Everybody for joining us. I'm Sara Senatore, Bank of America's restaurant analyst. I'm very pleased to have with me today Chris Turner, Yum! Brands CFO. I will say a few words about Yum!, just because I know we might have a broader, more global audience than I'm used to. Give you a little bit of Chris's background, and then we will dive in and put him on the hot seat. Yum!'s, KFC, Pizza Hut, and Taco Bell brands are global leaders in the chicken, pizza, and Mexican food category. The company's diversified about Habit. I've been covering this company for a very long time. Habit Grill is a fast casual restaurant concept specializing in made-to-order char-grilled burgers, sandwiches, and more. The company's diversified global system includes approximately 1,500 franchisees operating more than 55,000 restaurants in over 155 countries and territories. The strategy is defined by Recipe for Good Growth, which is grounded in the idea that growth and brand relevance will only endure if brands are inclusive, sustainable and reflective of evolving employee, franchisee, and stakeholder results. As I mentioned, very pleased to have Chris with me. As CFO, he has global responsibility for finance, corporate strategy, supply chain, and information technology. As we talked about, Chris has actually a very long-standing history with and around Yum! Brands. Turner, Chris Turner joined Yum! from PepsiCo, where he served as senior vice president and general manager, leading Pepsi's retail and e-commerce businesses after having served as senior vice president of transformation for PepsiCo's Frito-Lay North America business. Prior to Yum!, Turner previously spent more than 13 years at McKinsey & Company. Like I said, four years in the CFO role? Yeah. many years Coming up on four years here in a couple of weeks. Yeah, many years in and around the brand. Yum! was one of my clients at McKinsey. Right. I served Yum!, starting more than a decade ago. When I rejoined Yum!, it felt like coming back home. Coming home. -to a company I knew well. Great. Wonderful. With that, institutional knowledge, I will dive in and ask you maybe to give us a brief overview of the Yum! strategy, maybe how it's evolved, either since you've been there or prior to that, and then, you know, what does growth look like from here? Terrific. Thank you, Sara, for hosting us. Thanks to all of you for making time to hear more about the Yum! story. I think the Yum! story is incredibly exciting. You hit on a bunch of the sort of basic facts about the business. We have an incredibly scaled global business. Four iconic brands that resonate with customers around the globe, more than 155 countries. It's a, it's a very global business. 55,000+ restaurants, 1,500 amazing franchisees. It's a very large global business. You might say with that," how do you guys think about strategy?" Despite that scale, we still think of ourselves as a growth company, that is our primary focus, is driving what we call good growth. In fact, that's how we define our strategy, the Recipe for Good Growth, which incorporates our ESG aspirations, which we frame around people, food, and planet, with our growth aspirations. Of course, the way we define our long-term growth trajectory is through our algorithm, our long-term growth algorithm, which we actually took up a bit at our investor day last year. W e believe, and we have high confidence in our ability in the long run, to deliver 5% net new unit growth each year, translating to 7% system sales growth, translating to at least 8% core operating profit growth. You say, "Okay, what are the elements that drive that kind of growth on a business that already has 55,000 restaurants?" There's a few that I'll highlight, I'm sure we'll dig into. One is our development capability. We think it's distinctive, defensible, competitive advantage. Last two years, we've opened 8,600 new restaurants. That's a new restaurant every two hours. Second are these four iconic brands, and our marketing capabilities that drive same-store sales growth in those brands, make those brands relevant to consumers around the globe. Third, our amazing franchisees. We have a responsibility to our franchisees to be the global franchisor of choice, and in return, we think we've got the best franchisees in the industry. Lastly, and something that we've built over the last three years, are our digital capabilities. 45% mix digital in Q1, nearly a $25 billion digital business last year, and we like everything about those digital sales. Those are sort of the highlights of our strategy and what is driving the good growth that we see in the business. Very helpful overview. I'm going to touch on each of those points. While we're talking about the overall strategy, you mentioned you have multiple brands, more even actually clearly than when I started covering you. Maybe talk a little bit about, you think about both the existing portfolio and possibly growth from here? If you think about our four iconic brands, things that they have in common, being iconic brands, I think is where it starts. These are all brands that resonate with customers. They have a great customer connection. They have really inspiring entrepreneurial foundation stories and have grown tremendously since then. We think they can all be broadly appealing to customers around the globe. Then you say, "W hat are the other advantages of having these together in one company as Yum!?" We think that there are a bunch. One, we think there is a multiplicative effect in terms of the growth focus that we have across brands as we leverage our growth capabilities. If you think about, you know, at the end of the year, we do our strategy sessions across brands. We've got the CEOs of each of the brands sitting in, providing input to one another on how can we accelerate growth across the brands. There's best practice sharing and strategic sharing across the brands. Second is obviously scale. If you think about getting scale benefits for our franchisees and for our brands, purchasing is a prime example. In the U.S., we do all of our purchasing across all four brands together through our restaurant supply chain partner in the U.S. We're bringing scale advantages. Third is digital and technology. An increasingly important space in the restaurant industry, largely fixed cost investments. We think that being able to platform and utilize our technology capabilities, not only across brands, but across markets, should