1. Yum! Brands
China Investor/Analyst Conference
23 September 2008
Shanghai, China

2. Today’s Agenda
Introduction and Yum! Overview Tim Jerzyk
Building Big Brands Angela Loh
Support Capability Joaquin Pelaez
High-Return Development Lily Hsieh
China Business Perspective Sam Su

3. Power of Yum!
GLOBAL PORTFOLIO
GLOBAL GROWTH
GLOBAL CASH GENERATION

4. Not Your Ordinary Restaurant Company
% of Total Operating Profit
2013 F
2008 F
30%
U.S.
28%
China
40%
China China
41%
U.S. U.S.
30%
31%
YRI
YRI
Note: Excludes corporate allocation

5. Long Runway for Growth
5+
5+
billion
billion
18,000
1.3
1.3
Restaurants
billion
billion
12,000
Restaurants
300
300
million
million 2,600
Restaurants
U.S. Mainland China YRI
Restaurants Per
60 2 3
Million People
Note: Traditional units only (2007)

6. Leading International Retail Developer
International New Builds
1,358
1,300+
1,189 1,181
1,077
’04 ’05 ’06 ’07 ’08 F
Net Unit Growth +5% +6% +5% +6% +6%
Strong and Consistent Track Record

7. Huge Global Potential
Middle & Upper Class Growth
3 Billion
Developing Countries
1 Billion
Developed Countries
2000 2030
~90% of Growth Coming from Developing Countries
Source: World Bank Global Development Prospects 2007

8. Asia Pacific to Contribute
Majority of Growth
Middle & Upper Class Growth by Region
Developed Countries
+0.2 Billion
Europe/Central Asia
+0.3 Billion
Asia Pacific
+1.1 Billion
Middle East/Africa
+0.1 Billion
Latin America
+0.3 Billion
Source: World Bank Global Development Prospects 2007

9. Developing Country Growth
5 Year Net Growth
International Units in
Developing Countries(1) (2002-2007)
3,084
7,164
4,148
China 2,558
1,687
763
876
4,606
3,272 1,397 330
433
(1)
Units as of year-end 2007 using World Bank definitions of developing countries
Source: Public disclosures

10. 4 Key Strategies to Drive Growth
2. Drive Aggressive
2. Drive Aggressive
1. Build Leading Brands
1. Build Leading Brands
International Expansion
International Expansion
in China in Every
in China in Every
and Build Strong Brands
and Build Strong Brands
Significant Category
Significant Category
Everywhere
Everywhere
3. Dramatically Improve
3. Dramatically Improve 4. Drive Industry-Leading,
4. Drive Industry-Leading,
U.S. Brand Positions,
U.S. Brand Positions, Long-Term Shareholder
Long-Term Shareholder
Consistency and Returns
Consistency and Returns and Franchisee Value
and Franchisee Value

11. . . . with Substantial Infrastructure and
Long-Term Competitive Advantage
Unparalleled
Country-Wide
Country-Wide Unparalleled
Talent &
Distribution
Distribution Talent &
Experience
System
System Experience
Unmatched
Unmatched Targeted
Targeted
Development
Development Manufacturing
Manufacturing
Capability
Capability
National Scale — 500 Cities

12. Building
Big Brands
Angela Loh Chief Marketing Officer

13. Unique Approach to Brand Building
East Dawning

14. Category Leaders
#1 QSR #1 Casual Dining
“Life is tastier with KFC” “Happy Moments at Pizza Hut”

15. KFC’s Positioning: New QSR for Chinese Consumer
Traditional QSR New QSR
Core QSR strengths QSCV Maintain the core (QSCV)
Focus on few products to Offer variety
generate volume
Focus on product taste
Focus on product
consistency (industrialize) Offer balanced choices
Encourage balanced meals &
Value drivers (“up size”)
regular exercise
Educate consumer on
Eat lots of same product
healthy life style
frequently

16. KFC outperforms McD’s in major
Food-Related Measures…
Top 2 box% KFC McD
Chicken expert 66* 45
Food expert 56* 45
Good taste 71* 55
Food variety 65* 54
Interesting new products 64* 47
Data source: BIT July 2008 *Significant difference,
N=1900 in 47 cities 95 confidence level

