KFC Investor Day – Agenda

‰ Introduction TimJerzyk

‰ KFCOverview RogerEaton

‰ Operations LarryRoberts
b

‰ Marketing JavierBenito

‰ Q&A All

‰ P d t Sh i
ProductShowing D
DougHasselo
H l
KFC Investor Day

Roger Eaton
President, KFC
KFC Strategic Focus

STEPCHANGETHECALENDAR

FIXTHEOPERATIONS

….NothingElseMatters

3
Driving Against Consumer Barriers

Balance

Value

Portabilityy
4
KFC Investor Day

Larry Roberts
COO, KFC

5
 Fix Operations

CULTURE PEOPLE MARGINS PRODUCTIVITY

‘ Accountability ‘ Quality ‘ Oil Management ‘ BOH Productivity
– CFF – 2x2 Grids – Pre-Breading
– Stewardship – Bench ‘ P&L Deep Dive – Ops Simplification
• RGM
‘ Recognition • AC ‘ Menu
• TOM ‘ Best Practice
– System Program Sharing Simplification
– Company Plus Up
‘ Capability ‘ Labor
‘ HWWT2 – Back to Basics Deployment
Training

0709 Ops Investor Day 6

 Field Operations Structure

Territory
e to y StStructure
uctu e  Increase visibility and
accountability
Territory
y GM
Operations  Increase training
support

Territory Ops
Field  Provide stronger field
HRD/HRM Marketing
Manager
Manager leadership

Internal Ops Outsourced

Field Trainer
Specialists Auditors

0709 Ops Investor Day 7

 CFF Process

GREEN Audit Results = 90 Days

Green Re-Audit

YELLOW Audit
ud t Results
esu ts =
60 Days Learning
Yellow Re-Audit Z
Zone

RED Audit Results = 30 Days 30 Days 30 Days

Re-Audit = Re-Audit = Re-Audit =
Red Red Red Red

Winning Back to
Learning Letter of Warning Continued Red
Coaching Ops Basics
Zone Concern Letter ႛ Voluntary Closure 8
Training Training

0709 Ops Investor Day 8

 KFC Investor Day

Javier Benito
EVP, Marketing & Food Innovation, KFC

9
 Partner With a World Class Brand

Annual Sales:
$1B+ Company
140k+ US Employees
1.2 Million Colonels Club $4B F
$4B+ Franchise
hi
Database 455kk+ Employees
Worldwide
6 Million Visits to
KFC.com Monthly Global Brand
(outranking Starbucks,
Rolex and Porsche)
158 Local Ad Co-ops
with over $73
$ Million in
TV Media Spend 5,200 US Restaurants

#5 QS
# QSR Advertiser in US S 17k+ Worldwide
17k W ld id L Locations
ti serving
i
at $188 Million in TV more than 1 billion chicken
Media Spend and over dinners annually in over 110
16 Billion Annual countries
I
Impressions
i In Store Exposure to
Over 60 Million
customers each month
10
The Global Positioning will be critical
to our success

Easy, cool Unique

attitude Taste Ideas

Familiar
Discovery
Permissible Generous
Pleasure Spirit

Heritage of
Freshness

11
 Of all QSR chicken categories, Fried COB was the
onlyy category
g y that declined over the last five years
y
QSR Share of Total Chicken Servings and 5 Year Servings Growth: YE Dec ‘08

KFC QSR Chicken Wings KFC

17% MS 7% of Total Chicken Servings +2% 3% MS +10%
+2% servings growth over 5 years

QSR Nuggets/Popcorn
KFC 21% of Total Chicken Servings
10% MS QSR Strips +7% +10% servings growth over 5 years
10% of Total Chicken Servings
+7% servings growth over 5 years

KFC -10%
QSR Fried Chicken
44% MS 12% of Total Chicken Servings KFC
4% MS
-10% servings growth over 5
years +55%
QSR Fried COB
KFC 13% off Total
T t l COB S
Servings
i
QSR Breaded Chicken Sandwich
3% MS
24% of Total Chicken Servings
QSR Grilled Chicken Sandwich +37% +55% servings growth over 5 years
14% of Total Chicken Servings
37% servings growth over 5 years
+37%

Source: The NPD Group / CREST. Total Chicken includes chicken sandwiches (breaded, grilled and salad), Wings, Strips, Fried Chicken (Regular and Spicy), Nuggets , non-fried chicken and
other chicken. 5 yr. Wing growth brought down since Mid Year SB deck b/c latter half of 2003 contained several successful boneless HBBQ wing promotions which were not included in mid-
year SB deck, thus creating a higher growth hurdle for YE 2008. 12
 We Build The Calendar Based on these Three
Layers
• 75% of consumers eat less fried

Balance chicken as a result of health

concerns

• 22% of consumers eat KFC less

Value because they consider us too

p
expensive

• 50% say KFC

is not on-the-go
Portability
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 KGC Strategic Framework

Drive Grilled COB trial / awareness

• Two-module, two-tier launch campaign
• Holistic marketing plan across all consumer touch points
• Laser-targeted marketing (e.g. internet, PR, direct mail, etc.)