allow our franchisees to access leading-edge digital capabilities at a lower cost than they could in any other system. Last thing I'll say is talent. We are able to develop incredible talent internally and attract incredible talent externally into our business because of the opportunities that the multi-brand portfolio provides. Maybe just one more, because our franchisee base, they see advantages in us having multiple brand opportunities available to them, and that's part of us fulfilling our role as franchisor of choice. When you talk about the franchisees, that's a good segue to the fact that you took up the growth algorithm. Could you talk a little bit about how that disaggregates across the brands and the different markets, the drivers of the unit growth, accelerated unit growth, and maybe even just a little bit about the topic that's always on everybody's mind, you know, financing. Does the current environment change that or inhibit it at all? Maybe a bit more about the unit growth. Yeah. Let me I'll take the two parts of the question. Let me start with why we're so confident in our long-term unit growth trajectory and why we've been able to put up these results that we had in the last a few years. First, there's tremendous white space opportunity for our brands. You might say, "Gosh, but 55,000 restaurants, aren't you about tapped out?" We're just getting started. We said at our Investor Day, we think there are going to be another 100,000 restaurants on top of the current 55,000. Part of that is being a multi-brand portfolio. You've got slightly different use occasions for each of our brands, so we can get to a much higher density as a company than any single brand can on its own. Plus, in some markets, we're just getting started in terms of penetrating the market. Think about India, in the next five years, there'll probably be north of 250 million consuming class, customers in India, and we're just north of 2,000 restaurants there. Compare that to the U.S., where you got about 300 million consuming class customers. We got 17,000 restaurants, there's a tremendous growth opportunity in markets like India. There's still a huge growth opportunity in China. I could go market by market around the globe. Opportunity in white space is not our problem. Next is unit economics. Mm-hmm. You know, we're an asset-light company, 98% franchised. When a unit goes up, it's our franchisees who are putting their capital to work. They're only going to do that if the unit economics are strong and the returns that they generate are strong. We said at our Investor Day, the last couple of years, 80% of our restaurants have been built in markets with 5-year paybacks or better. Our franchisees see a tremendous investment opportunity in building a restaurant. Third, I'd say, is having the right franchisees. I think we've got the best in the business. They're larger on average than franchisees in other systems. We talk about them being 3 C: capable of running great stores, well-capitalized, and committed. That committed part is about a desire and a willingness to build new units and to grow the system. Fourth, we got the best development teams, I think, in the industry, and they're increasingly using advanced analytics tools to help us, you know, identify white space, drive the strategy. That's why our unit development story is so strong and why we're so confident. You asked about the, you know, rising interest rates, how is that affecting the industry? I actually think that's going to turn into a competitive advantage for us whenever it comes to development. If you think about where our development happens, we have 15 publicly traded franchisees who drive about 60% of our total net new unit growth. If you go look at their balance sheets on a weighted average basis, they have less than 1 time leverage relative to their EBITDA. They're not highly levered. In fact, you take the couple biggest of those, they have a lot of cash on the balance sheet, zero debt. This just isn't a big driver. Obviously, we'd all prefer an environment with interest rates being a little bit lower, but with our sophisticated franchisees and their scale, they're taking advantage of this opportunity to get ahead. If you look at what Yum! China did the last 3 years, think about the severely negative same-store sales environment they experienced because of the COVID movement restrictions. They built 3,000 new Yum! restaurants over the last 3 years. That platform, as they come out of COVID, is much bigger than it was going in. That's just one example of how our franchisees take advantage of these times of opportunity when other systems can't. Right. I'm glad you talked about, right, that sometimes, you know, the more challenging environments present the best opportunities and allow you to kind of press your advantage. Maybe talk a little bit more about that, sort of the strength in today's macro landscape, whether it's from a brand positioning perspective, a pricing, you know, you talked about scale on the supply chain. Just help us think about, like, what, you know, what some of those advantages, true advantages are in terms of your cost structure or the brand resonance as we look at a more difficult operating environment. Yeah. You know, if you, if you do see these macroeconomic, you know, headwinds in certain markets, of course, they manifest themselves in different ways in different markets. Being in 156 countries, it's hard to. You know, every market has its own situation that it's dealing with. I think our brands are well prepared to succeed in any sort of environment. Of course, QSR is a great place to be. You know, in general, the space stands for value, that's what customers look for in times of macroeconomic pressure. I think our brands are particularly well positioned within that space. You know, we've got over here Sean Tresvant, who is our Global Chief Brand and Strategy Officer at Taco Bell. He's got his Taco Bell socks on. An amazing leader, an amazing marketer, used to run marketing for the Jordan Brand at Nike, which I thought was one of the coolest jobs on the planet, and it is. Being at Taco Bell must be a little cooler. We're so excited to have Sean in the business. If you think about what he's trying to do with the Taco Bell business, I think it really exemplifies what you're asking. Taco Bell has a magic formula, and all of our brands have a magic formula: creating brand buzz and cultural