Why Yum! Brands Focuses on Food, People, and Planet

Steve Odland: Welcome to C-Suite Perspectives, a signature series by The Conference Board. I'm Steve Odland, the CEO of The Conference Board and the host of this podcast series. 

And in today's conversation, we're going to discuss corporate responsibility with Yum! Brands. Joining me today is Jon Hixson, chief sustainability officer for Yum! Brands. Jon, welcome to the program.  

Jon Hixson: Hi Steve, it's great to be here and nice to have a conversation with you.  

Steve Odland:So Jon, Yum! has just really done a tremendous amount with sustainability over the years. You were one of the early entrants into this whole field, and you personally are an expert on this. Give us a little bit about your background and experience, including what you've done at Yum!  

Jon Hixson: Thanks. Happy to tell a little bit of the journey, if you will. And I've really worked mainly, ifthere's a theme in my career, I always say it's 30 years of wandering through the world's food system. SoI've been in the food side of sustainability for about 30 years, worked in agricultural processing. Grew up on a farm to start it all off and the co of production of wheat and cattle and corn and that kind of thing, but then worked in food processing for ConAgra, worked on Capitol Hill for a number of years doing food policy, trade, and the conservation programs at that time around the world's food systems. 

Then joined Cargill, and worked 12 years with Cargill in various locations around the world, and now lead sustainability and government affairs for Yum! And I've done that for about eight years. So yeah, it's been a great journey and seen a lot of things change.  

Steve Odland:Yeah, and you've been, as you said, around food for a very long time. And sustainability in food takes on slightly different dimensions and very important dimensions, versus some other industries. Talk about what sustainability means in the food industry.  

Jon Hixson:It's interesting. This is actually the first role I've had where that part of that word has been in my title. In the past, I would also say I'm a little bit of a crisis guy. I've helped companies resolve large challenges in food. And if I think back to those big challenges, the early ones often revolved around, how do you protect highly sensitive habitats, tropical jungles? How do you make sure people are treated well in your supply chain from a human rights and working conditions perspective?  

Soit's evolved from working on spot market, major challenges globally. I would say a lot of my work was outside the US, because the US has a high-functioning regulatory system. So where your food comes from on a global sense may often be an emerging economy. So how do you address those big challenges? And those were the early days, for sure.  

And I think by now it's much more refined. I think we've got more themes and focus areas: climate, human rights, water, some of these big things around biodiversity, are a little more coalesced into big blocks of the world's food system, I would say. And you've had a lot more standardized reporting and systems to help track and say, "OK, are you fixing like a spot market problem, or are you developing a pattern of continuous improvement over time?" Soit's evolved a lot, certainly, over my career.  

Steve Odland: Well, this is really important. I think we have roughly 8 billion people on Earth today. And at one time, it was estimated we couldn't feed more than 5 billion, and it's been the sustainability efforts of the food industry and Yum! and the work that you've done over time that has allowed us to, essentially, sustain that level of population.  

Jon Hixson: It has, and it's a lot of innovation and technology driving that, and a lot of it is this core principle that we in the business world would just call doing more with less. Like, how do you produce more product with less land, less water, less inputs, drive that efficiency? And that globally is what's helped the system. Certainly, there are challenges where that footprint continue to expand into some critical habitats and areas, but a lot of that success and meeting the stomachs of 5 billion versus 8 billion has been that drive for efficiency.  

And we just need to make sure we do it while we don't create externalities that are negative and have other implications. That's the magic of what the world's food system has largely done and needs to do more of is really continue to grow, feed the right people in the right ways in a healthy and sustainable manner, but with less emissions, less footprint, more support for biodiversity, and treatment of people. That's the matrix. 

Steve Odland:Yeah. Now in the corporate world, sustainability has evolved really dramatically, particularly over the last decade. And companies have multiple stakeholders, customers, employees, owners, community, environment. What are you seeing as the key trends now in sustainability across these multiple stakeholders? 

Jon Hixson: It is a couple of thing key trends that are out there, both internal to the company and external. I think internally, that focus. We just talked about efficiency that focused on making sure that sustainability becomes more integrated into the corporate strategy. At Yum!, we often talk about strategy, structure, culture. Those are the way we develop our strategies and then also ultimately make sure they pull themselves into execution. You don't want your sustainability team taking a separate approach.  

