Outside Greg Creed’s office in Yum Brands’ gleaming Plano, Texas, headquarters is a standard issue pingpong table, paddles and ball at the ready. The rec room staple is hardly a usual executive-floor amenity. But, by design, Yum isn’t the usual Fortune 500 company. And that’s due in no small part to Creed’s disdain for being a textbook CEO, looking down from on high as he worries if his tie is straight.
It’s not as if his charge is still in the entrepreneurial stage, at least in terms of size. Yum’s three brands—Taco Bell, KFC and Pizza Hut—generated systemwide sales of $48 billion last year, or about a third more than McDonald’s collective intake. The corporation is the industry’s largest franchisor by several light-years, with roughly 48,000 restaurants open as of Jan. 1 and the tally growing at the rate of one new restaurant every three hours. Creed said he wouldn’t be surprised if a brand or two is added to the fold in the next five years—by those operations’ choice, not Yum’s (see sidebar).
But size and sales volume don’t translate into a mahogany-desk world for Creed, whose standard office attire is jeans and a sports coat, now that he’s eased the office dress code. Even before the proud Aussie took the CEO job, a position he never expected to have, Yum had been the industry’s resident eccentric, size be damned. Consider, for instance, how it reacted when its British KFC operations ran out of chicken last year because of a shipping snafu: The company decided to ignore the standard management text and have a little fun at its own expense. The chain temporarily tweaked its iconic logo and ran ads in Great Britain reading, “FCK, we’re sorry.”
“In so many ways, he embodies what we talk about at Yum when we talk about culture and talent ... Greg’s not asking anyone on his team to pretend to be something they’re not.” —David Gibbs, Yum Brands
“How does a chicken company run out of chicken?” Creed says in an accent that leaves no doubt he hails from Down Under. “If we didn’t have a great culture, there’s no way KFC England would have had the courage to come up with ‘FCK’ chicken.”
He cites the decision as a telling indicator of how Yum’s internal thinking has changed in lockstep with a transformation of the company businesswise. When he took over the corporation from friend and mentor David Novak, who’d led Yum for 17 years, Creed began a multiyear reorganization and recast.
“David honestly believed we were an operating company. The rest of us thought we were a marketing company,” Creed jokes.
Management was realigned by chain instead of by geography, so responsibility for building each brand was concentrated in one individual, not a committee of regional managers. “We actually had four people running KFC,” each focused on a different area of the world, Creed says.
A big step was spinning off Yum’s huge Chinese operations in 2016 into a free-standing public company that would function as master franchisee for the mega-market, running restaurants and paying Yum Brands a licensing fee.
Even though the Asian part of Yum’s business was ailing at the time, not everyone in the organization agreed with the decision. “Some were saying, ’We’ve just sawed off all our growth!’” Creed recalls. But he and the board were convinced the dramatic move was the right one long term and a crucial plank of the transformation plan. The move, his comments suggest, get back to the courage piece of Yum’s culture.
The other major part of the structural transformation was what in hindsight may be the industry’s most ambitious refranchising effort to date. Yum went from being an operator of tens of thousands of restaurants and one of the industry’s largest managers to a franchisor of all but 856 stores.
The results were two large, growing but very different companies. Yum China was the restaurant operator and the asset-rich one of the pair. The newly asset-light Yum Brands would focus on franchising, brand building, marketing and other forms of support for the field.
“A transformation like that, it’s kind of like a scorched-earth policy for the organization,” says Creed. Morale and results tend to decline as the organization adjusts to its radical new form. But Yum’s business took off. In 2017, global systemwide sales grew by 5%, same-store sales across the portfolio increased 2.2% and the restaurant count rose by 3%, or 2,632 units. Revenues and profits reflected the spinoff of the corporately owned Chinese restaurants, but the company’s net income for 2018 jumped 15%, to $1.54 billion.
“Greg’s greatest achievement has been the transformation of Yum,” says David Gibbs, who recently swapped his CFO title for the post of COO, while continuing to serve as president. The recast “has allowed us to lean in and stay focused on the things that really matter, our growth drivers. Those have led to an acceleration of our growth around the world. We’re opening more restaurants now than we ever had.”
Yum’s internal assessments of culture—metrics Creed can cite as readily as any sales or profit data point—have similarly soared.
The emphasis on nurturing the culture and stocking it with the right talent were a key part of the plan, Creed stresses, and it remains a critical focus of the new Yum. Ideas and daring to be different are what fuel a marketing company’s growth, and Creed’s credo holds that innovation is a byproduct of courage. To foster that audacity, the longtime marketer pushes a mission of encouraging every employee be “their best self”—real and grounded, but comfortable and confident enough to put themselves out there.
