology products and platforms. Poseidon, our proprietary point-of-sale system, which was expanded to an additional 1,700 Taco Bell U.S. restaurants, resulting in 5,000 restaurants having been onboarded this year. We also ramped up the deployment of our Dragontail AI platform, with an additional 1,000 locations onboarded this quarter and over 4,000 new restaurants added for the full year. We now have Dragontail in place in nearly 7,000 restaurants across Pizza Hut and KFC. Our 2024 rollout will include launching Dragontail in nearly 6,000 more restaurants, further evidence of our ability to scale software globally at a rapid pace. Our AI-driven automated inventory management system is now being used in 90% of our KFC U.S. locations and roughly half of our Taco Bell U.S. restaurants, driving more seamless and more accurate inventory ordering processes for our restaurant managers.

Chris Turner: Within easy operations. This quarter, we continued to fire on all cylinders significantly expanding the rollout of our world class technology products and platforms Poseidon, our proprietary point of sale system, which was expanded to an additional 1700 Taco Bell U S restaurants, resulting in 5000 restaurants have.

Chris Turner: <unk> been onboard this year.

Chris Turner: We also ramped up the deployment of our Dragon AI platform with an additional 1000 locations on boarded this quarter and over 4000, new restaurants added for the full year.

Chris Turner: We now have dragon tail in place in nearly 7000 restaurants across pizza hut and KFC.

Chris Turner: Our 2024 rollout will include launching dragon tail in nearly 6000 more restaurants.

Chris Turner: Further evidence of our ability to scale software globally at a rapid pace.

Chris Turner: Our AI driven automated inventory management system is now being used in 90% of our KFC U S locations and roughly half of our Taco Bell U S restaurants, driving more seamless and more accurate inventory ordering processes for our restaurant managers more than 3000 additional restaurants across.

Chris Turner: More than 3,000 additional restaurants across KFC, Taco Bell, and Pizza Hut will be onboarded to the Automated Inventory Management System in 2024. Finally, our custom-built super app, which provides smart, automated routine management tools for our restaurant managers, is now used in over 8,500 Pizza Hut restaurants globally, and KFC has plans to roll this out to approximately 6,000 restaurants in 2024.

Chris Turner: KFC Taco Bell and Pizza hut will be onboard to the automated inventory management system in 2024.

Chris Turner: Finally, our custom built Super App, which provides smart automated routine management tools for our restaurant managers is now used in over 8500 Pizza hut restaurants globally and KFC has plans to roll this out to approximately 6000 restaurants in 2024 for.

Chris Turner: For the third pillar of our easy strategy, easy insights, we are fully leveraging our unique global scale to bring new insights and enable even smarter and quicker decision making. This year, we expanded the reach of our Yum! Global Data Hub, which captures the vast majority of global transaction-level sales data and other key operational and customer metrics.

Chris Turner: For the third pillar of our easy strategy easy insights, we are fully leveraging our unique global scale to bring new insights and enable even smarter and quicker decision making.

Chris Turner: This year, we expanded the reach of our young global data hub, which captures the vast majority of global transaction level sales data and other key operational and customer metrics.

Chris Turner: In 2024, our Easy Insights team will develop and test new AI-driven capabilities that pull from the global data hub and integrate into our own technology platforms, including personalized upsell recommendations for customers ordering on our digital platforms, intelligent menu pricing recommendations, and dynamic restaurant routines for general management. Stepping back, it's incredibly encouraging to see this digital ecosystem come to life in our restaurants. By the end of 2024, we are likely to have our Taco Bell U.S. restaurants operating substantially all of these key technologies through the Yum! ecosystem.

Chris Turner: In 2024 are easy insights team will develop and test new AI driven capabilities that pull from the global data hub and integrate into our own technology platforms, including personalized upsell recommendations for customers ordering on our digital platforms intelligent menu pricing recommendations and dynamic restaurant routines.

Chris Turner: For general managers.

Chris Turner: Stepping back it's incredibly encouraging to see this digital ecosystem come to life in our restaurants.

Chris Turner: By the end of 2024, we are likely to have our Taco Bell U S restaurants operating substantially all of these key technologies through the arm ecosystem from the Poseidon point of sale system to the young commerce platform, our automated inventory management software and the tracks restaurant management application truly a power.

Chris Turner: From the Poseidon point of sale system to the Yum! Commerce platform, our automated inventory management software, and the Trax restaurant management application. Truly a power brand powered by world-class technology. Next, I'll provide an update on our balance sheet and liquidity position. Our net leverage ratio ended the year at 4.2x, down from 5x last year. As we had previously shared, we had planned for our net leverage ratio to drift lower during 2023 based on pausing new debt financing, paying our $279 million revolver balance in Q1, and retiring a $325 million bond maturity in Q4. Our capital expenditures for the quarter, net of re-franchising proceeds, were $103 million. Our net capital expenditures for the year came in at $225 million, reflecting $60 million in re-franchising proceeds and $285 million in gross capex. For the full year, we repurchased approximately 400,000 shares, totaling $50 million.

Chris Turner: <unk> powered by World Class technology.

Speaker Change: Next I'll provide an update on our balance sheet and liquidity position. Our net leverage ratio ended the year at four two times down from five times last year.