relevance through their marketing. They're have an innovation engine with the food that is always bringing new excitement to the menu. We always have a strong value component. We have strong relative value. Think about Taco Bell, we do that with the $2 value menu. Of course, when most customers come in, they see all of that exciting innovation that still is at a great relative value, but a little bit higher price point. The vast majority of our customers choose to buy from those other parts of the menu, and then they're underpinning that with this digital capability that has allowed them to go from basically 0 digital sales in 2018 to now a quarter of the business that's digital. All of those things contribute to being able to deliver what customers want in any environment. They want cravable food, they want an easy experience, and they want great value, and I think our brands are positioned to do that well in all of our markets around the globe. Right. No, that's, that makes a lot of sense, the, with the brand and the segment. Also, I forgot to mention, Sean is here, and as is Jodi Dyer from head of IR. I always say when Jodi's here, you can direct the hard questions to her. That's what I do. All right, on that note, let's talk maybe a little bit about, the sort of the topic that we always want to talk about, same-store sales. You know, your same-store sales across the board have accelerated. In fact, I think of sort of the most recent quarters, Yum! has really fired on all cylinders in a way that it, I hadn't always seen it. Again, maybe thinking back, oh, certainly predates your tenure, but what is it that has helped, you know, in addition to what you're talking about, how should we think about the cadence of same-store sales going forward versus what it maybe used to look like, which is very low single digits? Is it share gains? T o your point earlier, pressing the advantage and really offering something that maybe smaller franchisees or competitors can't. Is it pricing? Maybe help us think about that as part of the growth algorithm. Yeah. Same-store sales is a critical focus for it. W e talk a lot about our development capability because we think it's so darn, distinctive. Our same-store sales capability, which largely driven by our marketing and our operations teams, we think is just as strong and must remain just as strong in the future, and we want to have those dual growth drivers driving the business. If you think about what's driven our strength recently, I think it's a lot of the things that we've talked about. I think it's having the best marketing teams in the business who bring the formula in Taco Bell's magic formula. In KFC, it's what we call our bucket strategy, but they bring each of the brands approaches to driving same-store sales growth and customer relevance to life. Two weeks ago, in Dallas, we had the annual KFC MPM meetings, the marketing planning meetings. From around the globe, all of our KFC marketing leads, plus a set of our franchisees, were in Dallas to each present their marketing plans for the coming year, trade best practices, you know, align on how to bring the bucket strategy to life. Really inspiring to see. Next, digital has been a tremendous driver on the same-store sales side. Every time we convert sales from non-digital to digital, two things happen: one, check sizes increase. It just even when you normalize for heavy users may be being more likely to move over, we just have to do a better job demonstrating the full menu breadth to the customer, plus upsells where our digital capabilities just works better time and time again. Second, we get higher frequency. We build a deeper relationship with the customer. We're able to target messaging to them on an ongoing basis. They get an easier experience, and because they've now got the app on their phone or they've got the account set up, it becomes a sticky experience. I think that's been a driver as well. Finally, the customer experience being fast and easy. We've talked about digital being the way to bring easy to life, even our non-digital customers, you think about Taco Bell, high-volume restaurants, provides the fastest drive-through experience at scale in the U.S. market. Still sub four-minute drive-through times. You got to have an easy, convenient experience for customers. Of course, we also provide multiple other channels, whether it's delivery with our own capabilities or delivery through aggregators as well. I think all of those things are underpinning. Now, to your point, there's probably a little bit of a tailwind from the pricing that's been taken to deal with inflation, I think the foundational elements are all strong. Right. Right. To your point, you've outpace, you know, a lot of other restaurants who have also taken price, so it's, it can just be that. You did mention value, so I want just focus on that for a little bit. T he current operating environment, we touched a little bit about the strength that the Yum! portfolio has. Maybe I should have started with, are you seeing softness in the current operating environment? Certainly, like I said, you know, the quarters, the most recent quarters we've seen have been very strong from a top-line perspective. Maybe talk a little bit about that and the fact that, you are still being able to trade people up or upsell them on digital. Any kind of resistance or challenges there? Yeah, again, it's market dependent. Y ou've got in general, so across industries, across sectors, there's a little more customer pressure from inflation. The macroeconomic situation is presenting that. Again, QSR and our brands in particular, are very well designed to deal with that. I'll use Taco Bell again as an example. Think about what they've done in the last few years, balancing the two things that we take into account whenever we see these sorts of pressures. We always want be providing strong relative value for our customers and a great offering, while also ensuring that our unit economics remain really strong for our franchisees. That's, we have to take that into account as we think about pricing. Taco Bell has expanded margins and driven tremendous same-store sales growth over the last three years. They're getting that equation right. Pizza Hut and KFC in the U.S., if I just take those as an example, one of the things that they were dealing with is they didn't have as many low price point items on the menu. They provided tremendous abundant