17. … and in most Brand Imagery Attributes
Top 2 box% KFC McD
Fun and energetic 58 56
The leading QSR brand in China 63* 53
63
67*
A brand I can trust
46
60*
The QSR brand I like most
43
50*
Advocate healthy life-style
44
58*
Deeply rooted in China
Data source: BIT July 2008 *Significant difference,
N=1900 in 47 cities 95 confidence level

18. Building a Big Brand at KFC
Community
Involvement
In Store Experience
Menu
designed for Broad Appeal
Rooted in China
integrated into their life

19. Building a Big Brand at KFC
Community
Involvement
In Store Experience
Menu
designed for Broad Appeal
Rooted in China
integrated into their life

20. KFC Menu Design Strategy
KFC is the chicken expert, but not chicken only
Different cooking platform to enhance variety
Meaningful side items/snack to support balanced
choices
Relevant menu for different daypart/occasion
Product Innovation adapted to local taste

21. Building a Big Brand at KFC
Community
Involvement
In-Store Experience
Menu
designed for Broad Appeal
Rooted in China
integrated into their life

22. A Step Ahead on In-Store Experience
Passionate crew brings Customer Mania to life
Up to date interior design
Dedicated hostess program in every store
Chicky program, a big hit with Kids
2 birthday parties per day on average in each store
Chicky show during holidays
Kids fun club to incorporate educational content

23. Building a Big Brand at KFC
Community
Involvement
In-Store Experience
Menu
designed for Broad Appeal
Rooted in China
integrated into their life

24. Community Involvement, Not Gimmicks
First Light Foundation
- Awarding scholarships, building schools
Chicky school program
- Support by Educational Bureau on program design
3-on-3 Basketball tournament
- Year 1 – 9,000 teams in over 150 cities, 48,000 participants
- Year 2 – 13,200 teams in over 232 cities, 65,000 participants
- Year 3 – 17,500 teams in over 300 cities, 80,000 participants
- Year 4 – 21,000 teams in over 369 cities, 126,000 participants
- Year 5 – 24,033 teams in over 400 cities, 140,000 participants

25. Building a Big Brand at KFC
Community
Involvement
In-Store Experience
Menu
designed for Broad Appeal
Rooted in China
integrated into their life

26. KFC Brand has Emerged Stronger than Ever
How we did it
Development capability held penetration
Strong belief in product innovation
World class operation to support new sales layer
(Breakfast, delivery)
Robust local store marketing resource
(Over 80 LSM coordinators / 9,300 hostess in the field)
New success in youth segment

27. Pizza Hut, Dual Channels Brand Building
Casual Dining Brand Home Delivery Brand
Inspiring Functional
Communication focused marketing
Hot and on time
Complete casual dining
with 5 star service
experience
Menu designed
Menu structured to explore for efficient, complete
Western culture home meal replacement
More than just pizza, a unique 1st Best delivery brand
western casual dining experience with everyday affordable value

28. Pizza Hut Menu Strategy
Home Delivery Brand
Casual Dining Brand
Pan, stuff crust and thin & New traditional dough, fast
crispy dough bake
Complete Casual Dining Risotto & pasta line to
experience (appetizer, soup, enhance varieties
salad, drinks & dessert)
Appetizer, soup, salad and
Exotic & interesting dessert make meal complete

29. Pizza Hut, Dual Channels Brand Building
Casual Dining Brand Home Delivery Brand
Inspiring Functional
Communication focused marketing
Hot and on time
Complete casual dining
with 5 star service
experience
Menu designed
Menu structured to explore for efficient, complete
Western culture home meal replacement
More than just pizza, a unique 1st Best delivery brand
western casual dining experience with everyday affordable value

30. Pizza Hut, Differentiated Experience
Home Delivery Brand
Casual Dining Brand
Upscale décor package One national phone number
Event driven in-store activities
Well trained call center staff
Hostess program to enhance
“5-Star” feel
Neat, clean & tidy delivery staff
Tailored Tea Time menu design
Delivery time promise