Speaker Change: As we had previously shared we had plan for our net leverage ratio to drift lower during 2023 based on pausing new debt financing paying our $279 million revolver balance in Q1, and retiring a $325 million bond maturity in Q4.

Speaker Change: Our capital expenditures for the quarter net of Refranchising proceeds were $103 million.

Speaker Change: Our net capital expenditures for the year came in at $225 million.

Speaker Change: <unk> $60 million and Refranchising proceeds and $285 million in gross capex.

Speaker Change: For the full year, we repurchased approximately 400000 shares totaling $50 million.

Chris Turner: With the November bond maturity behind us and no significant debt maturities in 2024 or 2025, we will return to using our excess free cash flow to fund share repurchases and any accretive investments we choose to make, for example, the UK KFC acquisition. In addition, we were pleased to recently announce an 11% increase in the dividend. I will reiterate that our capital priorities are guided by maximizing shareholder value. This includes investing in the business, maintaining a resilient balance sheet, offering a competitive dividend, and continuously evaluating the optimal use of our excess cash. Finally, let me shed some light on how 2024 is shaping up. Despite a more challenging operating environment, including the impact of the conflict in the Middle East, we expect to deliver our long-term growth algorithm in 2024, which includes core operating profit growth of at least 8%, excluding the benefit of the 53rd week.

Speaker Change: With the November bond maturity behind Us and no significant debt maturities in 2024 or 2025, we will return to using our excess free cash flow to fund the share repurchases and any accretive investments we choose to make for example, the UK KFC acquisition.

Speaker Change: In addition, we were pleased to recently announce an 11% increase to the dividend I will reiterate that our capital priorities are guided by maximizing shareholder value. This includes investing in the business, maintaining a resilient balance sheet offering a competitive dividend and continuously evaluating the optimal use of our excess cash.

Speaker Change: Finally, let me shed some light on how 2024 is shaping up despite a more challenging operating environment, including the impact of the conflict in the middle East we expect to deliver our long term growth algorithm. In 2024. This includes core operating profit growth to be at least 8% excluding.

Speaker Change: The benefit of the 50 <unk> week we.

Chris Turner: We have a strong unit development pipeline, thanks to attractive and reliable paybacks and growth-minded franchisees, which gives us confidence in our ability to deliver strong system sales growth. For the shape of the year, we expect top-line trends in Q1 to be the most challenged, with same-store sales trends improving sequentially as lapses and a range of sales driving initiatives take hold. We expect full-year Taco Bell company-operated margins to be in the range of 23 to 24 percent.

Speaker Change: We have a strong unit development pipeline, thanks to attractive and reliable paybacks and growth minded franchisees, which gives us confidence in our ability to deliver strong system sales growth.

But the shape of the year, we expect topline trends in Q1 to be the most challenged with same store sales trends improving sequentially as lapses in a range of sales driving initiatives take hold we expect full year Taco Bell company operated margins to be in the range of 23% to 24%.

Chris Turner: We anticipate flat ex-special GNA growth as we manage spend across the organization. However, GNA can vary due to the nature of our performance-based compensation. Lastly, we expect our full-year tax rate to be in the range of $21,000 to $23,000.

Speaker Change: We anticipate flat ex special G&A growth as we manage spend across the organization remember that G&A can vary due to the nature of our performance based compensation plan.

Speaker Change: Lastly, we expect our full year tax rate to be in the range of 21% to 23%.

Operator: To close, I am incredibly proud of our performance this year. Sales trends became a little more challenging in the second half, and yet we delivered profit growth above our algorithm as our teams quickly adjusted marketing calendars to meet demand and kept a strict focus on managing costs. It is our team's relentless focus to stay vigilant on all areas of the business that gives me confidence we will deliver our long-term growth algorithm in 2024. The unbeatable combination of our iconic brands, best-in-class franchisees, and resilient business model will enable us to deliver growth and shareholder value creation for years to come. With that, Operator, we are ready to take any questions. Thank you. Of course, if you'd like to ask a question via the telephone lines, please press star followed by one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two.

Speaker Change: To close I am incredibly proud of our performance this year sale.

Speaker Change: Sales trends became a little more challenging in the second half and yet we delivered profit growth above our algorithm as our teams quickly adjusted marketing calendars to meet demand and kept a strict focus on managing costs.

Speaker Change: It is our team's relentless focus to stay vigilant on all areas of the business that gives me confidence we will deliver our long term growth algorithm in 2020 for D&B.

Speaker Change: Unbeatable combination of our iconic brands best in class franchisees and resilient business model will enable us to deliver growth and shareholder value creation for years to come.

Speaker Change: With that operator, we are ready to take any questions.

Speaker Change: Thank you of course, if you'd like to ask a question by the telephone lines. Please press star followed by one on your telephone keypad, if you'd like to be truly a question. Please press star followed by two when preparing to ask a question. Please ensure you're on mute locally.

Operator: When preparing to ask your question, please ensure you're unmuted locally. Please note that we will only take one question from each analyst before moving on to the next questioner. As a reminder, that's a star followed by one on your keypads now.

Speaker Change: Please note that we will only be taking one question from each analyst before moving on to the next question as.

