Operating Profit Growth Outlook
Q: Can you elaborate on confidence in meeting the 8% operating profit growth algorithm for 2024?
A: Management expressed strong confidence in delivering at least 8% core operating profit growth for 2024, driven by a robust development pipeline, expected sequential improvement in same-store sales, flat G&A expenses, and continued productivity programs. They acknowledged headwinds from the Middle East and a potentially challenging U.S. environment but believe in their trajectory and have levers to pull to ensure they meet their targets. " "

Same-Store Sales and Comp Outlook
Q: How do you view the comp outlook for 2024, and are you prepared if it doesn't materialize as expected?
A: Management expects sequential improvement in same-store sales throughout the year, supported by strong positions of KFC International and Taco Bell U.S., and initiatives planned by each brand, including doubling Taco Bell's innovation calendar. They are prepared to manage uncertainties, such as the Middle East situation, and have multiple levers like flat G&A plans and productivity projects to ensure they achieve their profit growth targets. " "

Development Outlook
Q: What are your expectations for the pace of global development in 2024 and 2025?
A: The company is very confident in the pace of development, stating that the pipeline has never looked better. Franchisees are getting great returns, leading to continued strong growth commitments, including from Yum China and an uptick in Pizza Hut U.S. development. Evolving asset types, like the new satellite Pizza Hut delco store in China, provide additional tailwinds for growth. "

Taco Bell Growth Prospects
Q: Is Taco Bell expected to widen its market share outperformance in 2024?
A: Management is excited about Taco Bell's prospects, highlighting a 15% two-year growth in Q4 despite lapping the Mexican pizza launch. They believe the challenging consumer environment favors Taco Bell, which consistently gains market share. Plans include doubling innovation on the calendar compared to 2023, aiming to drive further growth and outperformance. "

Digital Sales Growth Impact
Q: How incremental is digital sales growth to overall sales and operations?
A: Digital capabilities are significantly boosting sales and operational efficiencies, contributing to the 10% global system sales growth for the full year. Digital initiatives support strong unit economics, expand Easy Operations capabilities, and are becoming more leverageable as they mature. Management believes they are still in the early innings of digital transformation, attracting top talent and quick franchisee adoption. "

U.S. Pricing Strategy
Q: How are you advising franchisees on pricing in the U.S. given pressures on lower-income consumers?
A: The company sees positive performance in low-income trade areas, particularly with Taco Bell, which has slightly outperformed expectations. They have tweaked the value menu to $3 and under, over-indexing with consumers. While there may be small shifts in consumer behavior, they are confident that offering strong value with innovation will maintain franchisee profitability without slowing down transaction growth. " "

Performance of Value Menus
Q: How are the value offers performing across your core brands amid consumer trading around the menu?
A: Value menus are performing well, with the Taco Bell $3 and under menu exceeding expectations. The company notes a return to a more normal operating environment where value is crucial. Taco Bell wins on value perception scores and can offer value while maintaining industry-leading margins, which keeps them connected with consumers and supports transaction growth. "

Pizza Hut U.S. Comp Outlook
Q: Do you expect stabilization in Pizza Hut U.S. comps starting in the second quarter?
A: Management anticipates Pizza Hut U.S. to be positive for the year despite a challenging lap of the Melts launch in the first quarter. They have several initiatives planned and highlight that Pizza Hut globally hit a new record in net new unit development, contributing to overall growth. "