Yum Brands : Third Quarter 2025 Financial Disclosures

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Unless otherwise noted, the section references to (i) "us", "our", "we", "the Company" and "YUM" refer to YUM! Brands, Inc. and its consolidated subsidiaries, (ii) "the Parent" refers to YUM! Brands, Inc., on a stand-alone basis, (iii) "the Issuers" refers to KFC Holding Co., Pizza Hut Holdings, LLC and Taco Bell of America, LLC, which are direct wholly-owned subsidiaries of the Parent and co-issuers of $750 million of 4.75% Senior Notes due 2027 (the "Subsidiary Senior Unsecured Notes") and co-borrowers under the Credit Agreement, as defined in our annual report on Form 10-K for the year ended December 31, 2024 filed with the SEC (the "2024 10-K") on February 19, 2025; (iv) "the Specified Guarantors" refers to collectively Yum Restaurant Services Group, LLC, Restaurant Concepts LLC and Taco Bell Corp. (including their subsidiaries except for Taco Bell Funding, LLC and its special-purpose, wholly owned subsidiaries), which are directly wholly-owned subsidiaries of the Parent and guarantors of the Subsidiary Senior Unsecured Notes and under the Credit Agreement; (v) "the Companies" refers to collectively the Issuers and the Specified Guarantors, (vi) "the Taco Bell Securitization Entities" refers to collectively Taco Bell Funding, LLC, a Delaware special purpose limited liability company and wholly owned subsidiary of Taco Bell Corp, and its special-purpose, wholly owned subsidiaries and (vii) the "Restricted Group" refers collectively to the Companies and their subsidiaries, other than the Taco Bell Securitization Entities which will not be subject to the covenants under the Indenture governing the Subsidiary Senior Unsecured Notes and the Credit Agreement, and also excludes the Parent and ABR Insurance Company which will not be subject to such covenants as well.

This discussion should be read in conjunction with the Condensed Consolidated Financial Statements ("Financial Statements") and the section "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our quarterly report on Form 10-Q for the quarter ended September 30, 2025 as filed with the SEC on November 7, 2025 (the "Third Quarter 10-Q") and contains additional information related to the pro forma results of operations and financial condition of the Restricted Group. None of the financial information in this discussion has been audited or reviewed by our auditors. This discussion has been prepared and posted to our website in accordance with our reporting obligations under the Indenture governing the Subsidiary Senior Unsecured Notes and the Credit Agreement. You should read the following Restricted Group's pro forma results of operation and financial condition together with the information included in our 2024 10-K, especially the information under the heading "Risk Factors".

Pro Forma Results of Operations for the Restricted Group

The following table sets forth certain unaudited financial and operating data of the Restricted Group as of the dates and for the periods indicated after giving pro forma effect to the exclusion of the Taco Bell Securitization Entities and the exclusion of Parent Entity Expenses from the Restricted Group.

(in millions) Quarter ended Year to date

2025 2024 % B/(W) 2025 2024 % B/(W)

Company sales	$ 697	$ 621	12	$ 1,974	$ 1,667	18
Franchise and property revenues	629	593	6	1,815	1,744	4
Franchise contributions for advertising and other services	426	401	6	1,249	1,170	7
Total revenues	$ 1,752	$ 1,615	8	$ 5,038	$ 4,581	10
G&A expenses	$ 257	$ 236	(9)	$ 801	$ 752	(6)
Operating Profit	$ 447	$ 420	6	$ 1,212	$ 1,175	3

Unit Count 9/30/2025 9/30/2024

% Increase (Decrease)

Franchise 53,495 51,790 3

Company-owned	1,376 1,270	8
Total	54,871 53,060	3

Quarter ended Year to date

2025 2024 2025 2024

Same-store Sales Growth (Decline) %	2	(3)	1	(3)
System Sales Growth (Decline) %, reported	6	-	4	-
System Sales Growth (Decline) %, excluding FX	5	-	4	1

Parent Entity Expenses:

Amounts transferred to or on behalf of Yum! Brands, Inc. as Parent Entity Expenses (as defined in the Indentures) or operating costs and expenses incurred in the ordinary course of business (as permitted by the Credit Agreement) are excluded from G&A expenses of the Restricted Group. G&A expenses of the Restricted Group were reduced for such costs by $1 million for each of the quarters ended September 30, 2025 and 2024, and $7 million and $6 million for the years to date ended September 30, 2025 and 2024, respectively.

Pro Forma Results of Operations for the Taco Bell Division of the Restricted Group

The following table sets forth certain unaudited financial and operating data of the Taco Bell Division of the Restricted Group as of the dates and for the periods indicated after giving pro forma effect to the exclusion of the Taco Bell Securitization Entities from the Restricted Group.