At the end of the day, there's a lot of work to make sure that the business case for what we're doing is solid, and that the work of sustainability becomes less of an outpost function of the sustainability team and more built into the things and the ways we do our supply chain, our development, our ops, those kinds of things. 

Soit's how do we evolve it and make it more integrated? And for our franchisees, and we'relargely a franchise system, it's how do we do things that help them save money, help them drive efficiencies? And also aid and consumer relevance. And then it shows,that keeps a brand modern the way it needs to be. 

So all those have been, I think, major trends that have evolved over the years, and I'd be remiss if I don't at least mention regulations, too. So while those corporate activities and consumer-facing activities have occurred, there's been a, in the last, particularly, 36 months, just a massive growth in regulatory obligations, especially for global companies impacted by overseas jurisdictions. 

Steve Odland:It's interesting, when you read your sustainability reports, you talk about a strategy that's built around people, food, and planet. I know from experience, every one of those words was contemplated and debated and chosen very deliberately. Talk about what that means.  

Jon Hixson:Yeah, like I said, part of that move over time was to develop consistency about it. So when I first joined Yum! about eight years ago, we really started to think around, what does this journey of a consistent and integrated strategy look like? We talked a lot about the recipe for good. We have a recipe for growth and recipe for good. We've now merged those two together, but it really started with that recipe for good back then. 

And we knew we had to distill and simplify things to drive any bold change. So we simplified into those three channels of food, people, and planet. And then we had a harmonized way we were going to report every year, and that helped us begin to measure and monitor our change.  

And probably the last evolution is we knew we needed some focus areas, especially on the planet side. So we really did, after listening to stakeholders, really did try to elevate our climate work and our packaging work as North Stars that can give consistency and focus for the company, but also help us beyond those two areas, they also help us meet other interesting kind of challenges, as well. Biodiversity, water.  

When you work on climate, you naturally pick up a number of those things. But getting simple, long-term North Stars, as few as you can, very helpful in driving change, especially in a system as large as ours.  

Steve Odland:It's interesting when you describe it, you started with the corporate strategy. And soit's not like for you, this is a separate deal. you've got a sustainability strategy that sits over here, and then you've got corporate strategy that sits over there. The way you describe it is, it's interwoven into a fabric.  

Jon Hixson:That's the goal. I'd be lying if I said it was 100% interwoven, but I'd also be lying if I'd say it's totally separate. Soit's been a journey.  

I think one of the big key moves when our current CEO, David Gibbs, took over the helm of the company, he took that language I just mentioned, and it's a recipe for good growth. So it used to be recipe for growth, recipe for good. It was merged together then, and I think that's indicative, both symbolically, but it helps pull it through senior leaders' minds of how we build into our annual planning process or operations, all those sorts of things, but it takes time.There's a lot of competing pressures on markets and business units, as you know, but it'sdefinitely on that journey of integration. And really proud of the progress we've made there. 

Steve Odland: But articulating it is sometimes nine-tenths of it, and getting buy in around that. It's interesting, you've got your team, you and your team who are in charge of sustainability, but it really happens, as you said, in all these different areas, whether it's supply chain marketing through the franchise. operation. So it really requires a coordination across the entire company.  

Jon Hixson: Absolutely. And I've always said, we need the right-size sustainability team, but no bigger than that. Cause at the end of the day, we need a lot of roles and leadership. Again, procurement. You think about the decisions they're making on packaging or and how they engage with our suppliers on the way they address climate and risks and human rights and water. That's the team that needs to make sure those communications and conversations are going on. You're not going to have a separate sustainability team do that with near the effectiveness that they can when it's the folks driving your procurement decisions. Soit's one example, but that replicates itself all over the company. 

Steve Odland: And you're global, you have operations all over the world. So you can't even think about it in terms of one country or one market or one continent even. And your supply chain is vast. You'reprocuring what, in how many countries? I don't know if you said, but it's got to be hundreds of countries. 

And that takes a fair amount of coordination because there's different laws around the world. There are different practices around the world, and sustainability means different things around the world. Orchestrating that is really an incredible task.  

Jon Hixson: It is, and we've got great leaders, great people doing it. And that's one thing that's what drew me to Yum! originally was the corporate culture and the people. And that's what absolutely keeps me here.Sowe've got great people making those changes.  

