John Ivankoe: Yes. Hi. Thank you. I was hoping to get maybe just a little bit more color on bending the curve on digital and technology spend, especially how it might influence ‘25 and ‘26 type of total G&A growth. I mean I think this has been one of the more kind of debated topics of this on the Street as, are we just talking about a lower rate of growth, or might we actually see declines in dollars in ‘25 and ‘26 as you leverage the platform? And the follow-up to this, and I think it’s very related, acquiring technology, building technology is one thing. But of course, maintaining technology with best-of-class technology talent, especially kind of at the leadership end, might be something different. So, I just wanted to get your thoughts in terms of acquiring some of this tech talent and Yum!’s ability to both attract and retain this talent going forward as they may have other projects to work on in the future. Thank you.
Chris Turner: Yes. Thanks John. Look, if you go back over the last few years, we saw the importance of digital and technology to Yum!’s future and we invested ahead on behalf of the system to build those capabilities and put them in place across easy experiences, easy operations and easy insights. We thought that was the right thing to do for the business, and it did create some pressure on the G&A line as we did it. As we deploy our platforms to more and more markets and we get increased adoption, of course, that happens when our franchisees see the business cases coming to life and the improvements in their economics and the way the technology impacts their consumers and their team members. And we are – as we shared on the call, continuing to drive those deployments.
In fact, we are now starting to bundle some of those deployments. At Taco Bell, for instance, we are driving both the AIM inventory management in addition to the Trax back-of-house system at KFC U.S. We will be deploying the Dragontail kitchen display system along with the Poseidon POS system. So, we are bundling those together. And as we create more and more examples and proof points of the impact, as we talk to franchisees in additional markets, it becomes easier to prove the business case that our technology is delivering. So, that’s what supports the long-term deployment path as we move forward. Obviously, we have to continue to make investments in things like AI, better leveraging our data, as David mentioned, and as you said, in continuing to enhance the existing platforms that we have.
But as we bend the curve, that reduces the net P&L impact over time. And so in the long run, we expect us to get increasing leverage on our G&A and the G&A as a percent of system sales should come down over the long-term.
Operator: Thank you. The next question goes to Brian Harbour of Morgan Stanley. Brian, please go ahead. Your line is open.
Brian Harbour: Yes. Thank you. Good morning. Maybe just following up on that, you spent a lot of time discussing all of these tech initiatives. I think it’s probably a little bit harder for us to sort of observe that in terms of comp impact, margin impact. Obviously, we don’t kind of see franchisee profitability. But are there any examples you can give of, for example, e-commerce was deployed in certain restaurants and you saw a certain uplift in sales or franchisee profits, what happens to those when you deploy that tech bundle that you just mentioned? I think that would just sort of bring it to life more for us.
Chris Turner: Yes. Great question. Look, in all of these deployments, this is us partnering with our franchisees, and of course, they co-invest to bring these platforms to their businesses and they only do that when they see a strong business case. So, if you take Taco Bell U.S., which is the one market where we deploy the most of our platforms in combination, I think the tremendous sales results there as they have gone from essentially no digital sales in 2018 to well into the 30% mix now demonstrates the power of the combination of those platforms. In every market around the globe, as we shift sales from non-digital to digital channels, we see increases in check size, we see increases in frequency. Now, as you said, you don’t see all of our franchisees’ P&Ls, but on the productivity side for our franchisees, I think our development momentum is the best proof point that digital is adding to unit economics.
That’s the driver of us continuing to set records on unit development around the globe, and the digital and technology impacts on their P&L is an important part of that. So, all of that is enhancing the business model. But as we said, we think we are just getting started on the value creation potential from these platforms and capabilities.
David Gibbs: Yes. And just to get in, if you are looking for specifics, as you can imagine, when we move people to digital ordering, we see an uplift in check in almost every case, whether it’s kiosk or online. When we move people to things like Dragontail, we know we get a form – for Pizza Hut, we know we get a four-minute savings on delivery time of pizzas and we know we can get drivers up to deliver more orders per hour by using it. So, the method – to the point of your question, the measures and the financial results from the rollout of these things, there are use cases all over the place for how this improves unit economics for franchisees, which ultimately is the heart of our business. The better their unit economics are, the more they build, the more they can afford to offer the right prices and value to customers and so on.
Operator: Thank you. The next question goes to Dennis Geiger of UBS. Dennis, please go ahead. Your line is open.
Dennis Geiger: Great. Thank you. Specific to the U.S., I am wondering if you could speak a bit more to how you think about the trajectory of the brands with some of those tougher comparisons and the weather headwinds behind you, even if it’s at sort of a higher level. And sort of maybe how do you think about how the brands are positioned in the U.S. in a seemingly difficult environment and whether there is sort of any notable strategy shifts that you guys contemplate in an environment like this, be it on value or otherwise. Thank you.
David Gibbs: Yes. Thanks Dennis. I think we referred to this somewhere, but I will just for completeness. So, in Q1, obviously we had a lot of impact by the weather during the quarter. Our business generally improved sequentially during the quarter. Taco Bell, as you know, is 75% of our U.S. operating profit. Taco Bell improved throughout the quarter. And into Q2, we are seeing an acceleration of same-store sales growth trends. So, we are feeling good about how Taco Bell is positioned. Remember, they just launched their Cantina Chicken menu at the end of Q1. So, we are excited to share the results of that. But suffice to say, it’s been well received by consumers. And we think Taco Bell is incredibly well positioned for what I would describe as a more normal consumer environment today.
