New Unified FoodService Purchasing Coop Formed By Tricon and Its KFC, Taco Bell and Pizza Hut Franchisees *** New Cooperative Combines the Purchasing Power of Franchised and Company-Owned Restaurants

LOUISVILLE, KY, October 21, 1998 – The members of the Organizing Board of the new Unified FoodService Purchasing Coop, LLC, which is comprised of representatives of Tricon Global Restaurants, Inc., the KFC National Purchasing Cooperative, Inc., and Tricon’s KFC, Pizza Hut and Taco Bell franchisees, announced today that they have reached an agreement in principle to form a unified purchasing cooperative for restaurant products and equipment in the United States.

Annual purchasing volume for the Unified Coop is expected to exceed $4 billion, making it the largest such purchasing cooperative of its kind in the quick-service restaurant industry.

The arrangement will combine the purchasing power of Tricon’s company-owned and franchisee-owned restaurants, leveraging the system’s scale to drive cost savings and effectiveness.

The core mission of the Unified Coop is to provide the lowest possible sustainable store-delivered prices for restaurant products and equipment. The new organization will incorporate the best practices of the KFC National Purchasing Cooperative, Inc. (d/b/a/ the FoodService Purchasing Cooperative, Inc.) which currently provides purchasing services to most KFC franchisees and many Taco Bell and Pizza Hut franchisees, and Tricon’s Supply Chain Management group, which provides purchasing services to all company-owned restaurants, many Taco Bell franchisee-owned restaurants, and most Pizza Hut franchisee-owned restaurants.

“We view this as a tremendous win for the entire Tricon system,” said Thomas M. Cook, Chairman of the Organizing Board of the Unified Coop and President of Taco Bell’s FRANMAC (Franchisee Advisory Management Council). “This is the beginning of an exciting era in franchisee-franchisor relations because it demonstrates that we can truly act as one system. The new cooperative represents greater buying efficiencies and tremendous cost savings opportunities for all of us.”

“I’m very excited about this new purchasing cooperative,” said David C. Novak, Vice Chairman and President of Tricon Global Restaurants, Inc. “It builds on Tricon’s commitment to work in even closer partnership with the three outstanding franchisee leadership groups at KFC, Taco Bell and Pizza Hut to compete most effectively in the marketplace,” said Novak.

“This new purchasing cooperative underscores Tricon’s commitment to leverage scale and generate substantial cost savings for the entire system. We especially want to thank both the FoodService Purchasing Cooperative and Tricon Supply Chain Management personnel for providing the highest quality of service to our restaurant operators over the years and are delighted that they will continue to play a leadership role in the new Unified Coop,” Novak added.

“We look forward to continue building on the accomplishments we have achieved at the Purchasing Cooperative,” said David G. Neal, Chairman of the Board of Directors of the FoodService Purchasing Cooperative.

The Unified Coop will be organized as an independent operating company that is jointly governed by representatives of the KFC, Pizza Hut and Taco Bell franchisee groups and by Tricon.

“We are committed to moving as quickly as possible to commence unified cooperative operations as early as possible in 1999,” said Ken Wagnon, Chairman of Pizza Hut’s IPHFHA (International Pizza Hut Franchise Holders Association).

The new Unified Coop will be headquartered in Louisville and will have hub operations located close to KFC, Pizza Hut and Taco Bell Restaurant Support Centers to best serve the needs of franchisees and Tricon alike.

The parties have also agreed to form a similar unified cooperative to provide purchasing services to both company and franchisee-owned KFC, Taco Bell and Pizza Hut stores in Canada.

The FoodService Purchasing Cooperative purchases over $600 million a year in restaurant products and equipment for its KFC and Taco Bell franchisee owners. Since 1980, the FoodService Purchasing Cooperative has provided a model for the development of purchasing cooperatives in the food service industry.

Tricon is the world’s largest restaurant company in terms of units, with nearly 30,000 restaurants around the world in 100 countries and territories. Tricon’s brands, KFC, Pizza Hut and Taco Bell, are the global leaders of the chicken, pizza and Mexican restaurant categories, respectively. Total worldwide system retail sales for the brands were more than $20-billion in 1997. (NYSE: YUM)


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