Good morning. My name is Shawn and I will be your conference operator today. At this time, I would like to welcome everyone to the Yum! Brands' Second Quarter 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. Mr. Schmitt, VP of Investor Relations & Corporate Strategy, you may begin your conference.

Thank you, Shawn. Good morning everyone and thank you for joining us. On our call today are David Novak, Chairman and CEO; and Pat Grismer, our CFO. Following remarks from David and Pat, we will take your questions. Before we get started, I would like to remind you that this conference call includes forward-looking statements. Forward-looking statements are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the SEC. In addition, please refer to the Investors section of the Yum! Brands’ website at www.yum.com to find disclosures and reconciliations of non-GAAP financial measures that may be used on today's call. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback. Please be advised that if you ask a question, it will be included in both our live conference and in any future use of the recording. Finally, we would like to make you aware of the following upcoming Yum! Investor event. Our China Investor Analysts conference will be on September 16 and 17 in Shanghai, China. Our third quarter earnings release will be on Tuesday, October 7. And our 2014 New York Investor and Analysts conference would be on Thursday, December 11, in Midtown Manhattan. With that, I would now like to turn the call over to David Novak.

Thank you, Steve. And good morning, everyone. I am pleased to report Yum! Brands is well on its way to delivering in full-year EPS growth of at least 20% with second-quarter EPS growth of 30% excluding special items. Just as important, I'm confident we are building momentum behind major initiatives around the world that will sustain double-digit EPS growth in 2015 and beyond. Looking at the quarter, we are obviously pleased with the continued progress we are making at KFC and China as evidenced by strong sales in margin growth as well as improving new unit returns. Our KFC Division which is our second largest profit contributor behind China also continues to deliver solid sales and profit. When taken together, our China and KFC Divisions comprise nearly two third of our total operating profit. So it's great to see both performing well. Another highlight is our Taco Bell breakfast platform is off to a great start and we expect to build up this momentum going forward. Now let me give you more color on each of our divisions. Let's begin with China. Our China Division delivered system sales growth of 21% in the quarter as we opened 104 new units and grew same store sales 15%. It's great to see such a strong top line growth. And fortunately this top line growth flowed through nicely to the bottom line as operating profit grew an impressive 188%. The China team deserves a lot of credit for doing an excellent job driving restaurant margins of almost 17% during the quarter and over 19% in the first half. At KFC China, our goal is to improve our already strong economic model and make KFC which is the number one, most popular brand in China, even more youthful, contemporary and energetic. We've maintained our…

Thank you, David. And good morning, everyone. My remarks today, I will cover three areas. Our second quarter result, our outlook for the second half of 2014 and what we are doing to drive long-term value for our shareholders. With the second quarter, our results were similar to Q1 with the very strong bounce back in China, solid growth at our KFC Division, mixed results at Taco Bell and poor performance at our Pizza Hut Division. Overall, worldwide operating profit increased 34% in constant currency and EPS grew 30% excluding special item. We've now produced two quarters of strong EPS growth and are well on our way to delivering on a commitment of at least 20% EPS growth this year. China Division profit rebound in sharply from the second quarter of 2013 which was the low point of last year and grew 188% in the quarter. Importantly, KFC same store sales improved sequentially on one and two year basis growing 21% in the quarter on the strength of a comprehensive restage of the KFC brand. And while Pizza Hut Casual Dining same store sales were flat in Q2, we are pleased that we grew system sales 16% with continued rapid development of this highly profitable concept. We are also very pleased with our continued margin improvement in China. With first half restaurant margin above 19% and with our current outlook for the second half, we are confident that China's full year restaurant margin will be at least 18% or nearly three points above 2013 and back to where we were in 2012. I am also very happy to report that China's new unit returns have strengthened considerably. As you recall from our December Investor Conference, cash paybacks at KFC in 2013 averaged a very respectable four years despite short term…

Thank you very much. I was wondering if you could give a little more details on the China same store sales breakdown in terms of price, mix and traffic? Assuming mix maybe was a big contributor here, where is the mix coming from? Is this the change in occasions? Is it less promotion etcetera? And then maybe how do you see those three pieces moving in the second half to jive with the guidance that you just gave for same store sales? Thanks.