value. P izza is the most cost-effective way to feed a family of four or five, but it costs the same to feed a family of one or two. Pizza Hut introduced the Melts, $6.99 price point. It's now here in the U.K.. We say it is enough for two, but priced for one. It provided a totally new category entry point or a use occasion. Now someone who wants to eat Pizza Hut as an individual meal at lunch can access the brand. That was part of what helped us drive such strong sales in the U.S. in Q4 and in Q1. KFC in the U.S. introduced the $5 wraps. Now they've got nuggets the wraps with our lowest income customer segment helped drive traffic growth amongst that segment in Q1. It just shows that when you provide great product and great value, you know, it resonates with customers in any sort of environment. I think those are the things that we're focused on, providing that magic formula in all of its forms across our brands is what's gonna matter in resonating with customers. Right. Right. that's really interesting. To your point about, like, pizza all the different kinds of values, price point value, abundant value, value for the money, and different consumer cohorts are looking for different things. O ne of the things maybe we can dig a little bit farther into Taco Bell, since we, you mentioned that, and we have an expert in house here. That actually has been what I would consider probably the most consistent performer, the kind of the crown jewels or how it was always viewed. To what do you attribute that? What is it about the, you know, is it the operating model? Is it the fact that it's sort of a market of one, there really is nothing even close to Taco Bell on a national scale? How should I think about that? I will tell you, when I talk to franchisees, that is the number one brand on almost everybody's list. They all want be a part of the Taco Bell system. How do you get that kind of flywheel started and continue to go? Yeah. You know, all of our brands are crown jewels. Yeah. If we think about Taco Bell for a moment, I will start with the category of one component. Structurally, it's advantaged. If you take the QSR space, Mexican-inspired food in the US, it by far has the most share, and so it operates as the category of one with, a set of products that are, you know, they're so creative that a lot of customers don't have in their mind what's the reference point on pricing. I think David used the saying the other day that no one knows what the price of the Chalupa should be. Whereas, burgers, people have a reference point. In some other places, people have a reference point. That gives it the freedom to, from a pricing standpoint, as they bring new innovation to the menu, but customers still are excited about what they're getting. It is a tremendous value relative to things they can find in other places. The brand buzz and the cultural relevance that Taco Bell has always keeps it at the leading edge of the conversation. You know, if you look, TIME just came out with their list of the 100 most influential companies in the world. Taco Bell is on it from an innovator standpoint because of the relevance they create. That's a credit to Sean and what he's been driving with the marketing team. They are always at the leading edge of the conversation. Today, if you go on Instagram, you'll see Paris Hilton talking about the return of the Volcano Menu, which takes us to the food innovation component. They always come up with a way to create new, cravable food items. Some of that is a return of old favorites. Volcano is a return of something we had on the menu in the past. The Mexican Pizza last year created tremendous buzz, but also new innovations. The Grilled Cheese Burrito, where we put the cheese on the outside of the burrito, was a tremendous innovation. It's an amazing product, and it's really resonated with customers. Bringing fries to the menu, has been another example of that. They do, all of this with tremendous operating efficiency. That leads to a very high margin business model that also provides a great customer experience. That's why there's been such franchisee pull, for the system. Entrepreneur Magazine, the last three years, has ranked Taco Bell as the number one franchisor amongst all industries with franchise businesses, in the U.S.. This speaks to how, this is a, you know, a great, investment opportunity for franchisees who come in and partner with us in the system. All of those have contributed to the flywheel at Taco Bell, which has allowed it to maintain its strength, over time in the U.S.. The great story and opportunity going forward is that now we're starting to get momentum on taking Taco Bell internationally. We've now got four markets, including the U.K., where we have more than 100 Taco Bell restaurants. This is becoming increasingly a global brand. We passed the 1,000-unit mark outside of the U.S. recently. Sean and his team have tremendous aspirations for continuing to grow those markets. You have the next wave of markets in Malaysia, Australia, looking to get to scale. Someday we think there should be tens of thousands of Taco Bells outside of the U.S. as well. Let's talk about that because, there's growth international, and then I think there's also growth domestically that you talked about. Maybe let's take them separately. T o your point, unit economics are always the leading indicator. There's plenty of demand. H ow do you think about the U.S. for a brand that's been around for decades? T he growth opportunity is still there. W hat sort of has to happened t o your point about international, you've achieved the 1,000-store mark or reached it, but you have other brands that have tens of thousands. Taking those two separately, and what have been the gating factors, and going forward, what are the unlocks? Yeah. If we start with the U.S., I think two primary opportunities. One, on the unit development side, we still think there are going to be thousands more Taco Bells in the U.S. You look at the one of our leading competitors in the U.S., they've got 13,000 to 14,000 restaurants. We're just a little over half of that. There's no reason we can't have the same number of restaurants in the U.S. The economics are so strong. Our unit development pace has been really good. I think we were the fourth biggest new unit opener in the U.S. last year amongst all restaurant brands. We'd like to continue to accelerate that. The other side is the same-store sales side. Sean