Speaker Change: As a reminder, that star followed by one on your key packs now.

Gregory R. Francfort: Our first question comes from Gregory Francfort of Guggenheim. Gregory, your line is open. Please go ahead. Hey, thanks for the question. The question I had is, when we look into 2024, there's obviously been some pockets of weakness around the world, but... In terms of your development, you touched on the first half and some of the milestones you're going to reach. What do you think about the pace of development globally in 2024 and 2025? Do you expect that to hold around this 6% range or have any thoughts that would be helpful? Yeah, thank you for the question, Gregory. Obviously, in our prepared remarks, and I'll reiterate in my comments now, we are very confident in the pace of development. The pipeline has never looked better for us.

Speaker Change: Our first question comes from Gregory Frankfurt of benign Gregory Your line is open. Please go ahead.

Gregory R. Francfort: Hey, Thanks for the question.

Gregory R. Francfort: The question I had as we look into 2024.

There's obviously been some pockets of weakness around the world but.

Gregory R. Francfort: In terms of your development.

Gregory R. Francfort: You touched a little bit the first half and some of the milestones youre going to reach what do you think about the pace of development globally.

Gregory R. Francfort: <unk> 24 in 2025, do you expect that to kind of hold around this.

Gregory R. Francfort: The 6% range or any any thoughts there would be helpful.

Speaker Change: Yes. Thank you for the question Gregory.

Speaker Change: Obviously in our prepared remarks and I'll reiterate.

Gregory R. Francfort: In my comments now we are very confident in the pace of development. The pipeline has never looked better for us obviously varies by country by country.

David W. Gibbs: Obviously, it varies by country by country, but franchises are getting great returns. As you heard yesterday, Yum! China is committed to continued strong growth and the great returns they're getting through development. Even PwS is picking up the pace of development. We see lots of reasons to be hopeful, and we have a lot of good visibility into the pipeline, the development agreements that we've struck with franchisees, and the way we're evolving our asset types, I think, is another tailwind for us on development. As we mentioned, when we were in China, we saw this new model that they've come up with, their satellite pizza Delco store, which we believe they can blow out and be a real It's just one example.

Gregory R. Francfort: But franchisees are getting great returns you heard yesterday Yum, China commit to continued strong growth in the great returns that we're getting through development.

Gregory R. Francfort: Even pizza hut U S is picking up the pace of development.

Gregory R. Francfort: We see lots of reasons to be Opal.

Gregory R. Francfort: And we have a lot of good visibility into the pipeline the development agreements that we've struck with franchisees.

Gregory R. Francfort: And the way we are evolving our asset types I think is another tailwind for us on development like we mentioned when we were in China. We've seen this new model that they've come up with the satellite Pizza hut Delco store, which they are.

Gregory R. Francfort: We believe they can blow out and be a real growth driver for them is just one example.

Operator: Thank you. Our next question comes from Brian Bittner of Oppenheimer. Brian, your line is open. Please proceed. Thanks, good morning.

Gregory R. Francfort: Thank you. Our next question comes from Brian Bittner of Oppenheimer. Brian. Your line is open. Please proceed.

Brian John Bittner: Thanks, Good morning.

Brian John Bittner: As it relates to 2024, Chris, you said you expected it to be a year that you're going to perform in line with your algorithm, of course, meaning that you can grow your operating profits by at least 8%, excluding the extra week. I just want to dive a little more into this and your confidence around it. I know unit growth is a source of confidence, and clearly, you've outlined that on today's call. But what about the same store sales required to get to that algorithm? Just given the ongoing headwinds from the Middle East, a potentially more challenging U.S. environment.

Brian John Bittner: As it relates to 2020 for Chris You said, you expect it to be a year that youre going to perform in line with your algorithm of course, meaning that you can grow your operating profits at least 8% excluding the extra week I just wanted to dive a little more into this and your confidence around it I know unit growth is the source account.

Brian John Bittner: <unk> clearly you've outlined that on today's call, but what about the same store sales required to get to that algorithm just given the ongoing headwinds from the middle East.

Brian John Bittner: Potentially more challenging.

Brian John Bittner: U S environment.

Chris Turner: How do you think about what's required from a same-source sales perspective after the first quarter as it relates to the need for them to accelerate? Yeah, thanks, Brian. You know, if we talk about the algorithm this year and our confidence in delivering it, you know, I'll start by reiterating our primary growth driver, which David just talked about in development. Obviously, you know, one of our strongest pipelines in recent years, lots of reasons to be excited about development continuing at or above that 5% in the algorithm. We talked about, from a same-store sales standpoint, we expect sequential improvement through the year. Our two primary growth drivers, KFC International and Taco Bell U.S., continue to have strong positions in their markets around the globe. Obviously, we've got the Middle East headwind that we mentioned that we'll deal with.

Brian John Bittner: How do you think about what's required from a same store sales perspective after the first quarter as it relates to the need for them to accelerate.

Brian John Bittner: Thanks.

Speaker Change: Yes, Thanks, Brian if we talk about.

Brian John Bittner: The algorithm this year and our confidence in delivering it.

Speaker Change: I'll start by reiterating our primary growth driver, which David just talked about on development.

