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CNBC Exclusive: CNBC Excerpts: Yum! Brands CEO Greg Creed Speaks with CNBC’s Sara Eisen Today

WHEN: TODAY, TUESDAY, March 28, 2017

WHERE: CNBC'S BUSINESS DAY PROGRAMMING

Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Yum! Brands CEO Greg Creed. Excerpts of the interview will run throughout CNBC's Business Day programming today. Following is a link to video of the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000605206&play=1.

All references must be sourced to CNBC.

CREED ON TAX REFORM

OUR TAX RATES ARE AROUND 26, 27%, AND THAT IS PARTLY BECAUSE OBVIOUSLY WE'RE IN 135 COUNTRIES, WE'RE A GLOBAL BUSINESS. A LOWER TAX RATE I DO BELIEVE WOULD INCREASE INVESTMENT. I DON'T BELIEVE ANYONE AT MY LEVEL NEEDS A TAX CUT I WILL BE COMPLETELY STRAIGHT UP WITH YOU BUT IF WE COULD DELIVER TAX CUTS TO THEMIDDLE INCOME IN THE U.S., AND BELOW THAT PEOPLE WILL SPEND MONEY AND I THINK THAT WOULD BE A GOOD THING BECAUSE REMEMBER, OUR CORPORATE TAX RATE IS LOW BUT OUR FRANCHISEES LIVE IN INDIVIDUAL COUNTRIES SO OUR U.S. FRANCHISEES WOULD HAVE A HIGHER TAX RATE THAN WE HAVE. LOWERING THE TAX RATE PARTICULARLY AS WE MOVE TO BEING MORE FRANCHISE BUSINESS WOULD BE A GOOD THING FOR OUR INDUSTRY. IF YOU GET LOWER AND MIDDLE INCOME TAX CUTS, CORPORATE TAX CUTS, DEREGULATION, I DO THINK YOU WILL SEE A DRAMATIC INCREASE IN INVESTMENT AND DRAMATIC INCREASE IN JOB CREATION.

CREED ON YUM'S POST-SPLIT STRATEGY

CREED: WE'RE HERE THIS WEEK TO TALK ABOUT HOW DO WE GROW FROM GROWING LIKE 4% TO 5% TO HOW DO WE GET TO 7%. I THINK THERE'S A LOT OF DOUBT WE CAN DO IT, WHICH IS PROBABLY WHY THE STOCK IS IN THE SORT OF MID-60s WHERE IT IS. BUT I REMAIN ETERNALLY CONFIDENT THAT WE CAN ACTUALLY DO IT. AND IT IS BECAUSE I THINK WE HAVE GREAT INSIGHTS, WE HAVE GREAT PRODUCTS, BUT THE MOST IMPORTANT THING IS WE HAVE GREAT PEOPLE. AND WHEN YOU'VE GOT GREAT LEADERSHIP, AND I'VE GOT THE TOP 200 LEADERS AROUND YUM! HERE, THIS WEEK, TO TALK ABOUT HOW WE'RE GOING TO GROW FASTER, I AM REALLY CONFIDENT WE'RE GOING TO SURPRISE THE STREET AND DO REALLY WELL.

CREED ON PIZZA HUT

EISEN: IS 2017 GOING TO BE A COMEBACK STORY FOR PIZZA HUT?

CREED: I DON'T THINK IT WILL BE A FULL COMEBACK STORY FOR PIZZA HUT. I THINK WHAT WE ARE DOING IS WE'RE WORKING WITH OUR FRANCHISEES REALLY CLOSELY TO SAY LOOK, WE'VE GOT TO PUT A DIFFERENT PLAN IN PLACE AND WE'VE GOT TO PARTNER WITH OUR FRANCHISEES. I'M REALLY EXCITED ABOUT THE WORK THAT ARTIE STARRS IS DOING WITH THE U.S. FRANCHISEES. I THINK INTERNATIONALLY WHAT YOU ARE GOING TO SEE US REALLY IS SORT OF ACCELERATING OUR NET NEW UNIT GROWTH AND IMPROVING OUR SAME-STORE SALES GROWTH. SO I THINK 2017 INTERNATIONALLY FOR PIZZA HUT WILL BE AN IMPROVING YEAR AND I THINK WE'VE STILL GOT A LOT TO PROVE IN THE U.S. BUT WE'RE STARTING TO DO ALL THE RIGHT THINGS. YOU MAY NOT SEE IT AS EARLY AS THE END OF 2017.