and the Taco Bell U.S. team are thinking very, you know, strategically and systematically about how to drive that, and they're tackling it from a day part and a customer use occasion standpoint. I f you break down the day parts, Taco Bell is the undisputed late-night leader, in the U.S. They have a fantastic dinner business. We have good breakfast and lunch businesses, but if you compare to a couple of our competitors, if we could get the same penetration in breakfast as lunch as they have, there's a $1 million per store opportunity there. Their strategies are focused on how do they go attack that as part of driving, accelerated same-store sales growth over the long haul in Taco Bell U.S. If I go internationally, it's really about how do you take this brand, which is so loved in the U.S., and make it, bring it to life with the same level of customer passion and customer following around the globe, and we think that absolutely can be done. It does take a little more time to communicate the food category and the food products outside of the U.S.. KFC is so translatable. I f you're a human on this planet and you're not a vegetarian, you probably had fried chicken, and you probably loved it. KFC is, you know, kind of meeting that demand on first bite. Taco Bell, it takes a little more trial, and we... Our old strategy, we were opening a couple of restaurants here, a couple of restaurants there, but that lack of scale prevented us from doing the kind of marketing we needed to do to tell the Taco Bell brand story. That's why we shifted the strategy to say: Let's get to 100 units. We think that's why, where the flywheel will really start to spin. That allows us to do more marketing, get more leverage out of the marketing. Practically, on supply chain, in a number of these markets, there's not a well-established tortilla maker or a chip maker, so people could set up lines, our supplier partners could set up lines if we had more scale. You know, third, from a digital standpoint, of course, digital benefits from scale. That's another reason to go with the scale approach. Of course, Taco Bell internationally is being kind of born as a digital brand. It has a 40% digital mix. All of those things are part of the strategy shift that we made a couple of years ago. Everything we've seen so far is telling us that strategy shift was the right one, and that that flywheel should start to pick up speed. I think those are the elements to bringing it to life. Interesting. Right. There's sort of the flip side of, or the other side of the market of one, is you have to build that market- Yeah. a little bit more. Okay, so that, we, you know, we could probably talk about this brand forever, but I do wanna get to the others and maybe, and talk about technology. Actually, maybe I'll use technology as a segue to the others. You mentioned that, tech, Taco Bell is a very digital brand. You talked about how that's something where you can get scale across brands. Can you help unpack, if you will, kind of what needs to be done at the brand level versus where the scale benefits are for technology? Because, I always think about the idea that brands need to be run, the operating model is different, the brand messaging, all of those things, which is something that Yum! I think, has done quite well, across its portfolio. Are there how do we think about technology in that context? Part of the reason Yum! is one of the great global retail growth stories of all time. I was a retail industry consultant for many years, and there just aren't many stories like the Yum! story. 155-plus countries, including back in the days when we were part of PepsiCo. Part of that magic was that we were pretty decentralized in the way we thought about this. T here's not a massive playbook where you have to do thousands of things whenever you take KFC to a new market. We said, there's a set of guardrails. You're gonna use the Colonel, you're gonna use 11 herbs and spices. You're going to have this great trick, craveable food. You're going create an awesome environment for our team members. You're going to have a really safe, well-operated supply chain, otherwise, tailor this to the market. That's why if you go market to market and go visit KFCs, it comes to life slightly different ways that are very relevant to the local market around the globe. That's fantastic, one of the areas where we must get scale, and fortunately, our leaders back in 2017, 2018, saw this coming, the advent of technology. Because of the fixed cost investments, this is a place where clearly you can have better economics and move a lot faster if you have platforms that span those brands. They shifted our strategy. In In 2019, we hired Clay Johnson, who's our Chief Digital and Technology Officer. He was Walmart's CIO, came in, and he leads Yum! digital and technology at the center. We still have brand technology teams with amazing CIOs and CTOs and amazing teams, and they work in partnership. What we're trying to do at the center is build platforms, and we're building those in three areas centered around the word easy. Jodi was our CFO of our Digital and Technology Organization. In her prior role, she came up with this framework. All of our capabilities tie to easy. We have easy experiences for the customer. We have capabilities that provide easy operations for our team members and our franchisees, and capabilities that generate easy insights from all of that data. It's a very comprehensive framework. We're building platforms in each of those areas that all of our brands and all of our markets can leverage. What the technology teams at the brand do is ensure that the interface between those platforms and the customer or the platforms and the franchisee are still relevant and tailored to the brand and to the individual market. The way your e-commerce should come to life in Thailand and KFC is probably going to be a little different than the way Taco Bell should come to life in Guatemala. That's the synergy or the collaboration that we're trying to get across those two components. We've made tremendous progress, and the results show 45%. Of course, I someday think we should be at 100% digital. I don't know how long it's going to take us to get there, but that's where I think we should be. In some ways, we're still in the early innings of this journey, so those platforms are still being implemented. T here's a lot of work to sort of get everyone onto the