Yum Brands : Aug 3, 2017 – Yum! Brands Reports Second-Quarter GAAP Operating Profit Growth of 1%; Delivered Second-Quarter Core Operating Profit Growth of 19%; Maintains Full-Year Core Operating Profit Growth Guidance

NEWS ‌

Keith Siegner

Vice President, Investor Relations, Corporate Strategy and Treasurer

GREG CREED COMMENTS

Greg Creed, CEO, said "I'm pleased Yum! Brands' intensified focus on our four distinct growth drivers helped deliver another successful quarter. Core operating profit grew 19% and EPS excluding special items grew 21% during the second quarter. We are maintaining our full-year 2017 guidance and are on pace with our multi-year transformation strategy designed to further unlock shareholder value."

SECOND-QUARTER HIGHLIGHTS

• Worldwide system sales grew 6%, with KFC and Taco Bell at 7% and Pizza Hut at 2%.

• We opened 174 net new units for 3% net new unit growth.

• We refranchised 244 restaurants, including 40 KFC, 163 Pizza Hut and 41 Taco Bell units, for proceeds of $136 million. We recorded refranchising gains of $19 million in Special Items. As of quarter end, our global franchise ownership mix was 94%.

• We repurchased 5.6 million shares totaling $384 million at an average price of $68. As of quarter end, there was approximately $1.1 billion remaining in share repurchase authorization through year end 2017.

• Foreign currency translation negatively impacted GAAP operating profit by $6 million.

1See Reconciliation of GAAP results to non-GAAP measurements within this release for further detail of Special Items.

System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of GAAP results to non-GAAP measurements within this release for further details.

All comparisons are versus the same period a year ago. Effective January 2017, we removed the reporting lags from our international subsidiary fiscal calendars. To accommodate these changes, Yum! Brands now reports on a monthly calendar basis though certain subsidiaries, including our U.S. subsidiaries, continue to be included in our consolidated results on a periodic basis with 3, 3, 3 & 4 periods in each quarter, respectively. Prior year figures in this earnings release have been restated to present comparable results. An 8-K was filed on April 13, 2017 with restated quarterly 2016 results.

Yum! Brands, Inc. • 1900 Colonel Sanders Lane • Louisville, KY 40213 P: 502 874-8300 • www.yum.com/investors

• KFC Division system sales increased 7%, excluding foreign currency translation.

  Second Quarter (% Change)
  Int'l Emerging Markets Int'l Developed Markets U.S.
  System Sales Growth (Ex F/X) Same-Store Sales Growth	+9 +4	+7 +4	+1 +2

• KFC Division opened 241 new international restaurants in 56 countries, including 202 units in emerging markets.

• Operating margin increased 5.4 percentage points driven by same-store sales growth, refranchising, reduced G&A and higher initial and renewal fee income partially offset by higher restaurant operating costs.

• Foreign currency translation negatively impacted GAAP operating profit by $4 million.

  KFC Markets1	Percent of KFC System Sales2	System Sales Growth Ex F/X
  		Second Quarter (%)	Year-to-Date (%)
  Emerging Markets	26%	+8	+6
  China3
  Asia (e.g. Malaysia, Indonesia, Philippines)	6%	+11	+9
  Middle East / Turkey / North Africa	5%	+3	+1
  Latin America (e.g. Mexico, Peru)	4%	+14	+13
  Africa	4%	+4	+5
  Russia	3%	+22	+25
  Thailand	2%	(2)	+2
  Continental Europe (e.g. Poland)	2%	+17	+18
  India	1%	+9	+6
  Developed Markets
  U.S.	19%	+1	+2
  Asia (e.g. Japan, Korea, Taiwan)	7%	+4	+1
  Australia	7%	+9	+8
  U.K.	6%	+6	+6
  Continental Europe (e.g. France, Germany)	5%	+11	+10
  Canada	2%	+5	+5
  Latin America (e.g. Puerto Rico)	1%	(2)	Even

  1Refer to www.yum.com/investors for a list of the countries within each of the markets.

  2Reflects Full Year 2016.

  3Includes April, May and June; YUMC Q2 reported results include March, April and May.