Keith, very happy to do that. So we will focus on KFC where we are at 21% same store sale growth in the quarter. About half of that was driven by mix. And of that mix component the majority is attributable to the fact that we overlap a significant decline in high check family business. Now from last year, you may recall that from last year's result. Average spends however also benefited from the launch of our premium positioned menu revamp. So those two things together drove about half of that same store sales increase. Now we also had about four points to pricing which we felt good about considering that we took absolutely no pricing last year and that was more or less in line with inflation on a two year basis, and as far as we know in line with competition and then we had transaction growth that delivered another six points. I think the important thing here what I most pleased with is that despite the fact we had significant lift in average spend and we had a contribution from pricing, our value scores improved. Our value scores improved with the launch of our new menu. And they improve even with the pricing that we took. So we feel very good about the composition of our sales growth in the second quarter.

Your next question comes from the line of David Tarantino. Your line is open.

Hi, good morning. Pat, I just wanted to follow up on your outlook for the same store sales in China for the year. You mentioned that your expect comps to come in towards the lower end of your prior guidance. And I was just wondering if you could add some context to that statement. Is that because of -- simply because of a comparison that you are facing in the back half of the year or are you seeing any changes in the sequential volumes that might concern you and maybe point you more conservatively relative to your prior guidance.

Well, David, I think the first thing to point out is that we are confident that we are going to deliver at least 20% full year operating profit growth in China on the strength of our recovery and restaurant margin which I mentioned as the high end of our guidance range. Now as we said all along sales are difficult to predict with precision. And we know that China is a volatile market. But our best estimate today based on the currents that we see in our business is that sales, same store sales will likely be towards the lower end of our range. And it's with that combination of higher end margin and lower end sales if you will, so we get to that 40% operating profit growth that we need to deliver on our commitment of at least 20% EPS growth for the year. Now in terms of what driving the softer results in the back half of the year, you got to remember that we have adopted the strategy of pivoting towards higher quality, more profitable transaction and we feel very good about that because that yield a much healthier business model which bodes well for future development. The second piece is that is that the easiest overlap is behind us. Remember, in first half of last year sales were down 20%, same store sales were down 20% in China and in the back half same store sales were down only 7%. So yes we are lapping still in negative number but the overlap is harder in relative term. So it's combination of those things that we contribute to softer results in the second half versus the first half but again still ladder up to the 40% operating profit growth and the 20% EPS growth at least that we've committed to deliver.

As I've always said in the past, we are going to always have bumps in the road with same store sales. In June, we had a Brazilian Samba themed promotion around football that frankly didn't resonate like we had hoped. We are now moving to signature value program where we borrow from the success we had at Pizza Hut where we are offering one of our revamp products per day at a half of the price, making it-- it is only product. And this has been part of our ongoing plans. So we are just beginning to launch that program. And it's early days; we will see how it does. But one thing that we know as Pat said more moving forward is that we are driving popular transaction trends and improving our business model. And importantly when we look at where we are at today, all of our major attributes for the brand are improving. We are the preferred brand, taste is better, value for the money is better and our safety score are back to where they were 2012. So the brand is certainly bouncing back and when we look at the whole China business in total, giving at least 40% profit growth this year and having at least high single digit sales growth for the full year. We feel very good about that. And it's a great base for us to move into 2015 and beyond.

Your next question comes from the line of Jason West. Your line is open.

Yes, thanks. I guess just going back to the comments around the China unit economics and that the store growth outlook. I mean I guess given what you guys are seeing today in the improving economics is it fair to say you're going to sustain this sort of 700 gross opening rate going forward? Or would you like to see that number go higher over time or do you feel like-- you would like to moderate that number? Just if you could talk a little bit about that will be helpful.

