Yum! Brands, Inc.

Thank you for standing by. My name is Kayla and I will be your conference operator today. At this time, I'd like to welcome everyone to the Yum! Brands, Inc. 2026 First Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, press the star and one. Please limit all comments to one question. I would now like to turn the call over to Matt Morris, Head of Investor Relations. You may begin.

Good morning, everyone, and thank you for joining us today. On our call are Chris Turner, our CEO, Ranjith Roy, our CFO, and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from Chris and Roy, we'll open the call to questions. Please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this call and should be considered in conjunction with the cautionary statements in our earnings release and risk factors discussed in our SEC filings. Please refer to today's release and findings with the SEC to find disclosures, definitions, and reconciliations of non-GAAP financial measures. Please note that during today's call, system sales and operating profit growth will exclude the impact of foreign currency. For more details on our reporting calendars by market, please refer to the financial report section of our IR website. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback. We'd like to make you aware that our second quarter earnings will be released on July 30th with a conference call on the same day. Now, I'll turn the call over to our CEO, Chris Turner.

Thank you, Matt, and good morning, everyone. At Yum!, we remain committed to our mission to grow iconic restaurant brands globally by building the world's most loved, trusted, and connected brands. In support of that mission, we recently unveiled our Raise the Bar priorities to drive our next chapter of global growth. These priorities include battling for the future consumer, accelerating restaurant unit economics, and reaching the full potential of bite. Our world-class franchisees, along with our unrivaled culture and talents, are critical enablers of these priorities, giving us the scale and expertise to win across the 155 countries in which we operate. We expect Raise the Bar to come to life over time, and the momentum reflected in Q1 across these priorities and key parts of our business is encouraging. Yum's Q1 results mark a solid start to the year, with our fundamentals as strong as ever. We are incredibly pleased with the company's top-line performance. the integration of new company-owned Taco Bell stores, improved KFC restaurant-level margins, and disciplined G&A spend, all of which contributed to strong profit growth. To give more context, I'll review Q1 performance and the momentum across our priorities, starting with KFC, which represents 53% of our divisional operating profit. In Q1, KFC delivered 6% system sales growth. To battle for the future consumer, KFC is elevating its menus through high-impact collaborations and innovation and expanding its sauces platform, building on insights and best practices from Saucy by KFC. The platform includes globally deployable dunked and dripped flavor lineups, enabling faster speed to market and more consistent execution across geographies. Eight of KFC's top 20 markets are reactivating or launching one of these sauce platforms in 2026, including South Africa, India, Germany, the UK, France, and the Middle East. In parallel, KFC is leveraging its new global innovation pantry, which helps markets replicate successful proven menu innovation. For instance, KFC UK is off to a very strong start with a 7% increase in Q1 same-store sales growth, and it's seeing strong momentum to start Q2 driven by the Picklemania menu, which featured four pickle-topped items. Picklemania is the most successful limited-time offer in KFC UK history. The UK team pulled this concept from KFC's Global Innovation Pantry after Canada had a successful launch in 2025. Cultural relevance is essential to drive engagement with the next generation of consumers, and as a result, KFC continues to add more food options with rice bowls, boneless chicken, and occasion-led innovations. A great example in Q1 is the Toomba Kinjibab Bowl that launched in Korea, which rapidly became a fan favorite and sustained double-digit weekly growth into its fifth week. On top of KFC's distinctiveness and innovation, the brand is driving system sales through industry-leading development with 7% unit growth in Q1 and a record number of Q1 gross builds. KFC added new stores in 45 countries. Strong unit economics are a key factor behind this momentum. In partnership with its franchisees, KFC is working to accelerate restaurant economics even further across several key markets. Recently, KFC brought one of its best franchisees into Brazil, who is innovating its store formats. The franchisee recently opened one of its first prefabricated restaurants in Chile. These stores are assembled in a manufacturing facility over 45 days and only require 15 days to assemble on-site. This represents a reduction in construction time of 17 weeks versus traditional builds. This is just one small example of the ways in which we will encourage our teams and franchisees to take bold ideas to improve franchisee unit economics. Moving to Taco Bell, which represents 39% of our divisional operating profit, Taco Bell's magic formula is firing on all cylinders. Taco Bell U.S. reported 8% same-store sales growth, meaningfully outperforming the industry. This is Taco Bell's eighth consecutive quarter of U.S. same-store sales growth ahead of the industry. On a two-year basis, Taco Bell's U.S. same-store sales have grown 18%, miles ahead of the overall QSR industry. Same-store sales growth in the quarter reflects three percentage points of transaction growth, with value scores and value mix both increasing thanks to the successful launch of the Lux value menu. As the Taco Bell leadership team laid out in their 2030 Ambitions at Consumer Day in March 2025, the brand has a clear multi-year plan to expand its offerings with long-term targets that reflect persistent market share gains. As one example of the impact of the strategy, expanded use occasions among light consumers has led to perception gains for Taco Bell on factors including good for dinner, good for large groups, and good for healthier options. These expanded perceptions show that Taco Bell is driving not only short-term sales momentum, but importantly, long-term brand strength. Taco Bell is battling for the future consumer by pairing unbeatable value and innovation with cultural relevance. The power of this