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Item 1. Business

2025-02-19 compared with 2024-02-20 · 34 added, 40 removed, 156 unchanged (32% of the section changed)

7 unchanged sentences

Overview of Business

YUM has over 58,000 restaurants in more than 155 countries and territories primarily operating under the four concepts of KFC, Taco Bell, Pizza Hut and The Habit Burger Grill (the “Concepts”).

The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style food and pizza categories, respectively.

The Habit Burger Grill is a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more.

YUM has over 61,000 restaurants in more than 155 countries and territories primarily operating under the four concepts of KFC, Taco Bell, Pizza Hut and Habit Burger & Grill (the “Concepts”).

The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-inspired food and pizza categories, respectively.

Habit Burger & Grill is a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more.

At December 31, 2024, 98% of our Concepts’ units are operated by independent franchisees or licensees under the terms of franchise or license agreements.

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Business Strategy

Through our Recipe for Good Growth we intend to unlock the growth potential of our Concepts and YUM, drive increased collaboration across our Concepts and geographies and consistently deliver better customer experiences, improved unit economics and higher rates of growth.

Key enablers include accelerated use of digital and technology and better leverage of our systemwide scale.

Our global citizenship and sustainability strategy is reflected in our Good agenda, which includes our priorities for social responsibility, risk management and sustainable stewardship of our people, food and planet.

Our Growth agenda is based on four key drivers:

• Unrivaled Culture and Talent:

Leverage our culture and people capability to fuel brand performance and franchise success

• Unmatched Operating Capability:

Recruit and equip the best restaurant operators in the world to deliver great customer experiences

• Relevant, Easy and Distinctive Brands:

Innovate and elevate iconic restaurant brands people trust and champion

• Bold Restaurant Development:

Drive market and franchise unit expansion with strong economics and value

Through our Recipe for Good Growth we intend to deliver iconic restaurant brands and consistently drive better customer experiences, improved unit economics and higher rates of growth.

Key enablers include accelerated use of digital and technology, increased collaboration and better leverage of our systemwide scale.

This is done through a framework of three pillars:

being Loved, Trusted and Connected.

We grow by delighting customers with craveable food and a distinctive experience.

We innovate and elevate our iconic restaurant brands that people trust and champion, resulting in relevant, easy and distinctive brands.

We operate responsibly with consistency and efficiency in our restaurants, across our system and in our communities.

This includes a commitment to our priorities for social responsibility, risk management and sustainable stewardship of our people, food and planet.

We use our teamwork, technology and global scale to serve every customer, everywhere, anytime.

Our unmatched operating capability allows us to recruit and equip the best restaurant operators in the world to deliver great customer experiences.

And our commitment to bold restaurant development drives market and franchise unit expansion with strong economics.

Our unrivaled culture and talent and leading with smart, heart and courage are key to our success, fueling brand performance and franchise success.

Information about Operating Segments

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Master franchisees are typically responsible for overseeing development within their territories and performing certain other administrative duties with regard to the oversight of sub-franchisees.

In exchange, master franchisees retain a certain percentage of fees payable by the sub-franchisees under their franchise agreements and often pay lower fees for the restaurants they operate.

master franchisees retain a certain percentage of fees payable by the sub-franchisees under their franchise agreements and often pay lower fees for the restaurants they operate.

On October 31, 2016, we completed the spin-off of our China business into an independent, publicly-traded company under the name of Yum China Holdings, Inc.

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In recent years the Company has focused on building and acquiring a distinctive set of solutions with next-generation capabilities tailored for our brands and scaling these common digital and technology platforms across the globe.

The Company's technology initiatives are aligned with the “Easy” element of its Relevant, Easy and Distinctive Brands growth driver:

easy experiences for our customers, easy operations for our team members and franchisees and easy insights from our data.

Together, our technological initiatives are designed to simultaneously enhance the experience for our customers and restaurant-level employees while driving profitable sales growth.

In 2024, we accelerated our technology transformation by integrating our digital and technology teams into a unified global team.

Additionally, we have introduced our Byte by Yum!

platform, a comprehensive collection of proprietary software as a service and artificial intelligence ("AI") driven products that enables easy operations for team members and improved experiences for customers, while consolidating essential systems into a cohesive, easy-to-manage platform.

The Byte by Yum!

platform includes online and mobile app ordering, point of sale, kitchen and delivery optimization, menu management, inventory and labor management and team member tools.

The implementation of Byte by Yum!

is also designed to enable a faster and more impactful adoption of AI by YUM and its brands, and offers franchisees leading technology capabilities with advantaged economics made possible by the scale of YUM all with a goal of unlocking new insights and driving profitable sales growth.

Digital sales include transactions where consumers at system restaurants utilize ordering interaction that is primarily facilitated by automated technology.

