01

YUM! BRANDS 2015 ANNUAL REPORT

02

02 DEAR STAKEHOLDERS

04 CHINA DIVISION

06 KFC DIVISION

07 PIZZA HUT DIVISION

08 TACO BELL DIVISION

09 HUGE HEART

10 CONCLUSION

CONTENTS

2015 was a landmark year for Yum! Brands. Late in the year we announced our

intention to spin-off our China business into an independent, publicly-traded company.

Our decision to create two powerful, independent, focused growth companies is a

classic example of one plus one being greater than two. Yum! China will be China’s

largest independent restaurant company, with no meaningful external debt. New Yum!

will be a global, diversified, franchise company with an optimized capital structure. The

separation of these two distinctly different businesses will give shareholders the best of

both worlds. Yum! China will be a focused China investment with strong national appeal and

major growth potential and will target annual ongoing EPS growth of approximately 15%.

This company will have tremendous new-unit potential in China’s growing consumer economy

and inherent value from improving unit economics. Yum! China will also have a self-sufficient

business model, funding all of its capital needs, while having the potential for stock buybacks in

year one. New Yum! will be an even more highly franchised

company with three leading global brands, leadership in

emerging markets, clear average-unit volume and new-

unit growth opportunities, less volatile cash and earnings

streams, and high shareholder cash returns. New Yum! will

target approximately 15% annual ongoing shareholder

return, defined as EPS growth plus dividend yield.

In addition, we intend to return approximately $6.2 billion

in capital to our shareholders prior to the completion

of the spin-off. This is an incremental return of capital

beyond our regularly planned dividend.

Needless to say, 2016 will be a transformational year for Yum! as we complete this spin-off. The fundamental goal of Yum!, however, is unchanged. We are 100% dedicated to building and strengthening KFC, Pizza Hut and Taco Bell all around the world as strong brands are critical to delivering sustained growth and creating long-term shareholder value.

DEAR STAKEHOLDERS,

15% ANNUAL ONGOING

EPS GROWTH IN CHINA

$6.2 BILLION OF INCREMENTAL CAPITAL RETURN PRIOR TO CHINA BUSINESS SPIN-OFF COMPLETION

Please see our Safe Harbor Statement in the back following the Form 10-K.

03

In 2015 EPS excluding Special Items grew to $3.18 per share,

or 3%, despite a 7% decline in the first half of the year.

With restaurants in over 130 countries and territories we have

foreign exchange exposure from the impact of translating our

foreign profits from local currencies into U.S. dollars. In 2015

we had six percentage points of foreign currency headwinds.

Excluding these currency headwinds full-year EPS grew 9%

despite lower than expected sales in our China division.

While 2015 EPS was below our initial expectations, I was

pleased with the sales momentum we generated across

the majority of Yum! in the fourth quarter and look

forward to building on this in 2016.

YUM! CHINA

FOCUSED CHINA INVESTMENT

STRONG NATIONAL APPEAL

MAJOR GROWTH POTENTIAL

TARGET APPROXIMATELY 15% ANNUAL ONGOING EPS GROWTH

NEW YUM!

FOCUSED, HIGH MARGIN, GLOBAL FRANCHISE COMPANY

MAJOR GLOBAL GROWTH

TARGET APPROXIMATELY 15% ANNUAL ONGOING SHAREHOLDER RETURN

GREG CREED

ONE PLUS ONE IS GREATER THAN TWO

For the full year our brand divisions collectively grew operating profit 8% in constant currency, which is

in-line with our ongoing growth model target. This was led by 12% operating profit growth at Taco Bell – a

remarkable result given the significant investments we made in the fourth quarter to position the brand for

continued momentum and category leadership for years to come. Operating profit grew 8% in constant

currency in China, with impressive cost management partially offsetting weaker than originally anticipated

sales results.

In 2015 worldwide system sales grew 5% in constant currency, which included increases of 8% at Taco Bell,

7% at KFC, 2% at Pizza Hut and 2% in China. Same-store sales growth was positive across all three of our

brand divisions, with Taco Bell at 5%, KFC at 3% and Pizza Hut at 1%. China’s same-store sales declined 4%

in 2015 but we have plans to return both KFC China and Pizza Hut Casual Dining to positive growth in 2016.

