Yum's Digital Strategy, Strong International Footprint Underpin Robust Long-Term Growth Prospects

While the restaurant industry has changed a lot in recent years, we remain encouraged by the ability of the largest operators, including Yum Brands, to accelerate critical investments in e-commerce platforms, delivery integration, and technological solutions that meet the evolving demands of the modern restaurant consumer. Recent acquisitions demonstrate the emphasis the firm has placed on digital enhancements, with more than 50% of global systemwide sales now coming through digital channels, which we expect to remain integral to Yum's strategic playbook. Notably, the firm provides its digital tools to franchisees effectively at cost, strengthening franchise unit economics and helping drive the firm's compelling unit development flywheel. With margins on franchise revenue often clocking in north of 90%, this approach strikes us as appropriate.