Speaker Change: One of our strongest pipelines in recent years lots of reasons to be excited about development, continuing at or above that 5% and the algorithm.

Speaker Change: <unk> talked about.

Speaker Change: On a same store sales standpoint, we expect sequential improvement through the year, our two primary growth drivers KFC International and Taco Bell U S.

Speaker Change: Continue to.

Speaker Change: <unk> have strong positions in their markets around the globe, obviously, we've got the middle East headwind that we mentioned that we'll deal with we expect sequential improvement throughout the year.

Chris Turner: We expect sequential improvement throughout the year. And so, you know, we're confident in the trajectory on that piece. But then you get to the 8%, at least 8% core operating profit growth, which is really what the algorithm is intended to drive.

Speaker Change: And so.

Speaker Change: We're confident in the trajectory on that piece, but then you get to the 8% at least 8% core operating profit growth, which is really what the algorithm.

Chris Turner: And that's where we have, you know, even more levers at our disposal. So, we mentioned that we expect flat G&A year over year, which reflects, you know, how we're managing that component of the P&L. And so, we've got, you know, confidence in the actions that we're taking there. There's a component of that around our digital and technology approach As our capabilities become more and more mature, we get more and more leverage out of those capabilities. And, of course, we're doing all of that in the service of our franchisees, where we're building leading-edge capabilities at the lowest cost for them. And we've invested ahead.

Speaker Change: Is intended to drive and that's where we've got even more levers at our disposal. So we mentioned that we expect flat G&A year over year, which reflects how we're managing that component of the P&L.

Speaker Change: And so we've got <unk>.

Speaker Change: And the actions that we're taking there.

Speaker Change: There is a component of that around our digital and technology approach as our capabilities become more and more mature we get more and more leverage out of those capabilities and of course, we're doing all of that in service of our franchisees, where we're building leading edge capabilities at the lowest cost for them and we've invested ahead, but.

Operator: But we also mentioned the productivity programs that we continue to drive, which in the past few years have been used to fund those incremental investments in D&T, but we're going to continue to drive those productivity improvements. And then, you know, finally, we're lapping some larger than normal incentive programs that will help from a G&A standpoint as well. So, when you add it all up, we're very confident in delivering that at least 8% core operating profit growth in our algorithm. Thank you. Our next question comes from David Palmer of Evercore. David, your line is open. Please go ahead. Thank you, and good morning.

Speaker Change: But we also mentioned the productivity programs that we continue to drive which in the past few years have been used to fund those incremental investments and DNT, but we're going to continue to drive those productivity improvements and then finally, we're lapping some larger than normal incentive programs that will.

Speaker Change: From a G&A standpoint, as well so you add it all up we're very confident in delivering that at least 8% core operating profit growth.

Speaker Change: And our operator.

Speaker Change: Thank you. Our next question comes from David Palmer of Evercore. David Your line is open. Please go ahead.

David Palmer: Thank you and good morning lots of great stuff on this call.

David Palmer: Lots of great stuff on this call. I don't know if this is going to be something you can answer on this call, but maybe something for the future. Your digital sales growth and mix increase is very strong, a 22% growth this quarter, you said, and I just wonder how incremental you think that that growth is to sales or other benefits that you see in terms of loyalty and even labor efficiency. And so I know we would all be very open to hearing how incremental that is. Obviously, a quarter like this when you have a lot of headwinds and noise, but maybe for a future call, even if you don't have that handy, another separate question may be easier to answer.

David Palmer: I don't know if this is going to be something you can answer this call, but maybe something for the future of your digital sales growth and mix increase very strong and 22% growth. This quarter, you said and I just wonder how incremental do you think that growth is the sales or other benefits that you see in terms of loyalty and even labor efficiency. So.

David Palmer: I know, we would all be very open to hearing how inc.

David Palmer: Incremental that is obviously a quarter like this when you have a lot of headwinds and noise, but maybe for a future call. If you. Even if you don't have that handy, but another separate question maybe easier to answer you talked about the two year trend accelerating for Pizza Hut U S.

Chris Turner: You talked about the two-year trend accelerating for Pizza Hut US in the first quarter. And even if we were to say that that was a couple points of acceleration on a two-year basis, that could imply flat comps starting in the second quarter on a year-over-year basis. I'm wondering if that sort of stabilization in comps is a reasonable expectation for Pizza Hut starting in the second quarter. Thanks. Yeah, thanks so much.

David Palmer: In the first quarter and even if we were to say that that was a couple of points of acceleration on a two year that that could imply flat comps starting in the second quarter on a year over year basis. I'm wondering if you think that that sort of.

Speaker Change: Stable stabilization in comps is a reasonable expectation for pizza hut, starting in the second quarter. Thanks.

Speaker Change: Yes. Thank you so much I'll start with digital so yes look our digital capabilities continue to drive actually all elements of our algorithm.