Well, Jason, I can assure you we wouldn't moderate that number. We expect to deliver at least 700 new units this year that lapping the 740 from last year. We remain as bullish as ever about a long-term growth prospect in China and we feel very good about how our unit level economics have strengthened. David had said before that we did some of our very best work last year in the midst of crisis to make our business even better. And new unit, I know economics are as strong as they ever been. Even last year with the pressure that we felt on sales, we had four year cash payback of KFC, this year we are back to three years, that include tier three cities and below two and half year cash payback from KFC. Pizza Casual Dining cash payback have sustained at two years. So we feel very good about the position of our brand. We feel great about the overall returns we are seeing on this investment. And we have every reason to believe that we are going to try high levels of investment going forward, maintaining the high level of discipline and rigor around our capital investment products.

I think the other thing that we think going forward we have another weapon in our arsenal with Pizza Home Service. And this is a small pack box format where we are delivering not only pizza but also Chinese food. We think we've actually kind of back our way into Chinese fast food format with great economics coupled with the pizza that allows to get some dramatic expansions we go into future. And again this is small box so the investments costs are not that significant. The main point I would like to make on this is that we have never ever chased a number. We obviously think it will be better than 700, we want to grow that number as we go forward. We are going to stay very, very disciplined as we have in the past. What I have told Sam and the team, and this will continue to be our policy as we've got these incredible brands. They are like diamonds. We need to polish those diamonds and only grow as faster as our people capability can allow us to do it and then we can get the right location in the right places that we need to be and as we go forward. And the beautiful thing about our business in China is that the business models are great. And the business is strong. We are not any hurry. We don't have to hurry. We just need to grow this business the right way. So we will be very focused, very disciplined, look at our returns and only grow as fast as the locations are there, we have a people capability. And remember, I think this year we hired a close to 10,000 management trainees that will come into our system and three years from now will be ready to be restaurant general managers. And we are doing that in anticipation of the significant growth that we expect to have across KFC, Pizza Casual Dining and now Pizza at Home Service.

Your next question comes from the line of David Palmer. Your line is open.

Thank you. Question on Taco Bell. You mentioned Quesaritos is helping the non breakfast business. Have you been able to keep the breakfast sales stable even when you are pointing your advertising energy to non-breakfast items like Quesaritos. And in the second half we talk about specifically, should we be expecting--

Can you speak up David, we can't hear you. David? We can't hear you.

Can you hear me okay now?

I can hear you better now. We got the first half of the question I think but you might want to repeat it so everybody can hear it.

Let me just repeat that. We talk about; you mentioned Quesaritos is helping the non-breakfast business. Have you been able to keep breakfast sales stable even when you are pointing the advertising energy to the non-breakfast items like Quesaritos? And then in the second half just specifically with the P&L for Taco Bell, are we going to see significant digital launch cost as you roll that out for that brand? Thanks.

David, I will go and address the digital launch cost. We do expect to be launching that later in the year sometimes in the fourth quarter. The additional investment against that is working and our forecast for the full year and we continue to expect that Taco Bell division profit will be about in line with their ongoing growth target about 6%. So those costs are loaded into our G&A forecast for the year.

And the breakfast numbers remain relatively stable. We feel very good about the base that we have with breakfast at Taco Bell. We have more news coming and we think we have the combination of the breakfast news plus the other day part news, give us the one two combination that we have to have to really go forward. I actually -- I think breakfast is just critical to us on a number of front. First of all, we got this assets with basically has been empty until 11 o'clock and so we regaining the leverage that asset, we are also leveraging on a profitable basis. Remember, I took that thing for McDonald eight years to make money in breakfast. We are already at above breakeven. So we feel good about get $70,000 to $120,000 in sales per unit on annual basis. So this is a great vehicle for us. And I think this category is very tough. You got to have constant innovation and to be able to innovate across all the important day parts to drive the same store sales versus just the traditional lunch and dinner day part. I think it gives an opportunity to even bring more consumer news, more excitement to the Taco Bell brand as we go forward. And regardless of what we market and how we market it, if you look at what we are doing it all drives the Taco Bell brand forward. The Ronald McDonald advertising took our overall brand imagery I think up to -- some of the highest levels we've ever seen. So we were building the brand in all that we do and now we can build the brand across all the day part. So I am very enthusiastic about breakfast. I just about month ago I was…