Extend reach of KGC proposition

p p
• Establish KGC sub-brand (e.g. KGC Sandwich, etc.)
• Explore healthier sides to strengthen current line-up
• Flavor extension

Ongoing KGC Support

• Integrate KGC into all national COB windows
indo s (HE
(HE, LOW and LE)
• Continual POP and Menu Board presence

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KGC Launch UN
UNTHINK KFC

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 KGC Product Integrations

 Integrations that influence

LATE NIGHT - ABC SCRIPTED COMEDY - CBS

2008 2009 People’s

Choice Award
Emmyy B tN
Best New
Winner 5 “Live” Commercial One scripted brand Comedy
Skits w/ Jimmy integration

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 KGC Breakthrough Print
 Diverse plan to reach Mom’s, HFFUs and Ethnic targets.

Pop-up ad sticks out of

the top of the publication,
allowing readers to turn
directly to our Ad

Magazine Ad
Mock-up of Pop-up Ad

 May & June editions, 25-30 total insertions

y Leveraging print plan to secure in-book editorial mentions
 Full page in USA Today for Grilled Celebration

17
ESPN Placement

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 Proof PARADE Works

KFC earns the top scores of the issue and PARADE’s highest
Actions Taken score ever!
• 72% of respondents recall seeing KFC’s 4/26/09
ad in PARADE (vs. 58% PARADE adnorm)
• 98% associated the brand name after seeing the
ad (vs. 82% PARADE adnorm)
• 84% took action as a result of seeingg the ad –
PARADE’s highest Actions Taken score ever! (vs.
38% PARADE adnorm)
• Consider purchasing product: 44% (vs. 16%
PARADE adnorm)
• Visit store: 40% (vs. 6% PARADE adnorm)

• Purchase p
product: 20%
% ((vs. 5% PARADE
adnorm)
4/26/09
Source: Vista Print Effectiveness Rating Service
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 We Integrated Our Campaign with POS

Large Stanchion
Pole Sign Sign Inserts

Drive Thru Topper

20
The UNthinkable Endorsement

Oprah & KFC Feed America….

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 KGC Awareness Skyrockets

Secured more than media

impressions before May 5, but Oprah delivered
MILLIONS more!

22
 KGC QSR Trial More Than Doubled Following
Oprah Giveaway

 KGC trial was already well above the KFC average trial and more
th d
than doubled
bl d ffollowing
ll i th the O
Oprah
h show
h on M
May 5
5.
Kentucky Grilled Chicken Trial
KGC Trial KFC Average Trial

19% 19%
18% 18%

13% 13% 13%

9% 9% 9% 9% 9% 9% 9%
Test Market
7% Trial

4-May 5-May 6-May 7-May 8-May 9-May 10-May

Sandleman WA Report
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 Trial and Awareness Rise After Oprah*

KGC Trial: Pre-Oprah 14% / Post-Oprah 19%

KGC Awareness: Pre-Oprah
p 67% / Post-Oprah
p 73%

PromotionAttributeRatings
Top2Box
72% 70%71%
67% 67% 68%68%
64% 62% 64%65% 61% 61%
64% 64%65%
59% 58% 60%
57% 56% 57% 57%
49% *47%
42%

C Window Analyzeer Internet

Source: KFC
PreͲOprah(May4Ͳ5) PostͲOprahMay(6Ͳ10)

*During week of study field ( May 4 – May 10) * sig. lower than Post-Oprah
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First Integrated Campaign On-Line

Chef’s Corner
25
 Kentucky Grilled Chicken Launch

 Best product launch in history of brand

Bestproductlaunchinhistoryofbrand

 Q1 SSS Ͳ7%
Q1SSS Æ Q2SSS+3%
7%Æ Q2 SSS +3%
y Unprecedented30pointswinginSSSversuspreͲlaunch

 40%mixofchickenͲonͲtheͲbonesales

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 KGC Awareness Off The Charts

Awareness of KGC highest in KFC history!