David W. Gibbs: I'll start with digital. So yeah, look, our digital capabilities continue to drive, actually, all elements of our algorithm. You know, they support strong unit economics. As you heard, we continue to expand the easy operation capabilities, which make our restaurants easier for our team members to operate, and it helps our franchisees drive productivity. And so that is helping us ensure that our franchisees continue to have strong unit economics, which allows them to invest in building new stores. You know, if you look at that 10% global system sales growth for the full year, we think digital played a big part of that, both on the unit side and on the same store sales side. And then, you know, as I said, from a profitability standpoint for Yum!, as those capabilities continue to mature, we can get more and more leverage out of our digital technology, you know, teams, and capabilities in house.

Speaker Change: They support strong unit economics.

Speaker Change: As you heard we continue to expand the easy operations capabilities, which make our restaurants easier for our team members to operate and it helps our franchisees drive productivity.

Speaker Change: And so that is helping us ensure that our franchisees continue to have strong unit economics, which allows them to invest in building new stores.

Speaker Change: If you look at that 10% global system sales growth for the full year, we think digital played a big part of that.

Speaker Change: Both on the unit side and on the same store sales side.

Speaker Change: And then as I said from a profitability standpoint for Yum.

Speaker Change: As those capabilities continue to mature.

Speaker Change: We can get more and more leverage out of.

Speaker Change: Our digital and technology.

Speaker Change: Our teams and capabilities in house and so that's part of US bending the curve on those investments that I mentioned in our G&A plan for the year. So.

David W. Gibbs: And so that's part of us bending the curve on those investments that I mentioned in our G&A plan for the year. So again, we're very pleased with the progress on the digital front, and we still have, you know, a lot of that journey ahead of us. We have big plans this year to continue to accelerate the rollout. Yeah, I'll talk about pizza.

Speaker Change: Again, we are very pleased with the progress on the digital front and we still have.

Speaker Change: A lot of that journey ahead of US we described big plans this year to continue to accelerate the rollout.

Speaker Change: Yes, I'll talk about pizza, but on the digital front one thing I really want to emphasize is just the talent, we've been able to attract to the digital space both at <unk> and at the brands is unbelievable, we are becoming a talent magnet and digital it is a great place to work we're investing behind this our franchisees are quickly adopting it.

David W. Gibbs: But on the digital front, you know, one thing I really want to emphasize is just the talent we've been able to attract to the digital space, both at Yum! and at the brands. It's unbelievable. We are becoming a talent magnet for digital. It's a great place to work. We're investing in this, and our franchisees are quickly adopting it. And even though we're at $30 billion in sales and growing fast, you know, we're still in the early innings of what this can do to the business and the way it can transform us. So we could not be more excited about digital.

Speaker Change: Even though we're at $30 billion of sales and growing fast we're still in the early innings of what this can do to the business and the way it can transform us. So we could not be more excited about digital and we will continue to report on the various metrics loyalty and things like that as we go forward and keep you guys informed on the journey on Pizza Hut, obviously, sometimes we.

Operator: And we will continue to report on the various metrics, loyalty, and things like that as we go forward and keep you guys informed on the journey. On Pizza Hut, yeah, obviously, you know, sometimes we forget; we look at one-year numbers without really looking at the full picture. Q1 for Pizza Hut US, we have an enormous lap and obviously have to take that into account as we launched Melts last year very successfully and are now rolling that around the world. But we, you know, we certainly are planning for Pizza Hut US to be positive for the year. The team has a number of things planned for the calendar as we go forward. And, you know, we love the fact that Pizza Hut globally has hit a new record on that new unit development and is becoming a bigger and bigger contributor to that part of our growth. And certainly, Yum! China last night talked a lot about the great success on the wide runway they have for Pizza Hut in that market. Thank you.

Speaker Change: Forget when you look at one year numbers without really looking at the full picture Q1 for Pizza U S. We have an enormous lap and obviously you have to take that into account as we launched <unk> last year very successfully and are now rolling out around the world.

Speaker Change: <unk>.

Speaker Change: Certainly our plan for pizza it use to be positive for the year. The team has a number of things planned for the calendar as we go forward.

Speaker Change: We love the fact that pizza hut globally.

Speaker Change: We hit a new record on net new unit development.

Speaker Change: Coming a bigger and bigger contributor to that part of our growth.

Speaker Change: Yum, China last night talked a lot about the great success of the wide runway they have for pizza hut in that market.

Speaker Change: Thank you. Our next question comes from Jon Tower of City. John Your line is open. Please proceed.

John Tower: Our next question comes from John Tower of City. John, your line is open, please proceed. Great. Thanks for taking the time to answer the question. A quick clarification on the question on the G&A guidance for 24, is that just on a dollar basis? Can you maybe just level set us on what your expectation is? Is it flat on a 52-week basis, or, you know, obviously, you've got an extra week in some of the divisions. And then the question itself is more along the lines of Thank you for electing me.

John Glass: Great. Thanks for taking the question a quick clarification and a question on the G&A guidance for 'twenty four is that just on a dollar basis can you maybe just.

John Glass: Level set us where that what your expectation is.

John Glass: Is it flat on a 52 week basis or you know obviously, you got an extra week and some of the divisions and then the question itself is more along the lines of.

Chris Turner: Yeah, so the G&A, you know, we ended the year X special at $1.17 billion. We expect to be flat on that in the 52 weeks. So it should be an apples to apples, you know, comparison on that commentary about flat. Yeah, and as far as the US consumer and pricing, just some good news to share there, at least from a Yum! perspective.

