Yum! China Mark Chu Yum! China President & COO
2010: Good Performance Across Virtually Every Front Same store sales growth on track to be 5%+ Margins up 1 point, to reach 22% Development on track Business model remains strong
Building Leading Brands Across China Store Counts Store Counts 3,200+ 500+ 1,560 204 2005 2010F 2005 2010F
China a Huge Opportunity for Our Restaurant Business GDP / Personal income growth among top in the world Huge Chinese consuming class, 450 million+ and rising Over 15 million people enter cities each year Restaurant chain market share less than 3%
Yum! China - Unmatched Development Capability Experienced team of 500+ Development professionals Local teams in every province (except Tibet) Rich catalog of learning from 3,500+ new unit decisions Extensive people development programs Rigorous site development process
Leading Brands with Excellent Business Models
KFC the #1 QSR Brand in China Store count surpasses 3,000 units Broadly penetrated, in cities large and small Contemporary assets at prime locations Extending our leadership across many channels
KFC - Strong New Unit Economics Average Unit Volume ($ million) $1.1 Cash Margin 24% Cash Investment ($000) ~ $550 Cash Payback Less Than 3 Years
Widening the Gap in Western QSR Mainland China Western QSR # of Restaurants 2,872 2.5X Tier 1 1.7X Tier 2 2.3X 979 565 1,138 Tier 3 2.7X Tier 4 3.6X Tier 5 3.8X Tier 6 3.5X '03 '09
Continuing to Grow in Top Tier Cities Shanghai - # of KFC Restaurants 250 256 +16% CAGR 200 150 100 172 DISP. INCOME per capita Shanghai today $4,000+ CAGR since 00 10%+ 50 61 0 Units per million people '00 '05 Today 4 10 13
KFC Development Reaches Deep into China % of Total New Builds by Tier 15% 33% 52% Tier 1 Tier 2 Tier 3-6 50 to 60 New Cities Each Year! 2010
Jiangsu Province: Strong Growth in Tier 5 Cities
Pizza Hut Defining Casual Dining in China Reaching 500 unit milestone Significant development opportunity Pizza & more
Pizza Hut Casual Dining Leader With Significant Scale # of Restaurants Today 493 155 53 74 196 170 Tier 4 Tier 3 Tier 2 Tier 1 Papa Johns Pizza Hut Casual Dining
Pizza Hut Casual Dining Expanding into Lower Tiers Changzhou city, Tier 3 Population of 1 million, in Jiangsu province Disposable income of ~ $3,000 per capita 4 Pizza Hut units today, 3 opened in the past 3 years Average store sales of $1.2 million per year
Pizza Hut Casual Dining - Excellent New Unit Economics Average Unit Volume ($ million) $1.1 Cash Margin 24% Cash Investment ($000) ~ $550 Cash Payback Less Than 3 Years
We Have Established Strong Track Record of Development 471 504 509 475 + 334 379 364 262 268 174 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 F China New Builds by Year
Confident in Continuing Rapid Expansion Largest cities still growing, proactively filling in Government-led infrastructure brings new opportunities Non-traditional sites e.g., transport hubs Unmatched operations capability ready to manage new units
Proactively Monitor Store Capacity Levels Unique to China due to higher volumes Part of development process Build adjacent units to relieve pending capacity constraints Optimize service levels, relieve queue time Feedback loop from regular monitoring of service speed
Opportunities in New Trade Zone Types Infrastructure investment a continued focus in government long-term plan Vast high-speed railway network coming online More opportunities in airport as traffic grows Mass-transit newly emerging in many major cities
Going Beyond Traditional Units Bringing our Brands to a new variety of destinations Total Units Today Railway station 60+ Bus station 30+ Airport 30+ Drive-Thru 60+
Unmatched Operations Capability Enables Development 3,000+ training centers 80%+ RGMs have college degree Seasoned Operating Teams ready for growth We operate well across all tiers
KFC - Strong Operations Performance Across All Tiers Tier 1 Tier 2 & Below Average Unit Volume ($ million) $1.4 $1.3 - $1.5 Restaurant Margin 18% 23% - 25% # units 683 2,439 Note: unit count as of P10, 2010
And Pizza Hut Dine In As Well Tier 1 Tier 2 & Below Average Unit Volume ($ million) $1.4 $1.1 - $1.4 Restaurant Margin 19% 20% - 24% # units 170 323 Note: unit count as of P10, 2010
Yum! China A Ground-Floor Opportunity Rapid urbanization continues At current rate, China urban billion by 2030 Continuous growth in large cities, emerging new urban centers High return, category leading brands Less than 3 units per million people (vs. 60 / million in US) Opportunity for Over 20,000 Units
Safe Harbor Statement This presentation, any related presentations and the related webcast contain forward-looking statements. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Our forward-looking statements may include, among others, statements regarding unit development, profit growth, EPS growth or certain company initiatives and plans. Our forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from those projected. Factors that can cause our actual results to differ materially include, but are not limited to: economic and political conditions in the countries where we operate; currency exchange and interest rates; commodity, labor and other operating costs; competition, consumer preferences or perceptions; the impact of any widespread illness or food borne illness; the effectiveness of our operating initiatives and marketing; new product and concept development by us and our competitors; the success of our strategies for refranchising and international development; the continued viability of our franchise and license operators; our ability to secure and maintain distribution and adequate supply to our restaurants; publicity that may impact our business and/or industry; pending or future legal claims; our effective tax rates; our actuarially determined casualty loss estimates; government regulations; and accounting policies and practices. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions Risk Factors and Forward-Looking Statements in our Annual Report on Form 10-K) for additional detail about factors that could affect our financial and other results. Forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements, which speak only as of the date hereof. We are not undertaking to update any of these statements.