Your next question comes from the line of Brian Bittner. Your line is open. Brian Bittner - Oppenheimer & Company: Thanks. Obviously the Pizza Hut business outside of China I guess continues to be drag on the profits. And obviously you are going to try to turn around that pizza business outside of China but I am just wondering if there is a scenario where as you are trying to do so maybe you look at possibly splitting that business off either through sale or spin. Or is that something that's not possible if you want to hold on to the China piece of pizza, if you could just talk about that and why you wouldn't maybe look at transaction like that?

Well, first and foremost we believe in the power of global brands and we believe we are very good at running global brands and we are going to be able to maximize the sales and profitability of that brand over the long term. We think our structures focus so that we can get after the opportunities that we have. And we think we are going to drive significant growth for pizza in the future. We are very bullish on pizza for the long term. Lot of what we've done this year, you really -- obviously you can't see in the numbers. But we are investing heavily and doing a globally along with digital front and also in terms of driving future development. We think we have significant opportunities in the delivery carry-out business and the express business. And we've got major new initiatives that will be implemented in the United States in terms of both the advertising positioning which we think will be global and also the innovation that we think will be global. And we believe that this will travel and we think we are going to get significant growth at our Pizza Hut in next year and beyond. So we think we are structured just fine. There are all kinds of things that you can do financially to think about reengineering the business and all kinds of scenarios have been brought up over the last 15 years. We look at everything but we are absolutely committed to our current structure, believe it's right and we think our shareholders, they are going to benefit from it over the long term.

Brian, what I would add to that just to build on David's point. We look at everything through a long-term growth plan so we don't over react to short-term issues in our business. And it wasn't two years ago that pizza was on top. We have a powerful brand. We can beat the competition. Things have softened last couple of years. We've taken our learnings and we are redoubling our efforts to bring the business back next year.

Your next question comes from the line of Sara Senatore. Your line is open.

Just a follow-up on China, if I may. The margins keep beating to the upside I think versus the investors' or Street expectations. Can you talk a little bit about why that is? Is it your costs like commodities and labor inflation are coming in lower than expected? I recognize that you got a lot of leverage and you have more profitable transactions from the menu revamp. But if you can just talk about that in the sense of the outlook for costs. And a related question is Pizza Hut is such a good business in China, the unit economics are still very good. Is the slower comp just the difficult compare? Is there something in the environment? Could it possibly be related to the acceleration in unit growth? Thank you.

Sara, I will take the question on China margin. We are absolutely delighted with the progress that we are making -- we are continuing make with the six point improvement in margin versus prior year in the second quarter. You are right that the menu revamp helped from a mix perspective as we pivot towards those more profitable, higher quality transactions. With respect to how things are trending and what gets us to the higher end of the range. You are also right that the inflation outlook has tampered. So where as at the beginning of the year we were expecting big higher inflation on food cost or closer to around 1% for the year and labor inflation is at the lower end of our range. We had guided low double digit. So it's going to be pretty close to 10%. So those things together bolster our confidence that we are going to get to at least 80% margin for China Division for this year.

I think regarding Pizza Hut and Casual Dining, in China obviously our same store sales were flat, is softer than what would have liked but we were overlapping 7% same store sales growth in 2013 which was the highest of that year. Our system sales growth is 16% in the second quarter. And our business model and returns are firing on cylinders. So we got two year cash paybacks on new units, we will have 20% plus margin for the full year. And remember we've grown our average unit volumes 30% in the past three years and we are doing this with basically no mid scale competition out there today or on the immediate horizon anyway. And we are expanding breakfast in more, more cities. We've now breakfast in 229 stores which is about 20% of our units. So we have a pretty amazing growth story and we are bullish as ever about the future growth prospect for Pizza Casual Dining. I think as we go forward we think we have the big story for pizza is to rapid new unit development that we have with two units -- two year returns. And with average unit volumes so they are already generating by themselves today 20% plus full year margins.