And if I didn't mention it, so Yum! Brands is KFC, Pizza Hut, Taco Bell, and Habit Burger, and it's 60,000 restaurants globally, over 150 countries. And the interesting fact that I always drop out there is that over the last three years, we've opened one new restaurant every two hours, 365 days a year, for that period. When you think of that level of growth and what increases in the realities and demands around sustainability. But it's also just the planning of operations and supply chain and development to make all those openings happen in concert with our franchisees and ensure that they've got chicken lined up for KFC and taco shells lined up for a Taco Bell. All those things have to be lined up.So it takes a lot of integration to make all those things happen, for sure.  

Steve Odland: And a considerable challenge is with your suppliers, which is up the supply chain. And you've got multiple scopes in these reporting structures that you're dealing with. And in some ways, the things that you handle directly, that the company handles directlyis to some extent easier. I'm not saying it's easy, necessarily, but you touch it, you control it.  

Then Yum! is challenged in the sense that all of your operation or most of your operations are franchising, so that's one level removed. You're working with independent business people, and you have to convince them to sign on and to operate in this sustainable way. And then you go beyond that up the supply chain to your meat suppliers, all of your suppliers, and trying to get coordination. How do you orchestrate all of that? 

Jon Hixson:So we tried a couple different things. So one, in some areas we've sponsored and joined supplier education coalitions, if you will. For years, we were in a plan called the Supplier Leadership on Climate Transition, which was a kind of an education program that we were a part of for a number of years. Ultimately ended up having, I think, 80, 90% of our beef suppliers, for example, had either been through that training or had their own goals in sustainability.  

So part of it was supplier training and engagement. And then a couple years ago, really formalized our thinking around it to be like, OK, we know our suppliers are oftentimes very large and serve regions where we in that region may just buy a very small percentage of their overall production. So we really have a three-pronged strategy for supplier and for supply chain work where we try to do pilot projects with our suppliers, partner up with them. And we see that a lot in our key commodities around beef, chicken, and dairy and in some of the feed ingredients thereof. 

And then, what we want to do on those pilots is test innovations that meet the environmental needs that are out there, and then try where possible to be public and transparent and show what those results are, whether they're good, bad, or otherwise. Use those as platforms to drive innovation and show ourselves and others how it can work. So pilot projects.  

Then we join a lot of cross-sector collaborations like the US Roundtable for Sustainable Beef. I've been a committee member of the Roundtable for Sustainable Palm for a number of years.We're on the Roundtable for Sustainable Poultry and Eggs and the Dairy Sustainability Alliance. All of those coalitions are great because they allow us to get visibility and engagement from retail clear down to the farmer. So even with our big suppliers, we wouldn't normally have the ease of connecting with the farmer side. It's just not easy to do. So those groups really help us connect with the producers, really understand what's on their minds, as well, how they're seeing us, how we can work together. 

And then the third piece of that strategy is really data and measurement. I always say, if you've got coal, oil, or gas in the ground and it goes into the atmosphere, you can measure your greenhouse gas. But the cyclical nature of the world's food system, between the cycle of photosynthesis, the methane cycle, all these things where a carbon molecule may be in the grass and eaten by an animal and emitted later and come back and get sequestered back into the soil, the measurement there is extremely difficult.  

So we try to collaborate as much as we can with partners on how we get better at trying to have data that is, I would say, honest and has some integrity. It's not to say it's perfect, but the data piece is a really challenging element. So, have pilot projects, work with broad collaborations and cross-sector engagements, and team together to try to get better data that shows what we're working on and how the results are to ensure you are trying to drive continuous improvement. 

Steve Odland:We're talking about sustainability at Yum! Brands. We're going to take a short break and be right back.  

Welcome back to C-Suite Perspectives. I'm your host, Steve Odland, from The Conference Board, and I'm joined today by Jon Hixson, chief sustainability officer at Yum! Brands. Jon, before the break, we were talking about this data-driven approach and this really intentional approach to working with your suppliers Around the world. 

How do you leverage in technology? You talk about data, but how do you leverage technology to drive sustainability? 

