YUM 05/06/08 Part1a

This presentation will include forward-lookingstatements that reflect management’s expectations based on currently available data. However, actual results are subject to future events and uncertainties. The information in the presentation related to projections or other forward-looking statements may be relied on subject to the safe harbor statement posted on

our Web site: www.yum.com.

This presentation will include forward-lookingstatements that reflect management’s expectations based on currently available data. However, actual results are subject to future events and uncertainties. The information in the presentation related to projections or other forward-looking statements may be relied on subject to the safe harbor statement posted on safe harbor statement posted on

our Web site: www.yum.com.our Web site: www.yum.com.

Information herein is as of 4/22/08

Today’s Agenda

Welcome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tim Jerzyk

Opening Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . David Novak

Driving Sustained Global Growth . . . . . . . . . . . . . Rick Carucci

YRI Growth Strategy . . . . . . . . . . . . . . . . . . . . . . . . Graham Allan

BREAK

Taco Bell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Greg Creed

Pizza Hut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Scott Bergren

KFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gregg Dedrick

LUNCH : KFC, Pizza Hut & Taco Bell Food Innovation

Welcome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tim Jerzyk

Opening Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . David Novak

Driving Sustained Global Growth . . . . . . . . . . . . . Rick Carucci

YRI Growth Strategy . . . . . . . . . . . . . . . . . . . . . . . . Graham Allan

BREAK

Taco Bell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Greg Creed

Pizza Hut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Scott Bergren

KFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gregg Dedrick

LUNCH : KFC, Pizza Hut & Taco Bell Food Innovation

Today’s Agenda

U.S. Brands Breakout Sessions/Q&A #1 . . . . . Leadership Team

BREAK: Move to 2nd Breakout Session


BREAK: Beverage/Dessert Innovation

Q&A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . David NovakRick Carucci

Closing Remarks . . . . . . . . . . . . . . . . . . . . . . . . . David Novak

Restaurant Tours at KFC and Taco Bell


BREAK: Move to 2nd Breakout Session


BREAK: Beverage/Dessert Innovation

Q&A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . David NovakRick Carucci

Closing Remarks . . . . . . . . . . . . . . . . . . . . . . . . . David Novak

Restaurant Tours at KFC and Taco Bell

Driving Shareholder Value thruSignificant Share Buybacks

$981

Q1 '04 Q1 '05 Q1 '06 Q1 '07 Q1' 08

$ (million)

$0.6 Bn $1.1 Bn $1.0 Bn $1.4 Bn

Not Your Ordinary Restaurant Company

Dramatically ImproveU.S. Brand Positions,

Consistency and Returns

Dramatically ImproveU.S. Brand Positions,

Consistency and Returns

Drive Aggressive International

Expansion and BuildStrong Brands

Everywhere

Drive Aggressive International

Expansion and BuildStrong Brands

Everywhere

Build Leading Brands in China in Every

Significant Category

Build Leading Brands in China in Every

Significant Category

Drive Industry-Leading, Long-Term Shareholder and Franchisee

Value

Drive Industry-Leading, Long-Term Shareholder and Franchisee

Value

Global Consumer Leader inShareholder Payout

Source: Thomson Financial Data Payout = (Dividends + Repurchase) / Average Market Capitalization

3-Year Annual Average2005 – 2007

4.3%

4.6%

5.2%

5.2%

5.9%

7.3%

7.7%

8.8%

MeaningfulDividend

MeaningfulDividend

SignificantShare

Buybacks

SignificantShare

Buybacks

AddingShareholder

Value

AddingShareholder

Value

Significant Shareholder PayoutsThrough

AND

Quarterly Dividend Growth

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

Q3

'04

Q1

'05

Q3

'05

Q1

'06

Q3

'06

Q1

'07

Q3

'07

Q1

'08

Note: split-adjusted (May 2007 2-for-1 stock split) quarterly dividend

Today…27% increase, from $0.15 to

$0.19 per share

Initiated

15% Increase

30% Increase

Doubled

~4xinitial

dividend

Driving Sustained Global Growth

Driving Sustained Global Growth

NewGrowth

Vehicles

ImprovingCompetitivePositioning

Huge Unit Growth Opportunity

Favorable Global Earnings Portfolio

Sales Layers Leveraging Our Assets

Growth-Oriented Earnings Portfolio

OperatingProfit Mix %’02 ’07

China 10

21

69

YRI

ProfitGrowthTarget

U.S.