We opened 2,365 new restaurants globally in 2015. This year we expect to open nearly 2,400 new restaurants,

which means we’re opening over 6 new restaurants a day, laying the groundwork for future growth. Given

the plans we have laid out for each of the divisions, we’re confident in our ability to deliver 10% operating

profit growth in constant currency in 2016, which includes the benefit of a 53rd operating week for part of our

brand divisions.

CHIEF EXECUTIVE OFFICER YUM! BRANDS, INC.

04

In China we opened 743 new restaurants in 2015. Our disciplined

approach to development balances our continued, strong belief in China’s

long-term growth potential and strong cash paybacks on new restaurants

with current market realities. In 2016 we plan to open 600 more restaurants

in China. This reflects the opportunities we see across our brands

to enter new trade zones and expand our presence in existing ones.

Our net-new unit growth in 2016 will

be similar to 2015 as we expect fewer

closures this year. We expect 2016

to be another year of sequential

operating profit improvement with

growth of 10%.

KFC CHINA KFC, which represents about 75% of China’s operating profit,

grew same-store sales 6% in the fourth quarter, continuing

the sequential improvement we saw throughout the

year. While same-store sales declined 4% for the year,

total system sales in constant currency were even as

we added 175 net-new units, surpassing the 5,000

unit mark. KFC has more than twice the number of

restaurants of our nearest Western QSR competitor

and is in about five times more cities. This beloved

brand reported restaurant-level margins of 16%, a

full percentage point higher than 2014, despite a

decline in same-store sales. These fundamentals

demonstrate our progress in productivity

initiatives and the tremendous operating

leverage the brand should realize as sales

continue to improve.

We know we still have work to do at KFC and I’m thrilled the

China team is applying global best practices, fresh thinking and

new insights to revitalize the brand and achieve traction with

consumers. Early test results of proven, global, sales-driving

tactics are encouraging and the implementation of these

programs should drive transactions and benefit the division

later this year. One example is box meals, which have proven

successful globally and which we expect to be similarly well

received in China. I can assure you we are taking the right

steps to grow this business – and the momentum we are

seeing makes me confident we will.

743NEW RESTAURANT

OPENINGS IN 2015

KFC BOX MEAL

05

PIZZA HUT CASUAL DINING CHINA Pizza Hut Casual Dining, which represents about

25% of China’s operating profit, is the Western Casual

Dining category leader with nearly 1,600 restaurants in

over 400 cities. This is a lead of around 6:1 over our nearest

Western Casual Dining competitor. In 2015 system sales

in constant currency grew 10% as we added 259 net-new

units, but same-store sales declined 5%. The macroeconomic

environment and volatile stock market impacted the casual

dining segment and we know we must generate more exciting

news and value to counter this headwind. We’ll be more

focused on value going forward with workday lunch specials

and value pizzas – as well as other initiatives to drive traffic.

We have our work cut out for us here, but the China team has a

number of strategies and concepts in test that we expect to improve

results. We know there

is substantial runway for

new units and same-store

sales growth for China’s

leading Western Casual

Dining brand.

259 NET-NEW PIZZA HUT CASUAL DINING UNITS IN 2015

6:1RESTAURANT COUNT OVER NEAREST WESTERN CASUAL DINING COMPETITOR

PIZZA HUT CASUAL DINING’S LEAD IN

06

KFC is a franchise-led, emerging-market powerhouse.

With nearly 15,000 restaurants in 120 countries and

territories, the brand generated $16 billion in annual system sales and has grown operating profit over the last

three years at a 9% compound annual growth rate in constant currency. I’m thrilled to see KFC’s “Always

Original” positioning gaining momentum and being adopted globally, which I believe will lend further

strength to the brand.

