Yum!(YUM) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved a core operating profit growth of 8% for the full year, reflecting resilience amid macroeconomic challenges [38][49] - System-wide sales grew by 5% in Q4, driven by 5% net new unit growth and 1% same-store sales growth [41] - Digital sales increased approximately 15% to over $30 billion, highlighting the effectiveness of the digital-first approach [31][32] Business Line Data and Key Metrics Changes - Taco Bell US reported a full year system sales increase of 6%, with same-store sales rising 5% in Q4, significantly outperforming the U.S. industry [18][19] - KFC International experienced a 3% system sales growth for the full year, with same-store sales flat year-over-year but improving to plus 1% in Q4 [15][16] - Pizza Hut's full year system sales declined by 1%, but same-store sales growth improved by 300 basis points sequentially in Q4 [22][41] Market Data and Key Metrics Changes - In the Middle East, KFC saw a strong recovery in transactions, with same-store sales increasing significantly in Q4 [42][76] - Latin America achieved a 6% year-over-year same-store sales increase in Q4, driven by value promotions [17] - Africa reported a 9% increase in same-store sales, attributed to effective marketing strategies [16] Company Strategy and Development Direction - The company is focused on enhancing digital convenience and engagement through its proprietary technology platform, Byte by Yum [11][30] - Strategic initiatives include expanding product offerings and refining pricing strategies to deepen market penetration [17][18] - The company aims to modernize consumer experiences and drive innovation through new concepts like Saucy by KFC and Live Más Cafe at Taco Bell [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of international markets and the overall health of franchisees, particularly in KFC [75][80] - The company anticipates another strong year of core operating profit growth, targeting at least 8% in 2025 [70][86] - Management acknowledged near-term headwinds but remains optimistic about brand momentum and sales recovery in affected markets [67][70] Other Important Information - The company plans to increase its quarterly dividend to$ 0.71 per share and has returned $1.2 billion to shareholders through dividends and share buybacks [64][65] - The company is committed to sustainability initiatives, including improving packaging recyclability and participating in reusable cup pilots [36][37] Q&A Session Summary Question: Health of international franchisees and growth trajectory - Management noted improvements in international markets, with KFC's system sales growth in unimpacted markets at 9% for the full year and 10% in Q4 [76][78] Question: 2025 core operating profit growth algorithm - Management indicated confidence in achieving the 8% core operating profit growth target, driven by strong performances from KFC International and Taco Bell US [86] Question: G&A outlook long-term - Management expects G&A as a percentage of system sales to decrease over time, with a low single-digit percentage increase anticipated for 2025 [90][91] Question: KFC US business improvements under new leadership - Management expressed excitement about the new KFC leadership and plans to modernize the consumer experience and enhance digital capabilities [97][98] Question: Technology strategy and Byte by Yum - Management highlighted the advantages of an integrated technology platform, which simplifies operations and enhances franchisee capabilities [102][106] Question: Attracting and retaining technology talent - Management emphasized the company's strong culture and growth opportunities as key factors in attracting top technology talent [126]