OperatingProfit

Impact

24 20 % + 5%

30

46

10 % + 3%

5 % + 2%

Shifting Towards Higher Growth Businesses

+ 10%+ 10%

Note: Operating profit mix % excludes corporate allocation

Earnings Portfolio Driven byGlobal Growth% of Total Operating Profit

Note: Excludes corporate allocation

2017 F

China

U.S.

2007

46%U.S. 30%

YRI

24%China

30%U.S.

30%YRI

40%China

New Unit Growth: Global Opportunity

60

2 3

U.S. MLC YRI

Restaurants per million people

TraditionalRestaurants

(‘000)

U.S. 18

2.6

12

MainlandChina (MLC)

YRI

Select Growth Markets: 2 Billion People

Population(million)

Yum!Restaurants

Restaurants PerMillion People

India 1,130 173 0.2

Indonesia 234 620 2.6

Brazil 190 69 0.4

Russia 141 140 1.0

Subtotal 2,060 1,337 0.6

Nigeria 135 0 0

Vietnam 85 46 0.5

Germany 82 123 1.5

France 63 166 2.6

Note: Traditional units as of Q1 2008

Unit Growth Acceleration: U.S.

403

3,148

9,408

14,921

20,037

'60 ’70 ’80 ’90 ’00

Avg Annual Increase +626 +551 +512+275

* Taco Bell, Pizza Hut and KFC

Yum! U.S.Total Units*

Unit Growth Acceleration: China

1241

2,558

’87 ’97 ’07

Yum! Mainland ChinaTotal Units

Avg Annual Increase

+24 +232

Unit Growth Acceleration: YRI

8,649

10,418

12,354

’97 ’02 ’07 ’12 F

Avg Annual Increase

(Select Growth Markets)

Select GrowthMarkets

+121+14

Total Units

Strong International Competitive Position

OtherTop 10

U.S.QSR*

U.S. INTERNATIONAL

*Subway, Wendy’s, Burger King, Sonic, Arby’s, Jack in the Box, Domino’s, Papa John’s, Hardee’s, Popeye’sSource: Piper Jaffray restaurant benchmark book (September 2007)

Total Units(000s)

53,598

20,061

13,774

15,199

14,528

17,272

Competitive Position:Two Scale Players

$1,700

$800

Average of Other Top 10 U.S. QSR Concepts

$40

International Marketing Spending($ million)

Note: Company estimates

Power of Competitive Positioning

Scale AdvantageScale Advantage

Marketing Spend Higher Brand AwarenessMarketing Spend Higher Brand Awareness

Purchasing Power Greater Cost EfficienciesPurchasing Power Greater Cost Efficiencies

Talent Base Stronger LeadershipTalent Base Stronger Leadership

A Virtuous CycleA Virtuous Cycle

Yum! Position Strengtheningvs. McDonald’s Outside U.S.

2002 2007

15,400

17,515

(2,075)

17,617 Flat

11,798

(5,819)

CAGR

+5%

Difference

Total Units Outside the U.S.

Note: Excludes corporate allocation

Expanding Lead in South Africa

2002

341

89

+252

2007

479

McDonald’s 110

Advantage: KFC +369

Taking the Lead in Middle East

2002

293

338

(45)