Franchisees opened 85% of our 705 new international restaurants in 2015. Total system sales grew 11% in

emerging markets for the year, with particular strength in Russia and Central and Eastern Europe. In fact,

Russia has generated system-sales growth of at least 40% in each of the last four years. We have tremendous

potential in emerging markets, where we have a significant lead over the competition. I’m also encouraged

by our recent performance in developed markets, such as Australia, the U.S., and Japan. International

developed markets’ system sales grew 6% in 2015 and U.S. system sales grew 2%. These results reinforce my

confidence in the brand’s ability to drive sales going forward. We have an unbelievable ability to generate

meaningful growth in mature markets, where we have a long established presence. We are taking our global

brand identity and unifying that with local cultural insights to expand and grow our business all around the

world. We are 100% focused on our real, authentic and freshly prepared food and merging that with value

and innovation to drive results. On the international front we’ve enjoyed success with lunch and dinner box

meals. In the U.S. we recently introduced Nashville Hot Chicken. This is a spicy version of our crispy chicken,

inspired by one of Nashville’s most famous dishes. We’re excited about the possibility of this innovative

product finding its way into the system outside of the U.S.

The new-unit pipeline at KFC remains impressive. In KFC’s top 12

emerging markets, excluding China, we only have one restaurant

per million people today. With an aggregate population of 3 billion

people in these markets, think of the potential. Across the world

we have plans in place to grow sales and to build on the division’s

consistent operating profit growth performance. This year we expect at

least 675 new international restaurant openings and to grow operating

profit 11%, which includes a one percentage point benefit from the 53rd

operating week. I am confident KFC will continue to excel and reward

shareholders in the years to come.

15,000NEARLY

RESTAURANTS WORLDWIDE

MELBOURNE, AUSTRALIA

NASHVILLE HOT CHICKEN

07

At Pizza Hut U.S., which generates

about 60% of the division’s operating profit,

we are starting to turn the corner with our

focused emphasis on “making it easier to

get a better pizza.” This runs the gamut from

improved operations and insight-driven food

innovation to digital enhancements and consistent

value. While we recognize there is a lot more work

to do, we’re now generating positive momentum

with same-store sales growth.

Equally significant, we reached an important agreement

with our U.S. franchisees. Starting in January, we and

our franchisees began an overhaul of Pizza Hut’s assets,

replacing ovens and upgrading in-store technology. From a

marketing calendar perspective, we are focused on a balanced

approach. You may have seen the launch of our $5 Flavor Menu,

the most compelling value menu in the pizza business. In conjunction with our ongoing $6.99 Any Pairs deal

it provides our customers with great value on an ongoing basis. Simultaneously, we are offering premium-

priced innovation, such as our recent launch of the Stuffed Garlic Knots Pizza, to protect and improve

unit-level economics.

Our international business at Pizza Hut is led by strength

in emerging markets but offset by weakness in some

developed markets. We believe we can apply best

practices from the U.S. business to drive growth in

these developed markets going forward. In 2016

we expect to open at least 525 new international

restaurants. We also expect to grow operating

profit 7% in constant currency, which includes

a two percentage point benefit from the 53rd

operating week.

525

STUFFED GARLIC KNOTS PIZZA

NEW PIZZA HUT U.S. DESIGN

NEW INTERNATIONAL RESTAURANT OPENINGS PROJECTED IN 2016

08

Taco Bell delivered a fantastic 2015, surpassing $9 billion in system sales, and we expect a solid year in

2016 as well. Taco Bell is on the cutting edge of QSR and is the industry gold standard for social engagement,

product development, brand positioning and advertising. The brand’s Live

Más positioning is an example of how strong brand identity can drive

success across the spectrum. We have several new, exciting products

launching this year, including the Quesalupa, which we introduced

during Super Bowl 50. Our innovation focus extends beyond just

food. We are encouraged by early results of our delivery program

and are developing expansion plans for additional cities. The addition

of our loyalty program in November builds on our

mobile app and will increase brand affinity as it rewards social

behavior. Furthermore, we are focused on our core value messaging to

drive transactions. We continue to build our breakfast day-part where

sales are growing at twice the rate of the business as a whole. In fact,

we grew breakfast transactions 6% in the fourth quarter.