platforms. Once we're there, we'll be able to move so much faster, with new innovation and being at the leading edge of technology, because we won't have to be doing multiple integrations across markets, that sort of thing. I think we will be faster, better, and with advantaged economics for our franchisees and for us in the long run, as a result of the strategy. You talked about easy insights, and I'll focus on that first. What are some of the kinds of insights you can pull? C an you use data or transaction data across the multiple brands and use that to inform brand-specific decisions? Maybe give us a little bit more insight or detail on that since we're restaurant investors, not necessarily technology investors. Yeah. Yeah. So- In the easy insights area, we've got a set of capabilities that we've built in our data sciences team, but we've also acquired some. There are two acquisitions that we've made that partner together. One, a company called Collider. Collider is a set of the biggest kind of marketing and consumer insights brains that you'll ever find. Ken Muench and his team are just amazing. Every time I hear him speak, they blow my mind. They're the art, and they acquired a company called Kvantum, and it's an analytics company that's based in the U.S. and India, and it brings the science. That's the combination of art and science. Kvantum's calling card was marketing mix optimization. If you think about it, with the advent of digital, there's this transition from marketing channels, television, mass media, to very individualized, digitally driven marketing. That shift is happening at different paces in every single one of the 155 plus countries in which we operate. Kvantum helps us get that right. We're optimizing our marketing spend, and they're doing that across brands and across markets. That was their calling card. They have a tremendous set of other capabilities. Another example is pricing. We're now doing a lot more of our pricing analytics internally through Kvantum and in much more sophisticated ways. They're providing customer-driven, store-level, SKU-level insights and recommendations to our franchisees about where to price. Franchisees will ultimately decide, on where to place that. Working with our marketing teams in each brand to generate customer insights that are relevant to the brand. Increasingly, you mentioned that increasingly we are able to generate insights from a multi-brand perspective, which is, having a more holistic view of the customer is aiding our marketing programs in each of our brands. Those are just a few examples of how easy insights are coming to life. Right. I always think about that with respect to sort of the loyalty programs, the loyalty, the real sort of pile of gold or whatever have you, is the treasure, is like the data, right? That's really that insight and being able, which is good for customers because you're targeting and giving them what they want more precisely, and it's good for the business. Maybe we could talk a little bit about loyalty and sort of the. How you think about that. Again, how across the three brands, what the intentionality is behind it in terms of frequency or spend or maybe, how you would look at it? Yeah. More than 50% of our restaurants globally now have a loyalty or are part of a loyalty program. Now, a lot of our competitors have loyalty programs as well. I think in the near term, there'll be some distinctiveness that comes from the design of the program. I agree with the statement you just made, which is in the long run, I think the companies that make the best use of the data generated from loyalty will be the ones who find this to be a competitive advantage, and that's why we're investing in the easy insights component underneath that. We think when we've done the analysis at Taco Bell, I mentioned earlier, every time we shift sales to digital, we see an increase in frequency, and we see an increase in check size. If you then were to say, "Okay, now what if we go from somebody just using the app casually to being a member of the loyalty program?" You see an additional step up, you know, even when you control for other factors around the the usage, the normal usage of the customer. It's because you get richer, they get an even tighter connection. If you're in the US right now, and you want go take advantage of the new Volcano Menu, which returns today, I think the first couple of days, the only way to order it is if you're on the Taco Bell app and a member of the loyalty program. There are some reasons that you want to be there. You also can take advantage of a set of promotions or other value that we can deliver through that. We obviously build a deeper relationship with those customers and understand more about them. The customer benefits, we, you know, we benefit, our marketing becomes much more productive. You know, everybody wins in the equation, but that's part of how that comes to life. Right. I'm checking the time. I think we probably have, maybe 10 more minutes to sort of, this is from my reminder for myself, because I would go on forever. I wanted to make sure we hit KFC, and the other brands, and also talk about sort of the portfolio capital allocation piece. Yeah. KFC is a big driver of the acceleration, in the algorithm. H ow sustainable is that, you know, outside of development, if you will, on that? What is? H ow should we think about the proximity to the unit economics there that have improved dramatically? Is there something else, is it, that has opened up markets? Just what are kind of the key drivers for the momentum we've been seeing? Well, the KFC business is an incredible global business. As I go visit markets around the globe, and you see how it comes to life, it's just such a tremendous brand with great partners and tremendous scale in many markets, despite having a lot of white space left to grow. I n some ways, we talked about Taco Bell in the US as a category one. KFC outside of the US is similar in many ways. It's almost a category of one. In a lot of these markets where we're operating with KFC, they're either the only really well-established QSR brand, or there's only one or two. Contrast that with the US, where the chicken market is pretty competitive. Right. Remember, 80+% of our KFC business is outside of the U.S.. It's a very global business. Outside the U.S., I think we have the structural advantage of being the first mover into those markets, having expertise around franchising, and have selected great partners in each of these markets who are bringing it to life. S econd, the unit economics are tremendous. It's so quickly translatable to new customers. That's why we say, in total, we think we can have another 100,000 restaurants. 