2007

462

McDonald’s 450

Advantage: KFC +12

Expanding Lead in Indonesia

2002

181

105

+76

2007

300

McDonald’s 105

Advantage: KFC +195

New Growth Vehicles

East DawningEast DawningEast Dawning

Taco Bell InternationalTaco Bell InternationalTaco Bell International

Pizza Hut Home ServicePizza Hut Home ServicePizza Hut Home Service

Pizza Hut DeliveryPizza Hut DeliveryPizza Hut Delivery

Summary: Sustaining Global Growth

Strong and Even Better Earnings Growth Model

Long Runway for Global Unit Growth

Improving Competitive Position

Incremental Growth Potential from New Concepts

Achieving Explosive Growth

Around the World

Key Messages

• Strong and diverse business with consistent track record

• Category leading brands with huge upside

• Exciting potential in key growth markets

• High returns for shareholders

Another strong year in 2007…

2004 2005 2006 2007

$337

$372

$407

Profit ($MM)

Notes: 2004 profit and growth do not include impact from expensing stock optionsGrowth rates exclude Fx and the impact of the extra week in 2005

9%

12%

12%

$480

… built on record openings and healthy growth in unit volumes

New Openings

852

785780

2005 2006 2007

Same Store Sales Growth

4%

2%

6%

2005 2006 2007

Several key elements in consistent results

• Strength of local management

– 15 Business Management Units

– Local teams

– $375MM of G&A in 2007

• Tradition of in-market innovation

• Local relevance

• Culture of discipline and urgency

• Balanced portfolio

Well balanced portfolio

Developed Markets

Developing Markets Total

’07 Growth (23) 486 463

System Sales 63% 37% $13B

’07 Growth /1 5% 18% 10%

GDP per Capita /2 $30K+ <$3K $8K

Units 57% 43% 12,173

Population /2 750M 4.3B 5.1B

/1 Ex Fx/2 Data excludes US and China

2006 2007

Franchise

Significant franchise base driving majority of growth

Units New Unit Openings

Equity

2006 2007

8527856%

94%

6%

94%

11,71012,173

15%

85%

13%

87%

KFC is already a global powerhouse…

Africa 500 38

Americas 1,539 17

Asia 2,459 111

Australia/New Zealand 654 9

Europe 1,272 111

Middle East 462 50

Total 6,886 336

YE 2007 Units 2007 Net Builds

…and is bigger than McDonald's in many parts of the world

South Africa 479 110

Malaysia 402 176

Indonesia 300 105

Caribbean 246 154

Ecuador 76 15

UAE 67 51

Other 5,316 16,028

Total 6,886 16,639

YE 2007 Units

KFC is positioned around Taste all around the world

• Global cohesion is significant development

• Respect for local culture

– Menu

– Marketing

• Credible, resonant and relevant point of difference

• Filter for new products and consumer communication

Committed to making KFC a modern brand everywhere

Contemporary Assets Menu Innovation

Big Brand Marketing InitiativesYouthful Communication

Actively pursuing major sales layers

Beverages


Breakfast


Non-Fried


Seafood

PH competes in two growing channels

Delivery/TakeawayInternational

Market Size ($B)

14

22

2002 2007

Dine-inInternational

Market Size ($B)

29

48

2002 2007

+10%CAGR

+11%

CA

GR

Note: Data from Euromonitor, excludes the US and China

Pizza Hut is the world’s leading casual dining chain

116150164~200

1,966

PH Dine-In TGI Friday's Chili's Outback Applebee's

International Units

Countries 100+ 38 24 20 17

Note: PH Dine-In excludes China. International units for other brands are an estimate based on publicly available information and may include China.