Given the brand’s strong economics and broad franchisee appeal,

we continue to accelerate new-unit openings both domestically

and internationally. We had a record number of U.S. openings

in 2015 and expect to build upon this in 2016. I’m particularly

excited that we’re starting to get some traction expanding

this great brand internationally. We know this process will

take time, but we’re making real progress here. In 2016 we

expect to open at least 300 global new restaurants and

to grow operating profit in constant currency 9%, which

includes a three percentage point benefit from the 53rd

operating week. Our growth plans both domestically

and internationally will lay the groundwork for higher

operating profit growth in the years to come.

$9 BILLION

SYSTEM SALES OF MORE THAN

QUESALUPA

TOKYO, JAPAN

09

HUGE HEART Last but not least,

I want you to know I am proud of the way

our three iconic brands come together

to show we’re a company with a Huge

Heart – opening doors, growing people

and truly caring about the world. Making

responsible decisions as we build brands

people trust and champion is core to us being

a good corporate citizen. This includes leading

the world’s largest private sector hunger relief

effort, where we set the bar high every year in

support of World Hunger Relief and raised more

than $35 million in cash and food donations in 2015.

Since 2007, our efforts have raised $640 million in

cash and food donations resulting in 2.6 billion meals

going to people in need. Together we are making a

meaningful difference in peoples’ lives.

I am equally pleased that all of our divisions have

meaningful community engagement efforts that

positively impact the local communities where

they live and work. And trust me, we are going

to get better and more courageous every

day at delivering the high quality, high

integrity contributions our consumers most

care about in our food, people, communities

and environment. I invite you to view our

progress in our online Corporate Social

Responsibility report.

FEED THE WORLD AMBASSADOR PROGRAM

LIFE UNBOXED

ADD HOPE

GRADUATES FOR MÁS

10

With all this progress you can see why I am very excited about what’s happening at our company. We are

undertaking the biggest strategic move in the history of Yum! with the planned spin-off of our China business.

We’re confident this will create two powerful, optimally-structured, independent companies with unique

investment profiles. And, I want to assure you that while the spin-off transaction is critically important we’re

not going to let it distract us from running the business in China or anywhere else.

All three of our brands have significant opportunities for growth as

they progress along the journey to brand excellence. We expect

to achieve 10% growth in operating profit in constant currency

this year, which includes the benefit of the 53rd operating week,

and are setting up two separate companies that will lead the

restaurant industry going forward. Yum! is in a unique position. We have three iconic brands and are making

them even stronger. As you’ve heard me say before, my goal as CEO is to build three global, iconic brands

that people trust and champion. We are well on our way to achieving this, led by our brand positionings,

courageous leadership and committed team members and franchisees. Needless to say, there is a lot to be

excited about at Yum! and I could not be more pleased to lead this company into its next phase.

Finally, I want to take the opportunity to thank several senior executives who are retiring from Yum!, each

of whom made significant contributions to the company for many years. First and foremost, David Novak,

who will step down as Executive Chairman in May, completing his retirement plan. As co-founder, Executive

Chairman and former CEO, David’s contributions to this company are far too many to put into words.

He has created a world-class company, renowned recognition culture and high-performance orientation that

will stand the test of time. As a result, our shareholders were well-rewarded during his

tenure. David served as a caring and inspirational coach and mentor to many, including

me. I thank him for his visionary leadership and for entrusting our company to the next

generation of leaders. I’d also like to thank Sam Su, who retired in August from Yum!

China as Chairman and CEO, and as Vice Chairman of Yum! Brands. Sam is a true

pioneer who led the tremendous growth of our China business, creating one of the

finest restaurant companies in the world. Lastly, I’d like to recognize Massimo Ferragamo, who also will be

stepping off the Board. He joined the company at its inception and has been an invaluable Director since

that time. We owe each of them a debt of gratitude and wish them continued success and happiness.

And of course, I thank our Board of Directors, employees and franchisees around the globe, whose

contributions are truly inspiring and who are helping Yum! Feed The World.

Cheers,

“We have three iconic brands and are making them even stronger. “

GREG CREED CHIEF EXECUTIVE OFFICER YUM! BRANDS, INC.

FEEDTHE

WORLD