  Second Quarter		Year-to-Date
  2017 2016	%/ppts Change	2017 2016	%/ppts Change
  	Reported Ex F/X		Reported Ex F/X
  Restaurants	16,452 16,178 +2 N/A		16,452 16,178 +2 N/A
  System Sales Growth	Even +2		(1) +1
  Same-Store Sales Growth (%)	(1) (1) NM NM		(2) (1) NM NM
  Franchise & License Fees ($MM)	141 142 Even +1		285 288 (1) Even
  Restaurant Margin (%)	8.5 9.4 (0.9) (1.0)		7.4 9.7 (2.3) (2.3)
  Operating Profit ($MM)	85 81 +4 +7		168 172 (3) Even
  Operating Margin (%)	38.1 30.3 7.8 8.1		36.8 31.4 5.4 5.8

• Pizza Hut Division system sales increased 2%, excluding foreign currency translation.

  Second Quarter (% Change)
  Int'l Emerging Markets Int'l Developed Markets U.S.
  System Sales Growth (Ex F/X) Same-Store Sales Growth	+8 +2	+5 Even	(4) (3)

• Pizza Hut Division opened 142 new international restaurants in 42 countries, including 103 units in emerging markets.

• Operating margin increased 7.8 percentage points driven by refranchising partially offset by increased G&A related to litigation costs.

• Foreign currency translation negatively impacted GAAP operating profit by $2 million.

  Pizza Hut Markets1	Percent of Pizza Hut System Sales2	System Sales Growth Ex F/X
  		Second Quarter (%)	Year-to-Date (%)
  Emerging Markets	17%	+6	+7
  China3
  Latin America (e.g. Mexico, Peru)	5%	+6	+5
  Middle East / Turkey / Africa	4%	+7	+5
  Asia (e.g. Malaysia, Indonesia, Philippines)	4%	+17	+12
  India	1%	+8	+7
  Continental Europe (e.g. Poland)	1%	+13	+10
  Developed Markets
  U.S.	48%	(4)	(5)
  Asia (e.g. Japan, Korea, Taiwan)	7%	+4	+2
  U.K.	5%	+4	+4
  Continental Europe (e.g. France, Germany)	4%	+4	+3
  Canada	2%	+5	+5
  Australia	1%	+19	+20
  Latin America (e.g. Puerto Rico)	1%	(5)	+1

  1Refer to www.yum.com/investors for a list of the countries within each of the markets.

  2Reflects Full Year 2016.

  3Includes April, May and June; YUMC Q2 reported results include March, April and May.

  Second Quarter		Year-to-Date
  2017 2016	%/ppts Change	2017 2016	%/ppts Change
  	Reported Ex F/X		Reported Ex F/X
  Restaurants	6,686 6,466 +3 N/A		6,686 6,466 +3 N/A
  System Sales Growth	+7 +7		+10 +10
  Same-Store Sales Growth (%)	+4 (1) NM NM		+6 Even NM NM
  Franchise & License Fees ($MM)	120 111 +8 +8		234 212 +11 +11
  Restaurant Margin (%)	22.8 22.3 0.5 0.5		22.3 21.6 0.7 0.7
  Operating Profit ($MM)	152 139 +10 +10		293 257 +14 +14
  Operating Margin (%)	33.4 29.8 3.6 3.6		32.3 28.9 3.4 3.4

• Taco Bell Division system sales increased 7%.

• Taco Bell Division opened 56 new restaurants.

• Restaurant margin was 22.8%, an increase of 0.5 percentage points, driven by same-store sales growth partially offset by food and labor inflation.

• Operating margin increased 3.6 percentage points driven by same-store sales growth, reduced G&A including lower litigation costs and refranchising partially offset by food and labor inflation.

  OTHER ITEMS

• During the quarter, we recorded a non-cash charge of $16 million in Special Items related to the ongoing impact of share-based compensation award modifications made at the time of the separation of Yum China Holdings, Inc.

• On May 1, 2017, we entered into a Transformation Agreement with Pizza Hut U.S. franchisees that will improve brand marketing alignment, accelerate enhancements to operations and technology and permanently increase advertising, digital and technology contributions from franchisees. In connection with this agreement, we recognized a Special Items charge of $12 million during the quarter primarily related to investments for digital initiatives.

• On June 15, 2017, our Restricted Group subsidiaries that operate the company's KFC, Pizza Hut and Taco Bell businesses issued $750 million aggregate principal amount of 4.75% Senior Notes due 2027.

• Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the second quarter Form 10-Q.