Are there more concepts in Yum's future? Creed says it's likely. Yum Brands isn't actively shopping for additions to its fold, but Creed says he wouldn't be surprised to see the company make an acquisition or two in the next five years—probably at the request of the acquiree.
“People are always asking us, ‘How can such a big organization have such a great culture?’” Creed says. He suggests it’s a matter of emphasizing courage over fear, being genuine instead of acting, staying accessible instead of hiding behind a big desk, and being comfortable instead of worrying about appearances.
Hence the pingpong table shoehorned into the executive floor. The senior team doesn’t get to play frequently because of grueling travel schedules, but Creed, Gibbs and other leaders of the company appreciate the diversion when opportunities arise. And no one, they suggest, is more eager to grab a paddle than Creed—even though he’s often trounced by his archnemesis, Gibbs.
(“He has on occasion won a match or two from me, and that’s kept him sane,” trash talks the usually sober-speaking Gibbs. But “there’s no doubt my superiority has been established—that’s the one thing that aggravates him.”)
Someone had suggested the team put the table away before Yum’s last board meeting, but Creed saw no reason. “I’m my best self when I’m my true self,” he says, and he likes pingpong. “This is not a matter of ‘Do as I say, not as I do.’”
“In so many ways, he embodies what we talk about at Yum when we talk about culture and talent ... Greg’s not asking anyone on his team to pretend to be something they’re not.” —David Gibbs, Yum Brands
The company was given a strong taste of what the real Creed was like while he was CMO and then CEO of Taco Bell, Yum’s most profitable U.S. business and his charge before moving to the top corporate job. When Creed arrive at the Mexican chain, it was in dire shape, with units closing, franchisees up in arms and its marketing adrift. He showed his irreverent streak by hatching one breakthrough campaign after another: Live Mas. Think Outside the Bun. The Doritos Locos Taco.
He became a rock star both within and outside of Yum, a company that by all accounts abounded in talent. Yet he was still surprised when Novak summoned him for a chat about the company’s future.
“I thought he called me because he wanted to play golf,” says Creed, who is 61. “I honestly didn’t know I was going to get this job. I thought I’d retire as the CEO of Taco Bell.”
Instead, he’s thinking about the last year of Yum’s transformation plan, a continuation of the company’s recast into what Creed calls “more of a restaurant services company.”
He cites two recent steps that moved Yum significantly in that direction: The $200 million purchase of a 3% stake in third-party delivery service Grubhub, and the outright acquisition for Pizza Hut of the QuikOrder online ordering platform. Both are intended to help franchisees be more successful.
Meanwhile, with the change in Gibbs’ duties, “I want to work more with the brands, to keep them relevant,” says Creed. “I’m still a marketer at heart.”
Says Gibbs: “He focuses on brand building while I focus more on the operations, finance and real estate side of the business.”
Both mention a commitment to keeping Yum a different sort of place to work.
“I hope my legacy is all about culture,” says Creed. “The key is, I want to create an environment where you can be yourself.”
Yum’s achievements under Creed
Since Creed moved from CEO of Taco Bell to the same post at its parent on Jan. 1, 2015, the industry’s largest franchisor has logged these achievements:
● Transformed Yum from an operator to an asset-light franchisor, with 98% of the 48,000 restaurants in its three chains now managed by franchisees.
● Accelerated unit expansion to a rate of an average of eight restaurants opening daily.
● Spun off Yum’s extensive operations in China into a free-standing public company, Yum China. The mega-corporation operates as Yum Brands’ master licensee for China, opening and operating stores and paying a royalty to the franchisor.
● Acquired a 3% stake in Grubhub for $200 million, facilitating franchisees’ access to the third-party delivery service.
● Purchased QuikOrder, an online ordering platform, to provide a tech tool to Pizza Hut franchisees.
● Forged a strategic alliance with Telepizza, one of the world’s largest pizza deliverers outside of the U.S., that calls for Telepizza to add 1,300 Pizza Hut units in the next 10 years.
● Returned $6.5 billion to Yum shareholders from 2017 to 2019.
Creed expresses pride in being free of the pitched battles that have erupted within the franchise communities of other so-called asset-light franchisors. Part of that, he says, is a history of having franchise organizations that give the field-level operators a loud and heeded voice. The other factor is providing franchisees with tools for growth, such as the QuikOrder platform that Yum bought for Pizza Hut operators. Buying into Grubhub, too, facilitates the use of that third-party delivery service by franchisees.
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