Your next question comes from line of John Ivankoe. Your line is open.

Hi, great, thank you. Actually a follow-up on that question. It sounds like maybe in the second half for KFC that same store traffic might be pretty close to flat given what your menu mix is. And from what I understand, pricing that was taken in the fourth quarter and maybe some more pricing that was taken in the second quarter. So, maybe elaborate on that. And if I may, it is unusual to see a company focus on margins in a recovery - allow lower traffic growth. In other words, you're not necessarily trying to gain back the traffic that you lost in the previous year. So David you're obviously very experienced just in terms of what you've seen over your career. May be an example of previous success where you can focus on a higher margin customer and almost willingly allow some of your lower-margin or maybe more price-sensitive customers drop out of the brand as you focus on overall profitability.

Well, John, I think first of all I don't think we are focused on margin. I think what we have been focused on is rebuilding the brand. And making the brand more contemporary for a changing China. And so I think the things that we are most excited about is that with revamp that we have, the comprehensive program we put it in terms of service, uniforms, where we headed with digital all the stuff, is where contemporary since the brand were changing in China. And the research measures basically are all moving in the right direction. So we are building the brand. We got preferred brand, taste, value for the money, safety is back where it was in 2012, all the measures that you want to see going up are going up. So I think first and foremost what Sam and team have been focused on is rebuilding the brand and rebuilding the brand the right way. We look back couple of years ago in 2012 I guess it was, at 2011 we had 20% transaction growth which kind of blew everybody away. And that came primarily from value driven transactions which are good. But they are not necessarily sustainable from a profit perspective in terms of really driving our business model for the long term. So what we've done now is we still have 6 RMB launches and breakfast in 15 RMB lunch items. But we shifted our marketing focus to more focusing on the premium one which we think is more in line with where consumers are going today. And as a result of that we are getting significant same store sales growth. Some traffic growth, but we get the much better business models as we go forward that we can build from. And we really like that as we think about where we are headed. So I don't think that we are just margin driven. I think we are very focused on building the brand and doing so in a manner that will strengthened our business model, that give us a best possible unit economics going forward, it will allow us to open up as many as restaurants as we can.

And I will just add on that to say we are not going to comment on what we expect transaction growth to be in the back half of the year but building what I have said earlier, we do expect that comps in the second half, one is strong as they were in the first half in the part because we are lagging more challenging numbers. Also there is no reason to believe and you suggested that the pricing we've taken this year is putting pressure on pricing because of the --we mentioned value scores have improved with the brand we launch and with the pricing and we feel that the pricing we've taken is entirely in line with inflation and not ahead of competitors.

I think that's a big point. We are improving the overall brand dynamics from preferred brand to value for the money scores, both are going up. And we've been very, very mindful of the pricing. When I think about building the brand from margin perspective I -- there is a very brands that I think have been that successful okay in terms of like getting their -- by taking price and not taking price smart way and all that. So you asked me, historically, what have I learned? I mean if you price without being aware of where you stand with your brand and what your brand is capable of doing, you go down a very slippery slope. But we have priced and reorganized our menu and restructured our menu and innovated around our menu to improve the brand dynamics and that's all the feedback we are getting from the customers telling us. They think the best time to take price is before you have big news. So we did in Chinese New Year for example. We did just before Chinese New Year. And then we also did it just before we did the revamp. And so I think the big point I am making is we are not building this brand from a margin perspective. We are building this brand from a brand perspective and we are doing it in a way that happens to get us better margins.

Your next question comes from the line of John Glass. Your line is open.

Thanks. Pat, can you maybe just frame what your base case is for Pizza Hut this year? Your profits declined 15% to 20% in the first half. Is it very possible or likely you'll see the same kind of decline at least in the current quarter or the third quarter? And maybe help us more than - maybe just put some numbers or framework around how we should think about the full year.