EISEN: BECAUSE PEOPLE LOOK AT THOSEE 12% COMPS AT DOMINOS.

CREED: YEAH.

EISEN: THAT MUST BE A PRETTY STRONG COMPETITIVE FORCE.

CREED: YEAH IT IS VERY – LOOK, THEY'VE DONE A REALLY GOOD JOB. THEY'RE IMPRESSIVE RESULTS. AND I THINK THE KEY THING IS WE'RE GOING TO DOUBLE DOWN. I'M TOTALLY COMMITTED TO PIZZA HUT AS BEING A PART OF YUM!. WE CAN REALLY TURN THIS AROUND. I KNOW WHAT WE'VE GOT TO DO. I THINK WITH PARTNERSHIPS, WITH THE FRANCHISEES. WE PROVED IT WITH OUR KFC U.S. BUSINESS. IF I GO BACK THREE YEARS AGO, PEOPLE WERE LIKE THERE'S NO WAY YOU CAN TURN AROUND KFC U.S. AND WE'VE JUST HAD, WHAT, OUR TENTH QUARTER OF CONSECUTIVE SAME-STORE SALES GROWTH. THE BUSINESS IS REALLY GROWING. I WAS WITH THE FRANCHISEES LAST WEEK, THEY COULDN'T BE HAPPIER. WE'VE DONE IT ONCE, WE CAN DO IT AGAIN.

CREED ON TECHNOLOGY

EISEN: TECHNOLOGY. THEY HAVE REALLY BEEN OUT FRONT WHEN IT COMES TO DIGITAL PAYMENTS AND DELIVERY, PANERA, STARBUCKS. DO YOU FEEL LIKE YUM! HAS BEEN BEHIND ON THESE THINGS?

CREED: YEAH, I WOULD SAY WE HAVE BEEN. I THINK WE MISSED THE PLOT A FEW YEARS AGO THAT FOOD HAD GONE FROM SORT OF JUST FOOD AS FUEL TO FOOD AS AN EXPERIENCE. AND PART OF THE EXPERIENCE IS MAKING THE WHOLE EXPERIENCE EASIER. I MEAN THIS WHOLE SEAMLESS SOCIETY THAT WE NOW LIVE IN, WE WERE PROBABLY A LITTLE SLOW TO CATCH ONTO THAT. I THINK THE MOST IMPORTANT THING IS WE'RE TRYING TO CATCH UP REALLY QUICKLY. NOT JUST ON PIZZA HUT, BUT ON KFC AND ON TACO BELL. WE NOW DELIVER 6,000 OF OUR 20,000 KFCs AROUND THE WORLD. TACO BELL NOW HAS DELIVERY IN 900 RESTAURANTS. SO I THINK THIS WHOLE CHANNEL GROWTH THROUGH DELIVERY BUT AN INVESTMENT IN TECHNOLOGY AND AN INVESTMENT IN PEOPLE BECAUSE WE HAD TO GET NEW PEOPLE INTO OUR ORGANIZATION TO HELP US ON THE TECHNOLOGY JOURNEY.

CREED ON HEALTH CARE

EISEN: IS THE FAILURE TO REPEAL AND REPLACE OBAMACARE A BLOW FOR YOUR FRANCHISES?

CREED: NO, I DON'T BELIEVE SO. I'VE SAID OFTEN THERE'S A LOT OF SPECULATION, WATCHING NOT MUCH LEGISLATION GOING ON IN WASHINGTON. I THINK THINGS LIKE TAX REFORM WILL STILL BE IMPORTANT. I THINK DEREGULATION WILL BE IMPORTANT FOR THE INDUSTRY. AND NO, LOOK, IT WAS A PART OF DOING BUSINESS. IT WILL REMAIN A PART OF DOING BUSINESS. IT IS NOT A CHANGE. I THINK THE KEY IS TO GIVE US CERTAINTY. IT'S WHAT BUSINESS DOESN'T LIKE AND IT DOESN'T MATTER WHETHER IT'S HEALTH CARE, DOESN'T MATTER WHETHER IT IS TAX, DOESN'T MATTER WHETHER IT'S DEREGULATION. BUSINESSES DON'T LIKE UNCERTAINTY.

CREED ON IMMIGRATION

EISEN: HAVE THE RECENT IMMIGRATION ORDERS FROM PRESIDENT TRUMP AFFECTED YOU AND THE INDUSTRY? VERY HEAVY IMMIGRANT LABOR FORCE.