Source: KFC Window Analyzer Internet 27

 KGC Beats Bowls and KFC Average on
Most CI Measures

Key Measures

Current Study
Measure Period M6'06 Bowls Average
Awareness 69% Above Above
Trial 19% Above Above
Promotion
Trial (KFC)* 54% Above Above Performance
Trial (Hvy KFC) 48% Above Above
Non-Trier Int. 62% Above Above Current M6'06 Study
Measure Period Bowls Average
Taste 73% Above Above
For me 77% Above Above
Unique 72% Average Above
Advertising Affordable 71% Above Above
Performance
Worth the price 71% Above Above
Current Study
y Planned
a ed Purchase
u c ase 67% Average
g Above
Measure Period M6'06 Bowls Average Light 30% Average Average
Proven Total 67% Above Above
Proven Promo 64% Above Above
Likeable 75% Above Above
New info 85% Above Above
Interest 49% Above Above
Imprvd Image 61% Above Above

Source: M5 2009 Window Analyzer 28

 Search for the Face of KGC Continues

 America was buzzing about whether KFC planned

to get rid of the Colonel while the MySpace
“search for the face of KGC” was under way.

 KFC leveraged that controversy by letting America

vote on whether the Colonel or the “new face”
should represent KGC.

 The Colonel won in a landslide: 96 percent of

voters asked KFC to keep the Colonel, many via
ppassionate e-mails and pphone calls.

 The news continues: Finalists are being selected

in the MySpace “search for the face of KGC” video
contest.

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 QSR Needs / Jobs Synthesized Into 5 Core Areas

Reliable Classics Big Eats

• When I want something • When I am really hungry
easy and familiar • e.g. Big Box, Double Quarter
• e.g. OR, Big Mac Pounder, Baconater
French Fries,
Fries CFA Sandwich

Flavor Excitement
• When I am “bored” and want
something different / flavorful
• e.g. Hot Wings, Wendy’s
Spicy Chicken Sandwich

Balance / BFY Value

• When I want to feel better • When I don’t have much
about
b t what
h t I eatt money
• e.g. Salads, Sub Sandwiches • e.g. Dollar Menu, Taco Bell
30

30
 Menu Vision & Innovation Framework

Family Dinner Lunch Snacking

with Kids Individual Meal
Sit Down In A Hurry Individual Party

Reliable
R li bl Original Recipe
Classics
OR Sandwich
Big Eats Box

Flavor
Excitement Extra Crispy

Health/BFY Kentucky Grilled Chicken

Value Meal Snack-
Value (LOW) Value Menu

New Layers of Low Hanging Fruits: Beverages, Desserts

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 Size of Revenue Opportunity
(In Billions of Dollars)

F il Dinner
Family Di Lunch
h S
Snacking
ki
with Kids Individual Meal
Sit Down In A Hurry Individual Party

Reliable Classics 12 42
4.2 10

Big Eats 10 3.8 10

Fl
Flavor Excitement
E it t 12 42
4.2 10

Health/BFY 7.9 3.0 7.1

Value 84
8.4 30
3.0 75
7.5

Totals 50 18 45 30

New Layers of Low Hanging Fruits:

Beverages, Desserts
Source: NPD Crest & Group Meal Segmentation 2007 32
 DEDVIM Innovation Process
Stages

Define Explore Develop Validate Implement Measure

S

Identify and Conduct Develop Create Develop Conduct

prioritize ideation positioning validation launch plan post-
platforms for plan Develop analysis
Validate Develop
eps

innovation product
p Implement
p communication Synthesize
Prioritize
Ste

Develop a validation plan and report

Write PPW
deeper plan Launch learnings
Conduct
understanding Synthesize product
IST/CLT
post-test
Conduct ops
learnings
shakedown

Build Know How & Share Tacit Knowledge

Project
Explore Initial Final launched;
Innovation Brief Learning
Output

Business Business sales plan met Summary

Brief + Case Case
“70% Ready”
Products

ennovation! 33
Value Menu Launch in February

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 Boneless Filet Box
Description:
1 OR boneless filet, 1 ind side, 1 biscuit and 1 22 oz
d i k packed
drink k d in
i snack k box.
b Filet
Fil t served
d in
i sleeve.
l

Trade Up: 2 filet box for $6.99 served in super box.

Consumer Positioning:
A new, meatier way to eat boneless chicken.

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 Spicy Zinger Box Meal
Description
 Spicy Zinger Box Meal includes:
y Spicy Zinger Sandwich
y 3 Hot Wings
y 2 Sides
y 32 oz. Drink

Consumer Positioning
 The only Supercharged Spicy Box Meal made
to Conquer my Hunger.

Illustration Only

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$5 Fill-Up Boxes
Description
ƒ 5 box combo’s for $5 each
ƒ 2 pc
pc, 1 Side
Side, Bisc & Med Drink
ƒ 3 Strips, 1 Side, Bisc & Med Drink
ƒ Twister, 1 Side & Med Drink
ƒ 5 Hot or BBQ Wings, 1 Side & Med Drink

Consumer Insight
ƒ The only complete lunch for $5

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