31. Pizza Hut, Dual Channels Brand Building
Casual Dining Brand Home Delivery Brand
Inspiring Functional
Communication focused marketing
Hot and on time
Complete casual dining
with 5 star service
experience
Menu designed
Menu structured to explore for efficient, complete
Western culture home meal replacement
More than just pizza, a unique 1st Best delivery brand
western casual dining experience with everyday affordable value

32. Pizza Hut, Differentiated Communication
Casual Dining Brand Home Delivery Brand
Retail message driven
Escape from daily routine /
ordinary
Deliver functional benefits
Festival / holiday fun
moment
Exotic / interesting
Focus on leaflet
PR effect for community
involvement

33. Pizza Hut, Dual Channels Brand Building
Casual Dining Brand Home Delivery Brand
Inspiring Functional
Communication focused marketing
Hot and on time
Complete casual dining
with 5 star service
experience
Menu designed
Menu structured to explore for efficient, complete
Western culture home meal replacement
More than just pizza, a unique 1st Best delivery brand
western casual dining experience with everyday affordable value

34. East Dawning – The Choice of Chinese QSR
East Dawning
A promising future
Higher frequency
Sister to KFC
Healthy, balanced in nature

35. East Dawning – Asset

36. East Dawning – Nutritious Breakfast
Savory Chicken Rice Roll
House Specialty
Soft Bean Curd Congee with
Fry Dough
Mushroom

37. East Dawning – Mouthwatering Main meal
Guizhou Chinese Ground Pork Tomato Beef Sichuan
Spicy Sausage/Ham with Chicken Noodle Spicy Pork
Chicken Rice Set Wing Rice Rice Set
Rice Set Set

38. East Dawning – Tempting Snackables
Steam Pork Dumpling Spicy Chicken Wing
BBQ Pork Puff

39. East Dawning – Inviting Sweets/Drinks
Mango Pudding Sesame Ball Summer Drink
Crushed Ice
Varieties
with Milk

40. East Dawning – The Choice of Chinese QSR
Chinese Fast Food meets KFC’s Standards

41. Building Dominant Brands in China
Differentiated brand vision, based on consumer
needs
Stay relevant, ahead of trend
Build core competency around food innovation

42. Support Capability
Joaquin Pelaez Chief Support Officer

43. Support Capabilities That Set Us Apart
Logistics
Quality Systems
Innovation Capabilities
Manufacturing

44. Yum! Logistics China
A Powerful Advantage
Distribution Centers: 11
Satellite DC: 5
Processing: 2

45. Yum! Logistics China
Brand Stores SKUs
KFC 1,951 2,264
Pizza Hut Casual Dining 293 934
Pizza Hut Home Service 43 150
East Dawning 8 108
Total 2,295 3,456
. . . Last year
our team traveled 31 MM kms, ~ 5X around the world
Data thru July 2007

46. Upgrading Distribution Assets
Upgraded and New DCs:
Beijing, Shanghai, Guangzhou, Xiamen, Qingdao, Nanjing, Wuhan
Shanghai Dough Commissary
Current Upgrades and Construction Underway:
Hangzhou, Chengdu
Hangzhou Egg Tart Factory
Future Upgrades:
Shenyang, Xi’an, Harbin
Cost: ~$5 million of CAPEX

47. Why Upgrade?
Investing for Safety, Security, Growth
Food safety / Ensure cold chain
Secure freezer space for the future
Plan for future store / volume growth
Increase efficiency
Prepare for store and brand growth 5 + 5 year plan
Provide staff with improved work environment
World-class distribution system to support world-class
restaurant operation

48. Yum! Logistics China
World Class Facilities

49. Food Safety
and
Quality Systems

50. Yum! China Food Safety Quality Systems
Recent media attention has highlighted food safety
and quality issues in China
Seafood products
Toys
Pet foods
Toothpaste

51. Commitment to Food Safety
Much work has been done to improve food safety
policy in China
Has become top priority for the central government
Importantly, our supplier base has shown high
commitment to our standards and practices
The whole industry is moving in the right direction

