YUM FY 3Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

More food supplier problems in China

“our strong first half results have been offset by an unexpected and highly publicized food supplier incident in China, which significantly impacted sales at both KFC and Pizza Hut. As a result, we are now estimating full year EPS growth of 6% to 10% prior to special items.”

Retaurants/capita comparison US vs China

“Yum! Currently has five restaurants per million people in China with a consuming class is expected to grow from 300 million people in 2012 to over 600 million people by 2020. This compares to or about 60 restaurants per million people in the United States where the consuming class is about 300 million people today.”

New CEO in the new year

“I want to point out that this will be my last earnings call as CEO, and the Greg Creed will be the CEO beginning January 1, which time I will assume my new role as Yum!’s Executive Chairman of the Board.”

China is recovering for us

“We remained very confident that we will see a recovery in what we estimated a six to nine months period because we saw in the month of September that sales were substantially better than they were in the month of August which was the month immediately following the publicity incident. So we are clearly recovering. We are also seeing consumer scores improving and that further reinforces our belief in this recovery.”

So far the trajectory of the China incident is the same thsi time as the last time

“as we step back and look at how sales and consumers scores are trended in the two months or so since the incident, I would say that the trend is broadly in line with what we saw the last time, but again we are relatively early in the stage of this recovery and we continue to believe that we will see a full recovery in a six to nine months timeframe.”

These incidents are a chance to get stronger

“I would never be one to say that we could never have any incident like this again. And but I can tell you we get stronger from everything that we had– ever happens like this we get lot stronger and stronger from — we improve our processes that are already strong. Everything we can do to learn from and get better. ”

It takes 6-9 months to recover from a highly publicized event

“what we’ve learned over time it really doesn’t matter even almost a big, the issue there if there is a highly publicized event, it takes six to nine months to recover. Just because consumers are cautious when it comes to food intake. “