Jon Hixson: I love the power of technology. And I think sometimes people—I'll give you a couple examples that are capital T technology, kind of old school, like innovation and technology. SoI think we lean in a lot to help drive that efficiency story. 

And so it can be the capital T. We do a lot of work around geospatial monitoring of our supply chains, especially in sensitive habitats like tropical areas. So when we source cooking oils, for example, from areas around the equator, we track all the data points of where our palm oil mills and facilities are so that if there's any concerns, we can track down and see if there's been any infractions or violations or conversions of critical habitat there.  

You and I are thousands of miles away from where a lot of our food is produced on a practical level. And even beyond that, as a global system, our corporate headquarters is for sure going to be many thousands of miles away from all of our locations around the world. So that use of those monitoring systems has been very powerful and just interesting at helping catalyze change and adding transparency. A lot of people talk about traceability, super-critical, but to me that transparency is actually the bigger driver change of what you need in a lot of the world's food systems. 

Jon Hixson: And it can go also down to low-level innovation. One of my favorite pilots we did was a dairy methane emissions-reduction project that really revolved around more precise measurement of feed and making sure that the animal gets just what it needs and doesn't have a lot of excess and leftover. And that worked to be more precise and really,—called a silo cup—more accurately measuring feed and residual in the bunk resulted in an almost 10% emissions reduction there.  

So it can be sexy satellites, it can be just a way more precise measurement in the bunk. SoI think there are ways you can use innovation and technology, but it doesn't have to be, ones and zeros in a digital sense. It can be all the above.  

Steve Odland: And are you using AI for any of this?  

Jon Hixson: We are certainly using AI across Yum! Overall. A lot of the AI is around how we roll the information together, how we ensure the data is accurate and telling the story and driving efficiency. I think AIisn't reducing things, but it certainly Is reducing a lot of the mundane activities of that roll-up piece that kind of has to occur, especially for a lot of our regulatory side of what we're doing. 

Really, the goal is to try to use AI to free up the human capital to drive that thinking and innovation that we need to do there and marry the two together. SoAI overall is certainly a big part of our sustainability and corporate strategy. 

Steve Odland: we were talking before the break about your franchise operations. How do you convince a franchisor, a franchisee, to adopt these kind of sustainable practices? 

Jon Hixson: It takes time. It is a lesson in advocacy. I sometimes call advocacy like waves against the beach. You have to have small little messages that continue to hit the rocks and eventually knock the rough edges off.And I think we have to bring our franchisees along. We talk about trading and culture, bringing people with you. 

You have to make sure they understand clearly what the action is we're trying to do.What's the ROI of it? Is it value-adding? Is it cost-neutral? Does it have an extra cost? And if so, is there a regulatory or consumer-facing impact that helps justify why it is that way? So it's a lot of understanding what their situation is and then bringing it along in a way that works for their operations. And as you mentioned, a lot of it is also just working with our suppliers to make sure that we can leverage their scale and our scale to bring those needed innovations and sustainability forward in a way that is cost-efficient and save money. 

Soit'snot a one-size-fits-all easy answer. It is very difficult. But it's, to me, an important part of the job. It's really how we relate and meet them where they are and try to bring them on the journey with the understanding in a way that makes it actionable.  

Steve Odland: But it's discussion. It requires deliberateness about how you approach and in a friendly manner and laying out the goals and all of that. So it takes time, but it also builds relationships.  

Jon Hixson: Absolutely. One of the bigger ones we had, I was just on a major call about it yesterday and we'll have more calls to come, I'm sure. There'sa number of states that are changing packaging and recovery laws in the US that we will have a lot of work to do to comply with the Californias of the world that are out there. We can't do that without a lot of communication and understanding of our franchisees and what works and how we all think of where we're trying to get to. 

 They've got great ideas, too. Our franchisees are entrepreneurs, small-business owners. They're trying to figure out ways every day to serve customers better, make things work better, and we need to collaborate, work with them more than anything.  

Steve Odland: Well, the easier ones are where sustainability efforts take costs out, because that's a win-win. It's not cheap, it's not easy, but in the long run, it's beneficial. But it's the regulatory stuff that sometimes drives you crazy. You mentioned a surge in regulations around the world in the past three years. Talk about some of those and how you've risen to that challenge. 