combination was on display at its LiveMoss Live event last month, where the brand unveiled more than 20 menu innovations for 2026. The event was streamed on Peacock with headline-making guest appearances from Doja Cat, Devonte Adams, Ariana Maddox, Benson Boone, Yeet, Fernando Mendoza, Jason Sudeikis, DJ Peewee, Mike Towers, and many, many more. Social media mentions and media coverage were 60% higher than last year, and Taco Bell believes the event can be even bigger next year. Live Moth Live is a powerful example of Taco Bell's unique ability to create a marquee brand moment, amplify innovation at scale, and reinforced its position at the center of culture. Furthermore, Taco Bell's success is fueled by more than value and innovation. Operationally, Taco Bell is executing at a superior level on key measures, including consumer satisfaction and order accuracy. Taco Bell improved its consumer satisfaction scores in every period since March of last year. The brand relentlessly tracks order accuracy in part by monitoring consumer complaints, which have declined this year since rolling out operational improvements in 2025. I am confident that Taco Bell will continue to lead the industry, thanks not only to value and innovation, but also improved consumer experiences coming to life through superior execution, superior speed, and superior digital and loyalty platforms. At our smallest brand, Habit Burger & Grill, we are pleased with the top-line momentum generated from aggressive moves to enhance value, bring new innovation like the Baja Crispy Fish Sandwich to its menu, and to elevate brand distinctiveness. The positive impact comes while the team continues working to mitigate the ongoing bottom line impact of inflation, particularly from beef prices. One bold move to enhance brand positioning in Habit's home market of Southern California is the new partnership with the LA Dodgers. I had an opportunity recently to experience the amazing new Habit location inside Dodger Stadium, and the nearby Dodgers-themed restaurant in Echo Park. Yum is also investing smartly in testing bolder bets around innovations to keep our brands ahead of consumer shifts. For instance, through findings from Collider, our in-house consumer insights agency, Taco Bell and KFC are leaning into the fast-growing beverage category by introducing highly differentiated offerings. Starting with Taco Bell, in 2025, 62% of the brand's orders included a beverage making this an important area in which to increase the pace of innovation and deepen consumer engagement. From the beginning, the team has been intentional, from ideation to development, to ensure that even the Taco Bell beverage platform becomes a category of one. Taco Bell continues to pilot Live Moss Cafe in 38 restaurants and a unique set of Taco Bell-style drinks that won't be found anywhere else, such as churro chillers and a sweet empanada and cream chiller. Taco Bell is already leveraging learnings from the pilot to broaden the beverage menu across the entire system with proven successes such as Midnight Baja Blast and Agua Refrescas. In fact, 43% of Taco Bell's specialty beverage sales are standalone orders without food, proving the opportunity for incrementality is very high. Similar excitement for beverages is building at KFC. This year, KFC is scaling its quench beverage platform to the UK, Australia, and Canada. and building a pipeline of additional markets for further expansion. On top of better operational execution, buzz-worthy innovation, and compelling value, our brands are also delivering superior results through our digital channels. This quarter, digital mix increased to 63% and digital sales approached $11 billion. Expanding loyalty is fundamental to growing our digital business and broadening consumer appeal. This year, KFC is planning a loyalty expansion to 20 additional markets, putting the brand on a path to triple its 90-day active user base. Our proprietary Byte by Yum technology platform powers our digital business. A key element of our efforts to reach the full potential of Byte is expansion into new markets. This quarter, Taco Bell UK became the first international market to roll out both the digital ordering and smart ops bundles. Shifting to Byte from previous disparate third-party technologies provides the business with a single, unified platform enabling greater agility and consistency in execution. The capabilities in the Byte platform provide Taco Bell UK with more integrated digital and restaurant experiences and greater opportunities for personalization on digital channels and in the restaurant. In addition, use cases for AI continue to multiply, reinforcing the value of Yum! owning our digital ecosystem. This gives Yum! a powerful advantage. Our global data assets coupled with Byte's reach allow us to scale new AI features quickly for consumers. We also benefit from AI-driven efficiency gains within our digital and technology teams, benefits about which Roy will share more in a moment. All of our bold ambitions, from redefining beverages to earning the right to host star-studded streamed innovation events, are made possible by our people and our franchisees. We remain unified by our pursuit of accelerating growth into the future. As testament to that, right now, in our Plano office, nearly 500 KFC marketing, development, and franchise leaders and GMs from around the globe are gathered for KFC's Marketing Planning Meeting and Development Summit, sharing insights and best practices, showcasing what's working locally and how it can scale globally, all in service of raising the bar in our largest brand. Stepping back, what encourages me most is that the first quarter results reflect the strengths we believe matter most. We have incredible brands that our consumers love. Our brands are benefiting from strong, long-term consumer consumption trends in the categories in which we play. Specifically, Mexican and chicken are projected to grow well ahead of the overall limited service restaurant market over the next five years. We have world-class franchise partners who are experts at navigating dynamic environments. We have proprietary digital and technology capabilities that create seamless experiences for consumers and enable more productive restaurant operations for our franchisees. We are still early in 2026, and we know the environment remains dynamic, but our teams are executing with focus, our brands are staying close to the consumer, and we remain confident in the opportunities ahead as we raise the bar. With that, Roy, over to you.