Our strategy is to strengthen our casual dining offer

Appetizers Desserts

Pizza Pasta

Our strategy is to strengthen our casual dining offer

Tea Time Day Part Value Layers

Branded ServiceAssets

Hot is the cornerstone of our delivery positioning

We are also testing a new delivery brand – PHD

• Right locations

• Speed and value

• Simple menu and operations

Focused on delivery fundamentals

Taco Bell is an exciting opportunity for YRI

• 15 markets today

• Meaningful scale in Central America

• Open in Monterrey, Mexico

• Launching in 3 other markets in ‘08

Current Status

YRI targeting big growth markets like India

• 33 KFC’s

• 137 Pizza Huts

• 3 PHD’s

• Taco Bell to be launched

Current Status

Building a great business in Russia

• 118 Rostik/KFC’s

• Partner is great concept leader with proven record

• Senior operations leader is a YUM employee

• Aggressive unit growth plans

Current Status

Europe still has huge growth potential, especially for KFC

• France still breaking records

• Germany much stronger

• Spain doing well

• Poland growing fast

• Big plans in CIS countries

Opportunities abound in many other parts of the world

Southeast Asia Middle East

AfricaLatin America

YRI generates high cash flow…

EBITDAUS$ MM’s

Capital ExpenditureUS$ MM’s

537

654

2006 2007

118

189

2006 2007

…and world class returns for shareholders

ROIC

18% 18%

2006 2007

Summary

• Strong base

• Category leading brands

• Huge growth potential

• Great returns

The Bold Choicein QSRThe Bold Choice in QSR

The Bold Choice in QSR!The Bold Choice in QSR!

Clear Brand PositionClear Brand Position

The Last Affordable Fast Food Restaurant

Our Credibility Value PropositionWe invented Mexican Fast Food

Our OpportunityOur Opportunity

Turn Mexican QSR segment leadership…Turn Mexican QSR segment leadership…

BalanceBalance

Mexican QSR Sales = $10.6B

Baja FreshBaja Fresh

Del TacoDel Taco

ChipotleChipotle

Taco BellTaco Bell

Source: NPD Crest


BalanceBalance

Mexican QSR Sales = $10.6B

Baja FreshBaja Fresh

Del TacoDel Taco

ChipotleChipotle

Taco BellTaco Bell

…of a smaller segment of the QSR category……of a smaller segment of the QSR category…

Total QSR Sales = $220B+

MexicanMexican

SandwichSandwich

PizzaPizza

BurgersBurgers

BalanceBalance

ChickenChicken

Source: NPD Crest


#1#1

…into clear #2 QSR share brand!…into clear #2 QSR share brand!

QSR Market Share Rankings – YE 2007

#2#2

#3#3

#4#4

#5#5

Source: NPD Crest


QSR Market Share Rankings – YE 2007

…into clear #2 QSR share brand!…into clear #2 QSR share brand!

#1#1

#2#2

Future

Areas of Strategic FocusAreas of Strategic Focus

Build Sales Layers & Utilize Multiple

Messages

Accelerate the System to Bold Choice Assets

Create a New Service Paradigm

Consumer Perceptions ImprovingConsumer Perceptions Improving

Mid Nov ‘07Mid Nov ‘07Late Mar ‘07Late Mar ‘07Early Dec ‘06Early Dec ‘06

QSR Attitudes About Taco BellPenn & Schoen Research

QSR Attitudes About Taco BellPenn & Schoen Research

73738383

70705555

7777

5959

OverallOverall NortheastNortheast

Base Business Driven by Menu Pipeline NewsBase Business Driven by Menu Pipeline News

2008

Building Sales LayersBuilding Sales Layers

Expanded DaypartsExpanded Dayparts

More Balanced OptionsMore Balanced Options

Everyday ValueEveryday Value

New Product LayersNew Product Layers

3 V’s of Value Our Fundamental Organizing Principle

3 V’s of Value Our Fundamental Organizing Principle

Why Pay More! MenuWhy Pay More! Menu

• Price• Overall taste • Quality of food for the

money• Amount of food for the

money• Portability

• Price• Overall taste • Quality of food for the

money• Amount of food for the

money• Portability

Top Two Box=

Better Value

Top Two Box=

Better Value

Validated Vs. Internal andExternal Benchmarks

Validated Vs. Internal andExternal Benchmarks

84%84%

Repeat Purchase of > 4 (over 3 ½ weeks)!!

Why Pay More! Wins vs. BBVMWhy Pay More! Wins vs. BBVM Cheesy Double Beef vs.McD’s Double Cheeseburger

Cheesy Double Beef vs.McD’s Double Cheeseburger

Source: Test Market Buyer Reaction Studies Performed by Restaurant Research Associates

Why Pay More!Why Pay More!