John Glass: How franchisees, how you're working with the franchisees to price approach pricing in 2020 for I guess more focused on the U S. There.

John Glass: Given that that's the market.

John Glass: Where I think there is some incremental pressure on the lower income consumer but.

John Glass: How are you guiding them to think about it given some of the pressures on labor that are going to be manifesting themselves throughout the year.

John Glass: Thanks.

John Glass: Yes, so the G&A we ended the year ex special at 1.1 dollars 7 billion, we expect to be flat on that.

John Glass: In the 52 weeks.

David W. Gibbs: As we think about the US consumer, the best way for us to look at it is obviously through the lens of our Taco Bell business, which is the vast majority of our US sales and profits. Throughout 2024, we saw a slight outperformance from our restaurants that were in low, 2023, and high income trade areas versus the rest of the business. So with the low-income consumer, I know there's been a lot of talk about whether or not they are dropping out.

John Glass: So it should be an apples to apples.

John Glass: Comparison on that commentary around plan.

John Glass: And as far as the U S consumer and pricing just some good news to share there at least from a young perspective.

John Glass: As we think about the U S consumer the best way for Us to look at it is obviously through the lens of our Taco Bell business, which is the vast majority of our U S sales and profits.

John Glass: Throughout 2024.

John Glass: We saw.

John Glass: A slight.

John Glass: Yes.

John Glass: Outperformance from our restaurants that were in the low 2023 restaurants that were in low income trade areas.

John Glass: Versus the rest of the business so with the low income consumer I know theres been a lot of talk about are they dropping out certainly for Taco Bell.

David W. Gibbs: Certainly for Taco Bell, it looks like we're doing a great job of holding on to them. And in fact, you know, for both the entire year and in Q4, we saw the low-income consumer trade areas outperform the rest of the business. And I think that speaks to the strength of Taco Bell in this environment. It is a value leader in so many ways. When you talk to consumers about value, they win on every value perception score.

John Glass: That actually.

John Glass: It looks like we're doing a great job of holding on to them and in fact.

John Glass: In both the entire year and in Q4, we saw the low income consumer trade areas outperformed the rest of the business and I think that speaks to the strength of Taco Bell in this environment. It is a value leader in so many ways. When you talk to consumers about value. They went on every per value perception score.

David W. Gibbs: And they can do value with innovation, which is also a great combination. And they can do value while having industry-leading margins. So you think about the room that we have to compete with everybody else in the category. I really, really like our position with Taco Bell. Obviously, you know, as we move into Q1, we've got tougher laps. U.S. weather really played havoc on sales early in the quarter.

John Glass: And they can do value with innovation, which is also a great combination and they can do value, while having industry leading margins. So you think about the room that we have to compete.

John Glass: With everybody else in the category I really really like our position with Taco Bell. Obviously, you know as we move into Q1, we've got tougher laps U S weather.

John Glass: Really played havoc on sales early in the quarter and as we've said, it's going to be the lowest quarter of the year, but we think this environment is one that obviously, we can thrive and in the U S and there will be less pricing to the point of your question, but it's not going to slow Taco Bell down in terms of being able to connect with consumers and grow transactions.

David W. Gibbs: And as we've said, it's going to be the lowest quarter of the year. But we think this environment is one that, obviously, we can thrive in in the U.S. And there will be less pricing, to the point of your question. But it's not going to slow Taco Bell down in terms of being able to connect with consumers and grow transactions. Thank you. Our next question comes from Jeffrey Bernstein of Barclays. Jeffrey, your line is open. Please go ahead. Great. Thank you very much.

John Glass: Thank you. Our next question comes from Jeffrey Bernstein of Barclays. Jeffery. Your line is open. Please go ahead.

Jeffrey A. Bernstein: Great. Thank you very much just following up on that.

Jeffrey A. Bernstein: Just following up on that, you know, you talked about a more challenging macro in 24. I assume that's above and beyond the Middle East. So specific to the U.S., again, just any change in behavior you're seeing at any of your three core brands, consumer trading around the menu? Specifically, I know from television advertising that each of you has three big brands and has what appears to be pretty compelling value offers. I'm just wondering.

Jeffrey A. Bernstein: I know you did talk about a more challenging macro into 'twenty four.

Jeffrey A. Bernstein: And I assume that's above and beyond the middle East specific to the U S. Again, just any change in behavior, you're seeing in any of your three core brands consumer trading around the menu.

Jeffrey A. Bernstein: Specifically I know that from TV advertising each of your three big brands has what appears to be pretty compelling value offer. So I'm just wondering.

David W. Gibbs: How those value offers are performing, the consumer demand for them, maybe the mix shift of value today, however you define that versus where it's been. Thank you. Sure. Yeah, just to build on my comments about the Taco Bell business in the U.S. and how it's set up to thrive in this environment, you know, the value menu that we've recently tweaked in the U.S. to be $3 and under is actually over-indexing a little bit with consumers versus test and expectations, which isn't a bad thing because it's a real competitive advantage for us, and So there may be some small shifts in consumer behaviors, but as I said on previous calls, you know, we just are slowly returning to a more normal operating environment where value is always important in the category, as is convenience and, you know, food innovation and capability, and we think we just win on all those fronts with Taco Bell and why we're excited about 2025. Our next question comes from David Tarantino of Baird. David, your line is open, please go ahead. Hi, good morning.