(in millions) Quarter ended Year to date

% B/(W) % B/(W)

2025 2024 Reported Ex FX 2025 2024 Reported Ex FX

$ 591	$ 522	13	12	$ 1,649	$ 1,501	10	10
6	3	N/A	N/A	6	1	N/A	N/A
$ 298	$ 267	12	12	$ 848	$ 775	9	9
26	23	6	5	74	72	2	1

System Sales

Same-Store Sales Growth %

Company sales Franchise and

property revenues

178 165 9 9 $ 514 $ 477 8							8
$ 502 $ 455 10 10 $ 1,436 $ 1,324 8							8
$ 27	$ 15	(68)	(67)	$ 71	$ 65	(9)	(8)
8	6	(33)	(33)	22	22	3	3
177	163	(9)	(9)	510	473	(8)	(8)
$ 47	$ 51	(8)	(8)	$ 139	$ 132	5	5

Franchise contributions for advertising and other services

Total revenues

G&A expenses Franchise and

property expenses

Franchise advertising and other services expense

Operating Profit

Unit Count 9/30/2025 9/30/2024

% Increase (Decrease)

Franchise	1,143		1,118		2
Company-owned	528		491		8

1,671 1,609 4

Company Sales. The quarterly and year to date increases in Company sales were driven by Company same-store sales growth of 6% and 5% for the quarter and year to date, respectively, and unit growth.

G&A Expenses. The quarterly increase in G&A was driven by higher expenses related to our annual incentive compensation programs, lower management fees paid by the Taco Bell Securitization Entities, higher digital and technology expenses and increased professional and legal fees.

The year to date increase in G&A was driven by higher digital and technology expenses, higher expenses related to our annual incentive compensation programs and increased share-based compensation, partially offset by higher management fees paid by the Taco Bell Securitization Entities and lower professional and legal fees.

Operating Profit. The quarterly decrease in Operating Profit was driven by higher G&A and higher restaurant operating costs, partially offset by same-store sales growth and unit growth.

The year to date increase in Operating Profit was driven by same-store sales growth and unit growth, partially offset by higher restaurant operating costs.

Taco Bell Securitization Entities:

The Securitization Transaction and the exclusion of the Taco Bell Securitization Entities from the Restricted Group had the following pro forma impact on the financial and operating data of the Restricted Group and the Taco Bell Division of the Restricted Group in comparison to the corresponding data of YUM and the Taco Bell Division:

Units

• A total of 7,145 and 6,985 U.S. Taco Bell franchise units were excluded from the Restricted Group as of September 30, 2025 and 2024, respectively, as the Restricted Group no longer receives franchise fees from these restaurants.

  Franchise and Property Revenues

• Franchise and property revenues of $228 million and $211 million were excluded from the Restricted Group for the quarters ended September 30, 2025 and 2024, respectively, due to the exclusion of the franchise fees paid by all U.S. Taco Bell franchise restaurants as a result of the Securitization Transaction.

• Franchise and property revenues of $662 million and $606 million were excluded from the Restricted Group for the years to date ended September 30, 2025 and 2024, respectively, due to the exclusion of the franchise fees paid by all U.S. Taco Bell franchise restaurants as a result of the Securitization Transaction

  Company Restaurant Expenses

• The Restricted Group includes $16 million and $15 million of additional Company restaurant expenses for the quarters ended September 30, 2025 and 2024, respectively, due to the payment of royalty fees of 5.5% of annual sales to the Taco Bell Securitization Entities by all U.S. Company-owned Taco Bell restaurants (which are part of the Restricted Group).

• The Restricted Group includes $46 million and $43 million of additional Company restaurant expenses for the years to date ended September 30, 2025 and 2024, respectively, due to the payment of royalty fees of 5.5% of annual sales to the Taco Bell Securitization Entities by all U.S. Company-owned Taco Bell restaurants (which are part of the Restricted Group).

  G&A Expenses

• Management fees of $23 million and $26 million for the quarters ended September 30, 2025 and 2024, respectively, were paid by the Taco Bell Securitization Entities to Taco Bell Corp. as manager of the Taco Bell Securitization Entities, and were recorded as a reduction of G&A expenses for the Restricted Group.

• Management fees of $77 million and $72 million for the years to date ended September 30, 2025 and 2024, respectively, were paid by the Taco Bell Securitization Entities to Taco Bell Corp. as manager of the Taco Bell Securitization Entities, and were recorded as a reduction of G&A expenses for the Restricted Group.

• These management fees, on an annual basis, are equal to the sum of a base fee of approximately $30 million (subject to 2% per annum escalation, compounded annually) plus 8.7% of total securitization cash revenue paid to the Taco Bell Securitization Entities by U.S. Company stores and U.S. franchisees for the year.

Consequently, the overall operating margins of the Restricted Group are negatively impacted due to the exclusion of franchise and license fees from U.S. Taco Bell franchised restaurants and the Restricted Group's obligation to pay franchise fees on U.S. Taco Bell Company-owned restaurants to the Taco Bell Securitization Entities, with no corresponding reduction of Restricted Group expenses (other than a partial offset by the management fee paid to the Restricted Group by the Taco Bell Securitization Entities as reimbursement for a portion of G&A expenses).