50,000 of those we think are in KFC, and about half of those we've already mapped where they could be. There's a lot of white space opportunity. The unit economics remain strong. If you listen to Yum! China talk about the returns on their new units, in China, very fast paybacks. I think that's fundamental part of it. Our digital mix in KFC is actually higher than it is in Taco Bell. Mm. We're at a 40% digital mix in KFC globally. Our digital strategy is working well and driving sales in the ways that we've talked about across markets. It's just an amazing brand, and similar to what Taco Bell does in terms of creating buzz and cultural relevance, KFC does that in their own way. They may focus a little more on the cravability of the food, but we look at some of the marketing they're doing in South Africa, as an example, where we have an amazing business. It is a cultural trendsetter and buzz generator in that market as well, and we see that in other markets with KFC. Finally, they're providing tremendous value. They're using their scale to provide this very cravable product with the 11 Herbs and Spices, which in many markets outside, around the world, is largely a chicken off the bone, product menu. Mm-hmm. We got tremendous sandwiches, tremendous strips and nuggets businesses around the globe. They're bringing that to life in a way that resonates with customers and delivers great value. Right. Y ou mentioned how intensely competitive the U.S. is versus markets of one in international markets. Do you worry about competition, any of the sort of competitors from the U.S. having ambitions of growing or local competitors? Is that something that you worry about, or is the sort of scale and first mover, are those advantages so significant that it would be hard for anybody to catch up? I'll give you two answers to that. One, we are an intensely competitive company. We don't take any competition lightly. We are always out saying: How are we beating the competition? What are we doing to deliver a better value proposition to our customers and our franchisees than our competitors can? That is our mindset. You said the U.S., a lot of competition in this space in particular. If you look at it, a lot of those are either company-owned store models or, you know, franchise models that are, you know, highly company controlled, you know, where the franchisor might own real estate, the franchisees might be limited to one or two restaurants, for example. That has worked well for a number of those competitors in the U.S. If you look globally, there's really only a handful of companies that have figured out how to take brands globally at scale, and franchising is the core competency that enables brands to do that. That handful of companies, you know, have figured that out, but a lot of companies have tried and have not figured it out. I think we are the global franchisor of choice, and that gives us a tremendous advantage outside of the U.S. in how we've built the business. Part of why we're so focused on development, we think there's a first-mover advantage in these markets to have an installed base of significantly, you know, significantly dense network of restaurants in each of these markets. We think we are building up outside of the U.S., a very defensible, competitive advantage in the chicken category, but we're gonna continue to take all of our competition very seriously. Right. Understood. Yeah, no, I certainly don't mean to sort of understate, yeah, how focused on the market and the consumer and competition you are, it's helpful context, you know, for those of us Americans who are used to seeing a lot of different brands out there. Maybe, we could talk, then let's transition a little bit, so I can make sure I hit everything. Let's talk about Pizza Hut. Yep. That's also a global brand, and I think in some ways looks very different outside the U.S. versus what it does, inside the U.S. I can't speak to the U.K., which is where we are now, but maybe talk a little bit, same thing there, kind of some of the strategic priorities, and, you know, in some sense, kind of maybe help us understand how Pizza Hut's positioned, whether it's dine-in versus off-premise, that looks globally versus. Sure. What I know in my home market. Yeah. I n the U.S. and in some of our global markets, Pizza Hut grew up as a dine-in brand, and we've been in this, you know, transition to a modern, off-premise delivery brand. We've made tremendous progress. In many international markets, the Pizza Hut grew up that way, and so the U.S. business has always had strong performance, good unit growth, you know, good same-store sales growth. It, it is a more competitive category than the, you know, than what KFC and Taco Bell face. Pizza is a more competitive category. In general, our international business has always delivered strong growth. The U.S. had to go through this transformation from that prior business model to the new business model. The health of the U.S. business is in a much stronger place than it was even just five years ago. Our franchisee base is strong. Greg Flynn now is the largest franchisee in the U.S. system, biggest restaurant operator in the U.S., systematically going through improving performance in each of those restaurants. The food innovation engine is back at full speed. That's how they developed the Melts so quickly and are taking those to international markets. R eturn of The Big New Yorker. Our digital capabilities with the acquisition of Dragontail in the easy operation space, which is a totally new way of managing the restaurant in a delivery environment, is really enhancing performance in our Pizza Hut restaurants around the globe, and we're rolling it out in the U.S. Our marketing has a new spring in its step at Pizza Hut. All of those things have contributed to the health of the business, and you saw the performance there with the same-store sales in Q4 and then in Q1 in the U.S. +8%. R eally strong performance in a highly competitive category. It's a competitive category, so there's going to be puts and takes, but in the long run, we're very optimistic and bullish on the future of the Pizza Hut brand. Right, one of the