CREED: YEAH, IT REALLY HASN'T. IN THE SENSE OF, YOU KNOW, WE DO I-9 VERIFICATIONS FOR EVERYBODY WHO WORKS AT A YUM! RESTAURANT.

EISEN: BUT WHAT ABOUT THE IMMIGRATION? WHAT IF THERE IS A FURTHER CRACKDOWN ON ILLEGAL IMMIGRANTS, WHAT WOULD IT DO TO THE INDUSTRY AT LARGE?

CREED: I THINK THERE'S ALSO – THE GOOD THING IS THERE'S STILL POPULATION GROWTH IN THE U.S., OBVIOUSLY IN A LOT OF PLACES. IT'S STUDENTS ALSO, THEIR FIRST JOB AS WELL. SO LOOK, I THINK IT WOULD BE DIFFICULT, BUT I DON'T THINK IT'S IMPOSSIBLE FOR US TO SURMOUNT. BUT WHAT IT MAKES YOU, IS YOU HAVE TO BE THE EMPLOYER OF CHOICE.

CREED ON AUTOMATION

I'M VERY IMPRESSED WITH IBM. I MEAN, THIS WHOLE ARTIFICIAL INTELLIGENCE, THE WHOLE WATSON THING. I'M NOT SURE WE'RE GOING TO HAVE YOU KNOW, ROBOTS REPLACING PEOPLE SOON. THOUGH TO BE FAIR, I WAS IN SHANGHAI JUST RECENTLY AT NEW PIZZA HUT CONCEPT STORE AND I WAS GREETED BY A ROBOT. AND A ROBOT ACTUALLY GREETED ME AT THE DOOR, TOOK ME TO MY TABLE. AND SO, I THINK IT'S THE BEGINNING OF ROBOTICS, BUT I DON'T SEE IT WHOLESALING – THE WHOLESALE SENSE CHANGING PEOPLE'S JOBS IN THE SHORT-TERM. WE'RE NOT GOING TO BE DRIVING CARS. WE'RE NOT GOING TO BE – I MEAN, THINK ABOUT HOW AMAZON IS DEVELOPING AND HOW MACHINES ARE NOW TELLING AMAZON TO DELIVER THE GOODS. I THINK ONE OF THE KEY QUESTIONS IS WHAT ARE WE AS HUMANS GOING TO DO IN THE NEXT TEN OR 20 YEARS? WHAT WILL WE BE DOING AS HUMANS?

EISEN: OUR TREASURY SECRETARY STEVEN MNUCHIN JUST SAID ARTIFICIAL INTELLIGENCE WON'T THREATEN U.S. JOBS FOR 50 TO 100 YEARS. IT SOUNDS LIKE YOU WOULD DISAGREE WITH THAT.

CREED: YEAH, I WOULD DISAGREE WITH THAT. I BELIEVE, HAVING LISTENED TO THE PEOPLE IN THE ARTIFICIAL INTELLIGENCE AREA – AND WE'RE STARTING TO WORK WITH THEM IN THAT AREA – I THINK THAT IS WAY TOO LONG. I THINK IT'S GOING TO HAPPEN – I DON'T THINK IT IS GOING TO HAPPEN NEXT YEAR OR THE YEAR AFTER, BUT I DO BELIEVE THAT PROBABLY BY THE MID '20s TO THE LATE '20s, YOU'LL START TO SEE A DRAMATIC CHANGE IN SORT OF HOW MACHINES SORT OF RUN THE WORLD.

EISEN: AUTOMATED? FAST FOOD?

CREED: WELL, THAT WILL BE HARD. I THINK IT WILL BE VERY HARD TO AUTOMATE. I DON'T SEE HOW RUNNING DOWN A LINE AT TACO BELL WHERE – I DON'T THINK PEOPLE REALIZE, WE DON'T MAKE A LOT OF THE PRODUCTS UNTIL THE CUSTOMER ORDERS THEM. AND YOU KNOW, STANDING ON THE TACO BELL LINE, PUTTING ALL THE INGREDIENTS ON THE TACO – WELL, MAYBE THAT DAY WILL COME. I DON'T THINK THAT DAY WILL COME PARTICULARLY SOON. BUT IN TERMS OF ORDERING, USING KIOSKS, MOBILE ORDERING AND ALL THAT SORT OF STUFF, I THINK PART OF THE PROCESS WILL CHANGE. THE MANUFACTURING PART, I THINK WE'RE PROBABLY A LITTLE FURTHER AWAY.

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