InRestaurantsBeginningMay 15th

InRestaurantsBeginningMay 15th

A New Beverage PlatformA New Beverage Platform

Just in TimeFor Summer—Coming May 15th

Just in TimeFor Summer—Coming May 15th

• 9 Menu items reduced to 9 grams of fat or less

• Popular products -approximately 15% of base menu mix

• Fresco Menu Average reduction in fat grams – almost 40%

• Fresco Menu Average reduction in calories – almost 20%

• 9 Menu items reduced to 9 grams of fat or less

• Popular products -approximately 15% of base menu mix

• Fresco Menu Average reduction in fat grams – almost 40%

• Fresco Menu Average reduction in calories – almost 20%

Key InsightsKey Insights

Our Biggest “Loser”:Ranchero Chicken Soft Taco

Our Biggest “Loser”:Ranchero Chicken Soft Taco

Base Fresco

14 4

Fat(g)Fat(g)

Base Fresco

270 170

CaloriesCalories

37%37%71%71%

Fat First, Taste Second!

Fat First, Taste Second!

Taste First,Fat Second!Taste First,Fat Second!

“If it doesn’t taste good,

I won’t eat it”

“If it doesn’t taste good,

I won’t eat it”

“Looking good ishard work”

“Looking good ishard work”

Approach To Dieting Differs By GenderApproach To Dieting Differs By Gender

27%27%15%15%

5%5%

Cheesy GCheesy G CBRBCBRB FrescoFresco

54%54%60%60%

69%69%

Cheesy GCheesy G CBRBCBRB FrescoFresco

Trial Remains The ChallengeTrial Remains The Challenge

Trial Repeat

Breakfast Remains a Big OpportunityBreakfast Remains a Big Opportunity

Strategic Marketing TacticsStrategic Marketing Tactics

•Multiple Sales Layers

•Doubling the Pipeline

•Multiple Sales Layers

•Doubling the Pipeline

Primary TVPrimary TV

W1W1

Multiple Sales Layers Delivering ResultsMultiple Sales Layers Delivering Results

W2W2 W3W3 W4W4

Better For YouBetter For You

Secondary TVSecondary TV

Committed to More ThanDoubling Product PipelineCommitted to More Than

Doubling Product Pipeline

11 product teststhrough April11 product teststhrough April

••

At least 8 morepost-summerAt least 8 morepost-summer

••

Committed to More ThanDoubling Product PipelineCommitted to More Than

Doubling Product Pipeline

11 product teststhrough April11 product teststhrough April

••

At least 8 morepost-summerAt least 8 morepost-summer

••

Almost as many tests as

2005 - 2007 combined

Almost as many tests as

2005 - 2007 combined

You’ll Sample Some of these Great ProductsYou’ll Sample Some of these Great Products

Quality ValueQuality ValueAbundant ValueAbundant ValuePrice ValuePrice Value

FunctionalFunctional

OtherOther

BoldBold

Asset Transformation Is NecessaryAsset Transformation Is Necessary

HoldoverHoldover

Challenging in Context of PrioritiesChallenging in Context of Priorities

Equipment/Technology Capital to Support Growth

Grilled to OrderPOS

Frutista FreezeOps Improvements

Other BOH, tbd

System New Unit Growth

Asset Refresh

Functionalto Bold

3% Annually

Requires Breakthrough ThinkingRequires Breakthrough Thinking

M 2 Bold

Next 2 Ten K 2 Bold

Flex 2 Five

The Bold Choice Collection In Every DMAThe Bold Choice Collection In Every DMA

Ty07 Prototype

Delivering Brand Promise ThruDelivering Brand Promise Thru

AccuracAccurac SpeedSpeed

HospitalityHospitality

OptimalLabor

OptimalLabor

Speed Accuracy

Today No One Can Do BothToday No One Can Do Both

Wendy’s

Checkers

Taco Bell

McDonald’s

Long John Silver

Burger King

Arby’s

Bojangles’

Taco John’s

Chick-fil-A

Wendy’s

Checkers

Taco Bell

McDonald’s

Long John Silver

Burger King

Arby’s

Bojangles’

Taco John’s

Chick-fil-A

Chick-fil-A

Krystal

Bojangles’