things you mentioned some strong performance. What role do aggregators play in that with Pizza Hut, but also maybe your relationship broadly as a partner in the digital business? A step back, we want to be where our customers want to do business with us. When we meet them there, we have to do it in ways that work for our franchisees and for us from an economic standpoint. That's exactly what we've done from an aggregator standpoint. Remember, again, this is another one I can't take credit for, but the leadership team, David and team, back in 2018, made an investment in Grubhub, which was not a financial move. It was about learning about this aggregator space that was starting to grow. We had a board seat at Grubhub. We learned a lot about how the sector, the space operates. Our learnings informed how we went about building relationships with aggregators around the globe. In many markets, not all markets, but in many markets, the way our relationships are set up, our economics are very similar from channel to channel. If a customer wants to meet us on an aggregator platform or wants to, if an operator or one of our franchisees wants to use delivery as a service to help augment their own delivery capabilities of Pizza Hut, that's great because the economics work for us. That to us, that's just another way to help deliver a customer need and meet the customer where they want to be met. Our aggregators have been good partners in doing that. Of course, if there is a higher price that the customer pays, in that channel, if the customer ever says: Hey, I'm not willing to pay that, we've got, all of the other channels, click and collect, our own delivery channels, where we think we provide a really easy, convenient experience that they can go to, at a little bit lower cost. Right. Right. That's sort of through line of meeting the customer where they are, you know, and providing them with the use case or the occasions that they need. I n the last few minutes, I wanted to talk a little bit about Habit and also the broader context of the portfolio capital allocation. Habit does seem to present a little bit different use case. It's fast casual, not versus traditional QSR. Maybe help us think about the sort of the process behind the acquisition, and then going forward, I'll tack on two questions related to that. One would be, do future acquisitions, if there are future acquisitions, they look similar. How should we think about your financial structure leverage in the context of how you're thinking about using your cash? Yes. Habit, we are very excited about the Habit and think that someday there'll be thousands of Habits around the globe. David, our CEO, Tracy Skeans, our Chief People and COO, were with the Habit team, out visiting stores last week. I'd say, the thought process behind Habit was we hadn't done one acquisition in many years. The last ones we've done were a little bit more turnarounds. I don't think we're the right. You know, we're not the turnaround play. Habit was grounded in growth. We had an iconic brand in Southern California. If you go to Southern California, there's a cult following for the Habit. It was starting to expand outside of California. It, it needed some help with the growth capabilities. Didn't really know how to do franchising, needed some development expertise, could help make the brand more distinctive. We thought we could provide this. It was also subscale, and subscale brands at that time were starting to fall a little bit out of favor in the market. You know, Habit had north of a $1 billion valuation at one point, which we acquired it, you know, in the $400 million range. W e could leverage our scale. Third, we think in the long run, it'll provide an exciting new growth opportunity for franchisees in our system. Lastly, we thought there was significant shareholder upside because of, you know, the valuation where we were able to acquire it. The only thing that kind of got in the way of the plan on the Habit was COVID. COVID. We announced it on 6 January 2020, and just a couple of days later, you started to see these news stories roll in. COVID just created a delay in the plan. More than 50% of the sales were in the dining room, so our first focus was just stabilize sales and sustain sales when, you know, this channel that represented half the business sort of went away overnight. That was the primary focus. That's where the delay came. Now we're focused back on the integration plan. Right now, Shannon Hennessy, who's our new CEO and president there, she's focused on getting the PNL to the right place. Margins were a little compressed with the inflationary pressures. She's focused on that. They're gonna focus on a return to strong same-store sales growth while we have the development engine going. We've learned a lot from the integration. If you look at our playbook that we used, I'd probably say 60% to 70% of that worked really well, but there's 30% to 40% if we were to do another acquisition, I'd do a little differently. We've generated a ton of learnings from it, which was another reason that we did it. As we've said, we're keeping our eyes open for opportunities in the market, but they'll fit those same things that I mentioned: growth, opportunity, leverage our scale, exciting for our franchisees and shareholder value creation. You mentioned capital on the end, you know, our approach to capital is about optimizing returns for our shareholders. Past few years, that's meant landing at a 5% leverage target. We said this year. Five times. I'm sorry, not 5%. Five times leverage target. Yes. That was where we thought we could optimize returns. The thing that's changed is not the upside in the share price. We still think there's tremendous upside in the share price. The thing that's changed is where interest rates are, and that's changed the math in the model. We've said this year, we're likely going to flow lower than five times. We don't have to take an action to do it. We don't have to go pay down, you know, low price debt that's already on the balance sheet. We simply have to grow in to the lower leverage, and that does mean we'll do fewer buybacks this year as we're growing into it, but that's the right thing to optimize value for our shareholders. Good. Great brands focus on optimizing value for shareholders. It's a great place to leave this. Thank you so much. This has been super helpful for me. Thank you so much. I appreciate you having us.