Jeffrey A. Bernstein: How those value offers are performing the consumer demand for them, maybe the mix shift.

Jeffrey A. Bernstein: Today, However, you define that versus where it's been in years past and any color on that would be great. Thank you.

Jeffrey A. Bernstein: Yeah.

Jeffrey A. Bernstein: Sure.

Speaker Change: Yes, just to build on my comments about the Taco Bell business in the U S and how it's set up to thrive in this environment.

Speaker Change: The value menu that we've recently tweaked in the U S to be $3 and under.

Speaker Change: Over indexing, a little bit with consumers versus test and expectations, which isn't a bad thing because it is a real competitive advantage for us and it's designed to maintain franchisee profitability.

There may be some small shifts in consumer behaviors, but as I've said on previous calls we just are slowly returning to a more normal operating environment, where value is always important when the category is convenience.

Speaker Change: And food innovation capability, and we think we just went on all those fronts with Taco Bell and why we're excited about 2024.

Speaker Change: Okay.

Speaker Change: Our next question comes from David Tarantino of Baird. David Your line is open. Please go ahead.

David E. Tarantino: Hi, Good morning, I, just wanted to come back to your comp outlook for the year and I know you mentioned several times you know some of the some of the reasons you expect things to maybe get better as the year goes on but I'm, hoping that you could maybe elaborate on your.

Operator: I just wanted to come back to your comp outlook for the year. I mentioned it several times, etc. Expect things to maybe get better as the year goes on.

David E. Tarantino: I'm hoping that you can maybe elaborate on your... www.brandsinc.com www.yum!brandsinc.com. I guess the second part of the question... That doesn't materialize the way that... www.youtube.com And Chris just talked about one of the levers that we have to pull, which is, you know, improving our efficiency and holding GNA flat year over year. But there, you know, the bigger picture is that we're really excited about the initiative that each of the brands has going on. Just to give you a glimpse, Taco Bell, in 2024, is going to have twice the innovation on the calendar that they had in 2023.

David E. Tarantino: Or your view, there or whether you think it's the macro getting better.

David E. Tarantino: It's more what you have in your initiative pipeline and then I guess the second part of that question would be if that doesn't materialize. The way that you anticipate do you have levers to pull to still deliver the profit growth.

David E. Tarantino: Correcting for the year.

David E. Tarantino: Well in <unk>.

David E. Tarantino: Terms of the comp outlook, obviously, the middle East creates some uncertainty for the environment and Chris just talked about one of the levers that we have to pull which is.

David E. Tarantino: Improving our efficiency and holding G&A flat year over year.

David E. Tarantino: Yes.

David E. Tarantino: The bigger picture is we're really excited about the initiatives that each of the brands is going just to give you a glimpse Taco Bell in 2024 is going to have twice the innovation on the calendar that they had in 2023 and I've, obviously seen a lot of this innovation.

David W. Gibbs: And I've obviously seen a lot of this innovation, and I'm excited about the impact it's going to have on consumers. I mentioned the fact that, you know, in the US, it's a brand that thrives in a value environment. But around the world, you know, just to give you some more color on Q4, we had positive transaction growth in Q4, despite the impact that the Middle East had on our overall business. So, you know, we think the year sets up where, you know, obviously, the Middle East is a big variable.

David E. Tarantino: I'm excited about the impact it's going to have with consumers I mentioned, the fact that.

David E. Tarantino: In the U S. It's a brand that thrives in a value environment, but around the world just to give you some more color on Q4.

David E. Tarantino: We had positive transaction growth in Q4, despite the impact to the middle East because at the Middle East had on our overall business.

David E. Tarantino: So we think the year sets up where obviously.

David E. Tarantino: The middle East is a big variable, but putting that aside we think the year sets up to be another great year for Yum, all around the world with sales growth.

David W. Gibbs: But putting that aside, we think the year sets up to be another great year for Yum all around the world with sales growth. And a lot of it is driven by us leaning in more on what we call category entry points, opening up new lines of business for us. I'm excited in a couple of days to head to South Africa to see the great work that that team is doing in terms of launching breakfast and the beverage work that they're doing that's really having a positive impact on their sales. But we've got stories like that going on.

David E. Tarantino: A lot of it is driven by.

David E. Tarantino: US leaning in more on what we call category entry points opening up new lines of business for Us I'm excited.

David E. Tarantino: And a couple of days to head to South Africa to see the great work that that team is doing in terms of launching breakfast in the beverage work that they're doing that is really having a positive impact on their sales.

David E. Tarantino: We've got stores like that going on all around us.