13 unchanged sentences

In the U.S., the Company, along with the representatives of the Company’s KFC, Taco Bell and Pizza Hut franchisee groups, are members of Restaurant Supply Chain Solutions, LLC (“RSCS”), a third party which is responsible for purchasing certain restaurant products and equipment.

Additionally, The Habit Burger Grill entered into a purchasing agreement with RSCS effective July 31, 2020.

Additionally, Habit Burger & Grill entered into a purchasing agreement with RSCS effective July 31, 2020.

The core mission of RSCS is to provide the lowest possible sustainable store-delivered prices for restaurant products and equipment.

3 unchanged sentences

In the U.S., McLane Foodservice, Inc.

is the exclusive distributor for the majority of items used in Company-owned restaurants and for a substantial number of franchisee restaurants.

is the distributor for the majority of items used in Company-owned restaurants and for a substantial number of franchisee restaurants.

Outside the U.S., we and our Concepts’ franchisees primarily use decentralized sourcing and distribution systems involving many different global, regional and local suppliers and distributors.

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restaurants but may differ among jurisdictions.

The restaurants outside the U.S.

are also subject to tariffs and regulations on imported commodities and equipment, laws regulating foreign investment and anti-bribery and anti-corruption laws.

Like restaurants in the U.S., restaurants outside the U.S.

are subject to certain regulations and tariffs on imported commodities and equipment, laws regulating foreign investment and anti-bribery and anti-corruption laws.

See Item 1A “Risk Factors” of this Form 10-K for a discussion of risks relating to federal, state, local and international regulation of our business.

6 unchanged sentences

In addition to the persons employed by the Company and its subsidiaries, our approximately 60,000 franchise restaurants around the world are responsible for the employment of over an estimated 1 million people who work in and support those restaurants.

Each year YUM and our franchisees around the world create thousands of restaurant jobs, which are part-time, entry-level opportunities to grow careers at our KFC, Taco Bell, Pizza Hut and The Habit Burger Grill brands.

As evidence of the opportunities these positions create, approximately 80% of the Company-owned Restaurant General Managers (“RGMs”) located in the U.S.

As evidence of the opportunities these positions create, approximately 80% of the Company-owned Restaurant General Managers (“RGMs”)

located in the U.S.

have been promoted from other positions in our brands’ restaurants and such RGMs often earn pay greater than the average American household income.

1 unchanged sentence

Our investment in people includes creating a culture of engagement that attracts, retains and grows the best people and creates high performance in our restaurants.

We are also highly focused on building an inclusive culture among our employees, franchisees, suppliers and partners to reflect the diversity of our customers and communities.

Our commitments and progress towards executing this strategy are reflected below.

Culture & Talent

We believe that our culture and talent provide us with a competitive advantage with respect to the performance of our business.

Our areas of focus in this regard include the following:

We are also highly focused on building an inclusive culture among our employees, franchisees, suppliers and partners that reflects all of our customers and communities, which we believe provides us with a competitive advantage with respect to the performance of our business.

Our commitments and progress towards our vision of culture, opportunity and belonging are reflected below.

• Continually building upon ongoing inclusion efforts to help ensure our workplaces are environments where all people can be successful.

• Consistent with our Code of Conduct, making employment-related decisions based on an individual's abilities and merit, not personal characteristics that are unrelated to the job.

• Measuring YUM employee engagement regularly.

2 unchanged sentences

• Providing YUM employees with training and development that builds world-class leaders and drives business results.

We promote these efforts through initiatives such as our leadership development program (Heartstyles), our unconscious bias program (Inclusive Leadership) and training programs with respect to our compliance polices, including our Code of Conduct.

Our Heartstyles program is also available to our franchisees so that their employees may benefit as well.

• Enabling a culture that fuels results and cross-brand collaboration on operational execution, people capability and customer experience initiatives throughout our system.

• Assessing progress towards lowering turnover and increasing retention rates, particularly at the restaurant-employee level.

Equity, Inclusion & Belonging

In connection with our focus on equity, inclusion and belonging, our areas of focus include the following:

• Continually building upon ongoing inclusion efforts to help ensure our workplaces are environments where all people can be successful.

• Consistent with our Code of Conduct, making employment-related decisions based on an individual's abilities and merit, not personal characteristics that are unrelated to the job.

• Significantly increasing the number of women in our senior leadership globally, with a goal of achieving gender parity by 2030.

In 2022, approximately 43% of our global corporate leadership roles were held by women and approximately 52% of our global workforce were women.

• Continuing to make Inclusive Leadership training and anti-racism training available across our system.

We intend to expand our Inclusive Leadership training to employees and franchisees around the world and have started development of an online module of this training program to help provide even greater access.

Available Information

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business