Jon Hixson: Sure. A couple of examples are, again, we've mentioned a little bit on the energy side and this close focus on carbon and climate. And it requires a lot more of us trying to A) disclose and then how do we have transition plans that work? And I think, when you talk about how do we A) address those regulatory demands and then B) drive operational change? 

One of the things: energy management systems in restaurants automatically shut off and turn on your equipment as we see consumer demand and needs emerging in the restaurant in an automated fashion so that something doesn't run longer than it needs to and doesn't warm up earlier than it should. Those sorts of things are usually successful because that automation built within there provides more data that helps us get accuracy for the auditable requirements and the regulatory requirements and how we have todisclose. It also saves the franchisee because it cuts their energy bill, lowers their operational costs within the restaurant, and using less energy also results in a greenhouse gas reduction. 

Soit's the way we look to stack that regulatory demand with yes, we need to comply. Let's think, are there ways we can do it that also create economics and efficiency that work for our franchisees and suppliers?  

Steve Odland: Food waste is another area that has been a hot topic lately.  

Jon Hixson: It is, and I love our—I shouldn't say I love our food waste program, that sounds weird—but one, we try to minimize our food waste, and that also goes in with that predictive scheduling kind of piece. And I think we'll see more AI on that side, too, of really making sure that we minimize the amount of from a holding category standpoint. It is quickservice, it is fast food. How do we get it in the hands of the consumers—hot, fresh in a way they want to have it, but not produce more than we have to? Sothere's some planning and technologies on that side.  

And then we have a global program on food waste reduction, where we do take product that is safe and good and perfect in the eyes of the consumer. But put that into a system where it goes into the freezer in a separate bag and then gets donated into global food banks. A lot of it is protein, and they don't get a lot of protein and in that sort of space. So it fits really well, meets a need, and over the years has resulted in millions of pounds of donated food globally and in enhanced nutrition and food security and critical areas, as well. 

So we try to minimize it up front, but then make sure we find ways to repurpose, if at all possible, in ways that are good for society in our communities.  

Steve Odland:So looking ahead, what do you consider your top priorities and sustainability for Yum! Brands?  

Jon Hixson: I think our top priorities going forward are we have to build the systems on the regulatory side to meet that increased level of compliance, again, particularly coming out of Europe and from a few states here in the US. Compliance is a primacy element of corporate behavior that we want to have and do the right thing. But beyond that, I think our key goals around climate and packaging will remain our North Stars. That structure of food, planet, people feels good and consistent. We've loved our community impact, as well as the food changes we've talked about and have done, as well. So I think that framework will be there.  

I think our other nuance that we've just got to lean into a little bit more is the consumer understanding. That's the hardest part. They're fickle. People get passionate about brands for various reasons, and I think we want to make sure we try to do the things in sustainability that land in an authentic and attractive way for consumers, where we're meeting them where they are, not preaching to them. We're making them feel really great about the fact that they are consuming our product and engaging with the brand.  

So we got to keep that analysis and communication and understanding going for getting the right sort of consumer positioning that we need to have on our sustainability efforts overall. 

Steve Odland: So just wrapping up then, a lot of our listeners are experts in the sustainability field, but some are earlier in their careers. What advice would you give to those business leaders and sustainability professionals as they contemplate the development of their own programs? 

Jon Hixson: I sometimes can be a buzzkill for young college graduates coming at it because I think the most important advice is to take a moment and deeply understand your underlying business, the business strategy, what drives your profit and loss, what really is the growth plan for the company, and then make sustainability fit into it in a way that meets the business where it is, meets your stakeholders, investors, managers, leaders in the company, and consumers. Where I've seen people struggles when they come in guns ablazing and want to change the world and may not understand their underlying business of where they are. 

You have to make it be integrated and fitting in altogether. And that's my advice to young and old in this space is, a lot of challenges. Let's make sure that we seek to address those, but use the full power of your organization. And you can't really do that unless you really understand the growth strategy, operational strategy of the company itself, and then pull it all together. 

Steve Odland: Jon Hixson, chief sustainability officer at Yum! Brands, thanks for being with us today.  

Jon Hixson: Thanks, Steve. I've enjoyed our conversation.  

Steve Odland: And thanks to all of you for listening to C-Suite Perspectives. I'm Steve Odland, and this series has been brought to you by The Conference Board.