Yum Brands Earnings Call Insights: Food Safety and Rebuilding Consumer Trust in China

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Yum Brands Inc (NYSE:YUM) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Food Safety

John Ivankoe – JPMorgan: The sense of what you really could have done differently in this case in terms of the antibiotics ever entering into your chicken supply at all and what prevents that in the future? In other words, are you being asked to do inspection at the farmer level, which I can’t imagine? I mean are you responsible for inspection at the supplier level, which quite frankly I thought was the responsibility of different authorities? Or is it just a process to where you and the government need to communicate more? In other words, what really is the process of remediation that prevent this from happening in the foreseeable future?

Timothy P. Jerzyk – SVP, IR: I think the beginning of your question got cut off on our end. Can you – sorry that I ask you to redo that, but if you could restate your question, that will be helpful to us, the first part.

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John Ivankoe – JPMorgan: Apologies. The question really centers around what you could have done differently to prevent this? David, you made a comment about learning from history and is it, gosh, if we had more people in the field from an inspection point of view, you are doing inspection at the farmer level, which I have a hard time believing that’s your responsibility. Was it your responsibility to do more inspections at the supply level, which I thought was responsibility of different authorities. SO, the question that I have is what is changing specifically within Yum! For an issue like this, whether it’s chicken related to anything else in your supply chain for not occurring again?

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