52. Yum! China Model Is Based on
Traceability from Farm to Table
Yum China Food Safety HACCP Based Program
(Traceability based program)
Restaurant QA
Restaurant
Microbiological
HACCP
Micro and
and Chemical Performance Temperature
Criteria criteria criteria

53. Yum! China Food Safety & Quality Model
Restaurant
Supplier Raw Yum China Education Enforcement Support
Selection and Materials Standards
Risk Assessment Control
Certificate

54. Yum! China Food Safety & Quality Model
Supplier
Selection and
control
Re-qualified the right suppliers based on food safety, food quality,
supplier quality programs and commercial standards
Qualify suppliers based on Food Safety and quality capabilities and
their implementation of HACCP programs
Implemented at Yum! China a robust specification system

55. Yum! China Food Safety & Quality Model
Raw
Materials
Control
More specific criteria used for suppliers when purchasing raw ingredients
Potential exposure to chemicals and pesticides
Microbiological limits
Irrigation water quality
Labor and hygiene standards
More surveillance at scheduled frequency
Evaluation of how supplier’s food safety and quality program work
Yum! sampling and testing of ingredients at our Food Safety Lab
Enforcing regulatory compliance

56. Yum! China Food Safety & Quality Model
Yum China
Standards
Specification Issue specification QA Audits HACCP Yum! Food Safety
to qualified and compliance
•Technical Lab Random
suppliers based Testing
•Functional
Identify Critical
Elements for Food Supplier
Safety, Functional provides
Performance and certificate and
Not done prior to Sudan incident
Traceability performance
data
Confirm
certificate for
key items
New System in Place

57. Yum! China Food Safety & Quality Model
Education
Integrated educational requirements beyond primary suppliers
Implemented Yum! China’s crisis management program
Instituted HACCP discipline across all suppliers in Category I and
including commissaries
Created our Food Safety Experts Consulting Committee
Communicated with our consumers, JV partners and all constituents
about our efforts and commitments.

58. Yum! China Food Safety & Quality Model
Enforcement
Monitor:
Adulterants and contaminants surveillance
Sent letters of non compliance all the way to disqualification
to those suppliers in violation of our standards
Performance and set incentives for suppliers for high and low
compliance
Specification compliance and traceability based on HACCP

59. Yum! China Food Safety & Quality Model
Restaurant
Support
Dedicated Field QA team (108 professionals) in all markets
Support all restaurant openings
Technical audit is conducted on every single restaurant 4
times per year
Conduct technical audit ad product cuttings in the field
Visit local authorities and develop good relationship
Provide on site technical expertise on food safety, product
knowledge to the restaurants

60. Yum! China Food Safety & Quality Model
Restaurant
Support
Created the Food Safety and Regulatory Office
Collected and updated the database on food
law/regulation/standards and ensure full compliance
Conducts random testing 10 times per year on our raw
materials
Participates in the formulation of Chinese food standards
Operates the Yum! China Food Safety Advisory Committee
(3 conducted)
Communicates with officials, media and consumers on
food safety issues

61. Lessons Learned Thus Far
Our Food Safety approach has been suggested as a strong
model for China
Collaborating with officials at the central and local level to
improve food safety practices across China
Leadership commitment from the top (gov’t, industry)
essential
Demonstration of corporate leadership with actionable
plans has earned credibility with consumers and regulatory
officials
Suppliers learning a great deal about traceability
As a whole, the industry is moving in the right direction

62. Food Innovation
Capabilities

63. Food Product Innovation
Food innovation a core value in Yum! China
Clear goal: Deliver great tasting, differentiated food for all
brands and occasions
Grounded in consumer insights, clear menu vision
Menus with breadth in variety, quality, occasion
Strategic brand fit
Local know-how developed well over a decade
Team understands local palate and cultural differences
associated with food in China

64. Food Product Innovation
Each brand focuses on business pillars and day parts
Typically launch 80 + new products annually across our brands
170+ products in our pipeline at any time
Yum! China has become an innovation leader for Yum! worldwide
Pizza Hut Delivery
Pizza Hut Casual Dining
KFC Roasted products
Beverages and Desserts
Leveraging our know-how for big payoff: Chinese QSR

