Yum Brands Inc.

Strong core performance excluding Pizza Hut; digital continues to scale (good) - Yum! delivered 7% system sales growth, 6% unit growth, and 4% same-store sales growth in Q2 (excluding Pizza Hut). - Brand-by-brand: KFC delivered 6% system sales growth driven by 7% unit growth and 2% same-store sales growth; Taco Bell delivered 7% same-store sales growth (noted as outperforming the QSR industry for the 9th straight quarter). - Digital mix: Ex-Pizza Hut digital sales approached $9B in Q2, and in the first half digital sales exceeded $17B (+25% YoY); digital mix reached 61% ex-Pizza Hut (KFC 67%, Taco Bell 47%, Habit 55%). - Operating profit: Core operating profit +8% YoY (with a 3pp drag from 2026 quarterly phasing of Habit refranchising gains and store closure costs).

Taco Bell U.S. food-safety issue: near-term hit but early recovery momentum; Q3 guidance based on margin resilience (important + some negative) - Roy reported Taco Bell U.S. equity same-store sales were -2% through July 27 (quarter is period-reported; maximum impact around July 18). - Recovery: within ~10 days, average sales of the last 4 days were ~halfway back to prior year levels; management believes sales declines moderated materially and day-to-day trends are steadily improving. - Industry framing: management says sentiment improved because consumers recognized it as industry-wide, not Taco Bell-specific; Taco Bell social sentiment returned to pre-issue positivity. - Q3 margin outlook (equity store level): despite deleveraging from temporarily depressed volumes, Taco Bell’s Q3 equity store level margins expected at 19%–21%. - Challenges/risks: near-term demand uncertainty; management emphasizes it’s early days and aims to return the brand to pre-issue trajectory—i.e., risk remains around the duration/scale of the traffic impact.

KFC “Raise the B.A.R.” strategy is global and intended to lift same-store sales and unit economics (opportunity + investor-relevant) - CEO highlighted KFC’s structural tailwinds (chicken as fastest-growing protein), first-mover advantage, franchise partner strength, and operational capability. - Strategic plan details include modernized brand experience, menu innovation around boneless chicken, crave-worthy sauces and an expanded sauce pantry (9 bold sauces), refreshed visual identity, and updated tenders built for dunking/dipping/solo snacking. - Timeline aspiration: core elements of strategy targeted for the top 20 markets by end of 2027 (global coordination, not just one-by-one rollout). - Performance baseline: KFC in Q2 had 2% same-store sales despite 7% unit growth—management explicitly said they’re dissatisfied with same-store performance and expect higher stronger same-store growth and AUVs over time (proof points cited in U.K., Korea, Japan, Brazil). - EM upside: management reiterated big runway in underpenetrated markets (e.g., KFC density only ~1/5 of top-25 markets; ~20,000-unit opportunity cited across key EM regions).