John, I am not providing any more specific guidance on full year performance out of the detailed division only to indicate that the results will be below our expectations this year, well below our expectations and we had guided that the results would be below the ongoing growth model that we had established for the division and I really don't care to provide anything more specific than that at the stage.

Your next question comes from the line of Joseph Buckley. Your line is open.

Hi, thank you. Two questions, I'll throw them both out. Again on the higher quality more profitable sales in KFC China, is there risk that you are going to confuse the consumer? In 2012, you hit value hard; so hard that on that great comp number, your margins got killed. And now in recovery mode, I'm not sure exactly how you're repositioning it higher -- if it's meal combinations or different offerings or what it is. But it sounds pretty different. And if you could elaborate on that, I'd appreciate it. And then just on Pizza Hut, the Pizza Hut international business was pretty weak also. Could you talk a little bit about that? And we're used to seeing Pizza Hut have a tough year, a good year, alternating. And this looks like two tough years in a row. And, again, if you could comment on more on the international piece, I'd appreciate it.

First of all on KFC. I don't think we are confusing the customers whatsoever. I mean I think the brand is just being presented in a new improved way. We still have value offerings. It is not like we are advertising on television, gee; there is no value at KFC today. We still have the 6 RMB breakfast, we still have the 15 RMB lunches. We are introducing news around new products and new advertising with celebrities. And I think people -- every brand measure is moving up and there is no -- we are not getting anything from customers that says they are confused. So I would say to answer that is no problem.

And what I would say as well we all know from our experience the great brand follow the customer and give the customer what the customer wants. And consumers in China are ecstatic. Their expectations are increasing. They are becoming even more so sophisticated and this is what they want. We are giving them what they want. That's what they are telling us.

But I think consumers want great value which we have, best in the category. And getting basis what the number-- best of we've had. They want great taste which is we know is proven -- our measures are high and we are the preferred brand. So I think KFC is absolutely fine. I think Pizza Hut globally -- the division itself is underperforming and I have already detailed all the things that we are doing to get the business turned around and we expect much stronger year next year. We have a very good brand, the best brand we think in the category. And we've underperformed versus competition. And we think we will make significant progress next year.

And it also reminds you that we expect record level development globally with pizza brand and the vast majority of that will be done by franchisees. Franchisees will not be investing behind the concept unless they believe we have a powerful economic model backed by a great brand.

Your next question comes from the line of Jeffrey Bernstein. Your line is open.

Great, thank you, good morning. Just two quick follow-ups. One, just on that topic of the value versus the premium. Just maybe you can give some color in terms of where the brand stands in terms of sales value versus premium. We often get that color in the U.S. but just - you talked about two years ago, the big value push versus today. Any kind of color in terms of how you mix value versus premium? And separately just the Taco Bell, just to clarify what you said earlier, I guess it's running still mid-single-digit breakfast. I think you had said longer-term you were pushing for high single digit. I'm just wondering how you gauge whether or not it's cannibalizing the lunch and dinner. It seems like the advertising dollars got shifted. But now as it shifts back, how do you get a good read that the consumer is now coming for breakfast and therefore not coming for lunch or dinner? Thanks.

I'll address the Taco Bell question first, Jeffrey. And we look at a several different ways. But as we read the net list that we are getting in our breakfast day part which we define as sales before at 11 AM, we compare that to what we are getting before we nationally advertised and launched breakfast, we are seeing about five point lift which relative to the mix reinforces for us -- this is a highly incremental layer for us. We also look at the performance of the stores and this is a vast majority starts which offer breakfast versus -- today a small group, but [than] less meaningful group that doesn't offer breakfast and we see a dramatic difference in same store sales growth. Those data points reinforce our belief that what we are seeing here is a highly incremental layer. And we also believe that we have a good read on what drove the relatively soft performance balance of day as we talked about before with the media shift and the underperforming promotions.

I think in terms of the percent of the KFC menu, it’s value driven, I think it is probably 10%.

Your next question comes from the line of Jeff Farmer. Your line is open.