65. KFC Innovation
Second Proteins
Chicken
Sandwiches

66. KFC Innovation — Soups & Salads,
Snacks & Portables

67. KFC — Beverages & Desserts
Hot & Cold Drinks
Egg Tarts

68. Pizza Hut Casual Dining
Elevating Food to New Standards

69. Pizza Hut Home Service
New Traditional Dough Pizza

70. East Dawning Innovation

71. East Dawning Innovation
Key challenges in the development of a Chinese QSR concept
Commercialization of Chinese cooking techniques
Food preparation and assembly in the BOH (Back Of the
House) to meet the speed of service expectation of 90 sec.

72. Yum! China
Manufacturing

73. Yum! China Manufacturing
Why manufacturing ourselves?
When there are no supplier options to execute our
strategy
When there is a proprietary product and we can do
it better and more cost effectively that suppliers
When manufacturing is a key enabler of our
business model

74. Yum! China Manufacturing
When there are no supplier options to execute our
strategy (Dough Balls for Pizza Hut Home Service)
Dough Commissary

75. Yum! China Manufacturing
When there is a proprietary product and we can do it
better and more cost effectively than suppliers
(Egg Tart Commissary)
Hangzhou DC
and
Egg Tart Factory

76. Yum! China Manufacturing
When manufacturing is a key enabler of our business
model and no capability exists in China

77. Support Capabilities Summary
Strong logistic capabilities to support our growth
Food safety and quality a “top corporate priority and a
company mindset”
Strong innovation capabilities for all our brands
leading the pace in many business segments
Developing self manufacturing capabilities where no
capabilities exit

78. High-Return
High-Return
Development
Lily Hsieh Chief Financial Officer

79. Profitable Expansion Continues
Expanding multiple category-leading brands
Unit economics yield excellent returns
More than traditional units
Penetrating large and smaller tier cities
Unrivaled development capability

80. Unmatched Resource Commitments
Today . . . 600+ development professionals on the ground
Extensive people development programs
Technical know-how and execution
Incentive programs extract the best out of our teams
Database of 475+ cities
2,500+ new build decisions provide rich catalog of
learning

81. Strong Unit Economics
Mainland China KFC Traditional Unit
Average Unit Volume $1.0 to 1.2
($ million)
Average Transactions (‘000) ~300
Cash Margin 25%
Cash Investment
$490 to 540
($000)
Strong Return – Sales Are 2X Investment

82. Broad Reach, Extending to 475+ Cities
# of Total Number
Cities Population of
City Tier
Entered (MM) KFC Units
1 4 52 610
2 26 81 687
3 43 65 340
4 85 59 348
5, 6 318 81 331
TOTAL 476 339 2,316

83. Penetrating Beyond the Big Cities
% of Total New Builds by Tier
46%
Tier 3,4,5,6
Tier 1,2 57% 54%
57 %
2006 2007 2008 YTD

84. Going Beyond Traditional Units
Bringing our Brands to a wider variety of destinations
Units
Railway station 35+
Bus station 15+
Airport 20+
Drive-Thru 25+

85. New Opportunities in Drive-Thru
Car ownership rising sharply
Foot traffic still important to unit economics

86. Maintaining Discipline in Our Rapid Expansion
Build adjacent units to relieve pending capacity
constraints
Proactively optimizing service levels
Helps solve queue wait time
New-unit impact built into our economic model

87. Rigor Every Step of the Way
Market mapping and trade zone identification
Site selection and acquisition
Project approval
Construction and opening
Post opening analysis
Feedback loop, huge catalog of learning

88. Leverage Development Capability for
Emerging Concepts
Pizza Hut Home Service East Dawning
Development teams already on the ground
Leveraging the same extensive city, trade zone database

89. Expecting Another Solid Year of Expansion
New Restaurant System Openings
506 475
409 396
354
302 302
266
167
'00 '01 '02 '03 '04 '05 '06 '07 '08 F

90. Summary
Development continues to be a key growth
driver
Driven by strong returns
Development capabilities
Team/disciplined process/database a big
competitive advantage
Capability ready for new brand expansion