Chris Turner: And then, David, as you mentioned, we do have multiple levers to ensure that we land the ultimate component of the algorithm, which is at least 8% core operating profit growth. We've talked about the flat G&A plan, and we also referenced in the comments some of the productivity projects that we have going on. So we're laser focused on that component as well and have plenty of levers we can pull. Operator, we have time for one more question. Of course, our final question of today comes from Dennis Geiger of UBS. Dennis, your line is open; please go ahead. Great, thanks, guys. Just another on Taco Bell, David, in light of the strength and the multi-year trends in December and then the initiative that you highlight, is it fair for Taco Bell, given, you know, the fact that you're seeing pretty good strength across consumers for the brand, plus the initiative, that you could see sort of a widening market share or traffic share outperformance gap at Taco Bell this year, given the environment and given Yeah, yeah, thank you, Dennis.

David E. Tarantino: And then David as you mentioned, we do have multiple levers to ensure.

David E. Tarantino: With that we land the ultimate component of the algorithm, which is at least 8% core operating profit growth we've talked about the flat G&A plan and we also referenced in the comments some of the productivity projects that we have going on so.

David E. Tarantino: We're laser focused on that component as well and have plenty of levers we can pull.

Speaker Change: Operator, we have time for one more question.

Speaker Change: Yeah.

Speaker Change: Of course, our final question today comes from Dennis Geiger of UBS finish. Your line is open. Please go ahead.

Dennis Geiger: Great. Thanks, guys just another one on Taco Bell I guess, David in light of the strength in the multi year trends in December and then the initiatives.

Dennis Geiger: You highlight I guess is it fair for Taco Bell given.

Dennis Geiger: The fact that youre seeing pretty good strength across consumers for the brand plus the initiatives that you could see sort of a widening market share or traffic share outperformance gap.

Dennis Geiger: Taco Bell this year, given the environment and given the plans you have in place if anything to share on that.

Dennis Geiger: Thank you Dennis Yes look Taco Bell in Q4, just to put a little bit more numbers around it put up a two year number of a plus 15 again going back to sometimes we forget where we were lapping we were lapping a massive Mexican pizza performance, they were able to lap that and grow on that.

Dennis Geiger: Yeah, so look, Taco Bell in Q4, just to put a little bit more numbers around it, put up a two-year number of plus 15. Again, going back to times when we forget what we were lapping, we were lapping, you know, massive Mexican pizza performance. They were able to lap that and grow on that in a challenging consumer environment. We think that favors them. And absolutely, what you said is absolutely true.

Dennis Geiger: And Ah.

Dennis Geiger: Challenging consumer environment.

Dennis Geiger: Think that favors absolutely what you said is absolutely true.

David W. Gibbs: You know, we're constantly looking to gain market share. And, you know, the Taco Bell business has been doing that for many years. And we think this is an environment that favors them. So, we couldn't be more excited about the growth that Taco Bell has ahead of it in the U.S., and we've really just begun with that brand. And I'm excited about Sean and the team we've got in place to lead that.

Dennis Geiger: We are constantly looking to gain market share.

Dennis Geiger: The Taco Bell business has been doing that for now for many years and we think this is an environment that favors them.

Dennis Geiger: So it couldnt be more excited about the growth that Taco Bell has ahead of it in the U S and we've really just begun with that brand.

Excited about Sean.

The team we've got in place to lead that.

David W. Gibbs: I'll wrap up with one of my fun facts that, you know, we get hit with so many of them as we're preparing for these calls, but if you're not aware, in the last three years, 25% of all Yum! restaurants have been built. You're talking about brands that have been 50 to 70 years old and older, but yet, in the last three years, nearly 25% of our restaurants have been built in the last three years. It gives you a sense, first of all, the condition of our asset base around the world and how new it feels, given the age of the brands, but also the commitment that our franchisees have to this business. They're investing their capital in building those stores. But we always talk about net new units. That's gross new units.

Speaker Change: I'll wrap up.

Speaker Change: One of my Fun fact.

Speaker Change: We get hit with so many of them as well.

Speaker Change: For these calls but.

Speaker Change: If youre not aware in the last three years, 25% of all Yum restaurants have been built.

Speaker Change: Are you talking about brands that have been 50 to 70 years old and older.

Speaker Change: But yet in the last three years 25, nearly 25% of our restaurants were built in the last three years. It gives you a sense for first of all how.

The condition of our asset base around the world and how new it feels.

Speaker Change: Given the given the age of the brands, but also the commitment that our franchisees have to this business. They are investing their capital and building those stores. We always talk about net new units. That's gross new units. There was a lot of those stores were replaced with doors that had reached the end of their useful life. So it shows their commitment to the next 2030 years of the brand.

David W. Gibbs: A lot of those stores replaced stores that had reached the end of their useful life. It shows their commitment to the next 20, 30 years of the brand. They have been fantastic partners. They've always been our competitive advantage. We're seeing that even just managing through the Middle East and how Americana has done such a good job of that.

Speaker Change: They are fantastic partners, they've always been our competitive advantage, we're seeing that even just managing through the middle East and how Americana has done such a good job of that and we couldnt be more excited given the development pipeline the commitment to the franchisees have.

Operator: We couldn't be more excited, given the development pipeline, the commitment that our franchisees have, and the strength of our brands as we head into 2024. Thank you for your time today. Ladies and gentlemen, this concludes today's call. Thank you for joining, and may I disconnect your line? www.brandsinc.com

Speaker Change: And the strength of our brands as we head into 2024.

Speaker Change: You for your time today.

Speaker Change: Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].