Good morning. Just coming back to margins a little bit but from a different tack. So with what you guys have been able to achieve with KFC China in terms of driving margin efficiencies, you've been very good at detailing this in terms of sales forecasting, labor scheduling, reduced operating hours, things like that. I'm just curious what the opportunity is for you to pull some of those same levers as you look at some of these larger developed markets in the KFC division. So I recognize that those are 90%-plus franchise markets, but it just seems to me that there's a healthy opportunity at least on the operational side, to share some of those best practices with some of your bigger franchise groups out there.

Absolutely, Jeff. We are not pleased with the overall margins we are seeing for our KFC global brand division. Bear in mind working in that number would be -- some of our businesses in more developed market which are in the low end of the spectrum as it relates to margin performance. And then we have some businesses and they are in virgin market which benefit from relatively low labor and rent costs. That's not to say that we don't have an opportunity to deliver better results for both emerging and developed markets. And we are moving aggressively to share learnings around, how we can optimize food cost, optimize labor cost as you say, capitalize on the outstanding know how we have in China given the impressive results they have delivered. And make sure that we are leveraging that to achieve similar gains in our KFC global business. We also continue to look at opportunities we have to optimize our equity portfolio, earn-the-right to own philosophy and where we have equity businesses that are underperforming then we make those adjustments in order to optimize result for our shareholders. So really through a series of tactics leveraging know how we have in our organization and the good strong discipline we have around margin management. We are keen to improve those margins because we know there is an opportunity in our KFC global business. Helpful, Jeff?

I'm sorry. Real quick, if I could add just one more quick question just on the P&L. So any type of high-level, absolute dollar interest expense number you can roughly guide us to for 2014 as we think about that relative to 2013?

I think we guide to about $10 million reduction because of refinancing we did last year, Jeff.

Last question comes from the line of R.J. Hottovy. Your line is open.

Thanks. Just a quick question about innovation on a broader level. I know you've been running a few fast-casual tests in the U.S., and just wanted to see broadly what is your plan for some of these smaller concepts? I know it's not a meaningful part of the business. But as you see longer-term -- you just testing for learning or just kind of - just probably get a sense of the fast-casual concepts start to pop up a little bit here and there, West Coast and Texas, just what the thoughts are behind those. Thanks.

We are testing some fast casual concepts primarily innovation labs where we can really learn more about what customers think about some of these products, some of these products we expect them coming to our base business or derivatives of them. If we have some learning that suggest that we have a bigger idea I guess we might start to think about a bigger. But it is more of a real focus on learning, more about the fast casual segment and using as incubator for what can go into the base business. So, we have got a Mexican concept, it has been opened up on the West Coast. We've got chicken small box format being tested in Dallas. And so we are looking at that. And we are also looking small box derivatives are offered to our base brand to give us more opportunities as well which we think probably is the biggest idea of all.

Thanks. R. J., just a modification response in the interest expense. So that should be similar to last year. So I think David that's our last question.

Well, thank you very much for being on the call. Let me summarize. We expect to have at least 20% EPS growth this year and will be better if we can obviously. The key points that I would like to leave you with is we are back on track with China with the better business model and better brand dynamics. We have three year payback with KFC, two year at Pizza and we are continuing to make significant progress with Pizza at Home Service. Number two, Taco Bell is successfully establishing breakfast. We believe that what we are doing at Taco Bell, how we are building the brand, the one-two combination of breakfast plus the innovation we have coming is going to continue to improve our unit economics and help us take Taco Bell from 5000 stores to 8000 stores. Our franchisees are in the breakfast program and in to it to win. Number three, KFC global is getting better and better around the world. And we expect continued success there. Pizza Hut next is major turnaround mode but we expect to go on to the 2015 very strong and benefit from the fact that we will be overlapping not so high this year and last but not least, one of our big engines at Yum! is new unit development. And we will have over 2000 new units opened in 2014. So we are very confident. We will get back to our ongoing growth model of delivering at least 10% earning per share growth on a sustainable basis. So thank you very much. Appreciate you being on the call.

This concludes today's conference call. You may now disconnect.