Yum! Brands Build Dominant China Brands. Sam Su President Yum! China

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1 Yum! Brands Build Dominant China Brands Sam Su President Yum! China

2 Yum! Key Strategies Build Dominant CHINA Brands Drive PROFITABLE International Expansion Improve U.S. Brand Positions & Returns Drive High ROIC & Strong Shareholder Payout

3 Building Yum! China KFC 1987 Pizza Hut Casual Dining 1990 Pizza Hut Home Service 2001 East Dawning 2005

4 Yum! China 2006, an outstanding year KFC stronger than ever Pizza Hut Casual Dining momentum, rapid growth continues Huge progress on Pizza Hut Home Service business model Our capabilities continue to strengthen across many facets Target 20,000+ Yum! Restaurants

5 Yum! China Strong Growth Track Record New System Restaurant Openings Operating Profit ($million) % 3-Yr CAGR F F Note: Operating profit in 2005 and 2006 includes option expense impact; China Division includes People's Republic of China, Thailand, KFC Taiwan

6 Key Decisions Stand Out in China s Success To become the best restaurant company not only in China, but also in the world. Unique approach to brand building Grew people capability ahead of the business Invested early in distribution and supply chain Extended brand building to hundreds of cities

7 China Teams Know Brand Building Unique Brands... within China... within Yum! KFC Part of everyday life #1 QSR, huge returns Pizza Hut Casual Dining Window to the West Home grown CDR Pizza Hut Home Service First mover New delivery model East Dawning Best Chinese QSR Never done before

8 KFC #1 QSR in Mainland China 380+ Cities Life Is Tastier with KFC AUV = $1.1 million

9 Building a Big Brand at KFC Rooted in China Community Involvement Broad-Appeal Menu In-Store Experience

10 KFC, the Clear Leader... Top-2 Box Strong and Mostly Agree FOOD IMAGERY KFC wins... KFC wins... Good taste Progressive Food choice Trusted brand Interesting new products Providing variety Deeply rooted in China society Welcomed by Chinese consumers Data source: BIT, Aug N=1,900 in 47 cities 1,695 Restaurants in Mainland China

11 KFC Brand Leadership Growing Mainland China Restaurants 1, Q3 '06

12 KFC Has Capability to Become Even Bigger Further distance our lead over any competitor Our R&D and supplier network is strong World class restaurant teams Chicken leadership well secured Go beyond chicken to meet consumer need for variety From traditional fast food to new fast food

13 Pizza Hut Casual Dining #1 Casual Dining 50+ Cities Happy Moments at Pizza Hut AUV = $1.2 million

14 Pizza Hut... Differentiated Experience More than Pizza Inspiring Communication Unique Western Menu Casual Dining Complete Experience

15 Explosive Growth for Pizza Hut Casual Dining 95 Dine-In Restaurants % CAGR in Units 260+ Tier 2 & 3 cities, same success as in Tier 1 Tier 1 Cities: 122 Units Tier 2 Cities: 98 Units Tier 3 Cities: 35 Units F

16 Bold Goal: Build Pizza Hut Casual Dining to Even Bigger Brand Broaden brand appeal More than Pizza expert Continuously enhance customer dining experience Accelerate unit expansion Further strengthen our competitive position

17 Pizza Hut Home Service... Next Growth Concept Successful launch in Shanghai Beginning roll-out to new cities

18 Pizza Hut Home Service... Next Growth Concept Value What it means... One national phone # Functional Fast 5-Star Service Fast-bake dough Full menu: Pasta, appetizer, soup, salad & dessert Expert call-center staff Home Meal-Replacement Menu Neat & clean delivery staff

19 Positive Consumer Trends in Home-Service Category Delivery market growing fast Category supported by growing affordability and life-style change Consumers busier, more time starved Parents, young adults fastest growing segments Not much competition

20 Confident Pizza Hut Home Service Will Grow BIG Bold Goal: Build brand into dominant home meal solution provider Our strategic focus: Perfect the business model, prepare for expansion Lift brand awareness dramatically Better differentiate from Pizza Hut Casual Dining Ramp up expansion to new cities Roll-out dough commissary

21 Neither Satisfied Nor Finished East Dawning

22 East Dawning The Choice of Chinese QSR East Dawning A Promising future... Higher frequency KFC graduate Balanced in nature

23 Ready for Next Generation of Brands Development teams already on the ground Leveraging the same extensive city database Pizza Hut Home Delivery poised for growth Replicate Shanghai success in new cities Potential payoff big when East Dawning ready

24 Logistics a Capability that Enables Rapid Growth

25 Sustainable Competitive Advantages Outstanding tenured team on the ground in Shanghai $100+ million G&A commitment Brand positioning & menu vision Nationwide distribution system Yum! controls Unit economics clearly support expansion Largest retail development capability Yum! China

26 We Are As Confident As Ever of Our Future Three category-leading brands for expansion Improved product depth and marketing Best-in-class logistics capability Great returns from smaller cities Proven team capability to build multiple leading brands

27 Yum! China Target 20, ,000 14,000 2,000 1,800 1, KFC Mainland China 5,000 McDonald s U.S. 5,100 Pizza Hut Casual Dining Applebee s U.S. SIGNIFICANT POTENTIAL 30 4 Pizza Hut Home Delivery Domino s U.S. East Dawning

28 Yum! Brands Build Dominant China Brands APPENDIX

29 China Division Rapid Growth New Restaurant Openings F KFC Pizza Hut Casual Dining Pizza Hut Home Service Thailand/Taiwan ED/TBG TOTAL DIVISION Note: Traditional restaurants

30 KFC Today a Mix of Company, JVs, and Franchisees Mainland China As of Q Total Company Joint Venture Franchise KFC Restaurants 1,695 1, % of Total 100% 61% 35% 4%

31 Yum! China Division 2007 Capital Plan 06 F 07 Plan $ Million Restaurants $ Million Restaurants New Company Restaurants Upgrades Brand Projects 4 10 SUBTOTAL Maintenance 7 5 Corp/Other TOTAL Note: 2007 Plan rounded to $5 million