El Pollo Loco

Burger King

Hardee’s

Del Taco

Whataburger

Checkers

McDonald’s

Chick-fil-A

Krystal

Bojangles’

El Pollo Loco

Burger King

Hardee’s

Del Taco

Whataburger

Checkers

McDonald’s

112233445566778899

1010

SummarySummary

• Clear Business Turnaround Underway

• Strategic Clarity to Deliver Future Performance

–Build Sales Layers and Employ Multiple Messages

–Develop a System of Bold Choice Assets

–Create a New Service Paradigm

• Clear Business Turnaround Underway

• Strategic Clarity to Deliver Future Performance

–Build Sales Layers and Employ Multiple Messages

–Develop a System of Bold Choice Assets

–Create a New Service Paradigm

PURE HUT: A VISION THAT GOES BEYOND PIZZA . . .


America’s Favorite PizzaAmerica’s Favorite Pizza



Restaurant Quality PastaRestaurant Quality Pasta



Award Winning ChickenAward Winning Chicken

Changing The Commodity Game

Knocking Down Barriers

Affordable Value

Delivering More Than Just Pizza(i.e. Pasta)

Food The Way You WantTo Eat Today

Redefining The Category . . .Only at Pizza Hut

Changing The Commodity Game

Knocking Down Barriers

Affordable Value

Delivering More Than Just Pizza(i.e. Pasta)

Food The Way You WantTo Eat Today

Redefining The Category . . .Only at Pizza Hut

ATTACKING BARRIERS

AND OPPORTUNITIES

ATTACKING BARRIERS

AND OPPORTUNITIES

HOW LAYERING WORKSHOW LAYERING WORKS

AFFORDABLE& TASTES GREAT


Value For ManyValue For Many

Value For OneValue For One



Value For OneValue For One

Quality At

a Value

Price Point

Quality At

a Value

Price Point



Tuscani PastaTuscani Pasta

NOW DELIVERING RESTAURANT QUALITY PASTA

NOW DELIVERING RESTAURANT QUALITY PASTA

Complete Chicken SolutionComplete Chicken Solution

AWARD WINNING CHICKEN


WingStreet Brand Enables Revitalize AssetsWingStreet Brand Enables Revitalize Assets



WingStreet Lite!

Cityscape WS for Small Towns

WingStreet Lite!

Cityscape WS for Small Towns

THE WAY YOU WANT TO EAT TODAYTHE WAY YOU WANT TO EAT TODAY

The NaturalThe Natural

PremiumIngredients

The ‘Pure’Positioning

PremiumIngredients

The ‘Pure’Positioning

Dine-In Delivery

Assets: Upgrading To A New Standard!Assets: Upgrading To A New Standard!

Rural Small Town Suburban Metro Urban

4,000+ Stores 3,000+ Stores

Vis

ion

:

Everywhere!

SERVICE: A CRITICAL

FOUNDATION

SERVICE: A CRITICAL

FOUNDATION

Dine InDine In DeliveryDelivery

ALL REALIZED IN OUR ONGOING 2 BUSINESS MODEL

ALL REALIZED IN OUR ONGOING 2 BUSINESS MODEL

Vibrant StoresVibrant Stores

Killer ProductsKiller Products

Multi-Tier MediaMulti-Tier MediaWindow #Window #

Topic DTopic DTopic C Cont.Topic C Cont. Topic B Cont.Topic B Cont. Topic A Cont.Topic A Cont.

Unexpected ServiceUnexpected Service Dine-InFocus on guest

Consistent Service

DeliveryFast, On Time

HMR Experts

Brand

Positioning

Brand

Positioning

Menu VisionMenu Vision

Winning Operations

Platform

Winning Operations

Platform

Dynamic Asset StrategyDynamic Asset Strategy

Built on a Foundation of HWWT2

and Franchise Partnership Pact

Built on a Foundation of HWWT2

and Franchise Partnership Pact

YUM 05/06/08 Part1a

Economy & Finance

Transcript of YUM 05/06/08 Part1a