Industry Record Full-Year 4,754 Gross Unit
Openings Translating to 6% Unit Growth
Full-Year System Sales Grew 10% with 22%
Digital Sales Growth
Yum! Brands, Inc. (NYSE: YUM) today reported results for the
fourth quarter and year ended December 31, 2023. Fourth-quarter
worldwide system sales, excluding foreign currency translation,
grew 5%, with 6% unit growth and 1% same-store sales growth.
Full-year worldwide system sales, excluding foreign currency
translation, grew 10%, with 6% unit growth and 6% same-store sales
growth. Full-year GAAP Operating Profit growth was 6%. Full-year
Core Operating Profit growth was 12%. Fourth-quarter GAAP EPS was
$1.62 and EPS excluding Special Items was $1.26. Full-year GAAP EPS
was $5.59 and EPS excluding Special Items was $5.17, an increase of
14%.
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DAVID GIBBS & CHRIS TURNER
COMMENTS
David Gibbs, CEO, said “2023 was another remarkable year for
Yum! Brands as we crossed the $60 billion system sales threshold
and exceeded all aspects of our long-term growth algorithm. We
achieved 10% system sales growth with broad-based strength across
the globe and another record year for development, opening over
4,700 new stores. We also made massive strides in scaling our
proprietary digital and AI-driven ecosystem in partnership with our
franchisees. Looking to 2024, this will be a year of major
milestones as we cross 30,000 restaurants at KFC, 20,000 at Pizza
Hut and well over 60,000 globally for Yum!."
Chris Turner, CFO, said “Last year proved to be another great
example of Yum!’s unique blend of growth and resilience. We
delivered 6% unit growth, 10% system sales growth, and 12% Core
Operating profit growth. Simply put, there is no other retail
business that is growing across 110 different countries and opening
the equivalent of a new store roughly every two hours. We are
excited about our plans to further scale our incredible technology
capabilities and loyalty programs while maintaining focus on cost
control. I'm confident 2024 will represent another strong year of
global growth and expect to deliver our long-term growth algorithm
for the year.”
SUMMARY FINANCIAL TABLE
Fourth-Quarter
Full-Year
2023
2022
% Change
2023
2022
% Change
GAAP EPS
$1.62
$1.29
+26
$5.59
$4.57
+23
Special Items EPS1
$0.36
$(0.03)
NM
$0.42
$0.04
NM
EPS Excluding Special Items
$1.26
$1.32
(5)
$5.17
$4.53
+14
1 See reconciliation of Non-GAAP
Measurements to GAAP Results in our Consolidated Summary of Results
for further detail of Special Items.
All comparisons are versus the same period
a year ago.
System sales growth figures exclude
foreign currency translation ("F/X") and core operating profit
growth figures exclude F/X and Special Items. Special Items are not
allocated to any segment and therefore only impact worldwide GAAP
results. See reconciliation of Non-GAAP Measurements to GAAP
Results in our Consolidated Summary of Results for further
details.
Digital system sales includes all
transactions where consumers at system restaurants utilize ordering
interaction that is primarily facilitated by automated
technology.
FOURTH-QUARTER
HIGHLIGHTS
- Worldwide system sales grew 5% excluding foreign currency
translation, with KFC at 7%, Taco Bell at 6%, and Pizza Hut at
1%.
- We opened 1,853 gross units during the fourth quarter.
- Restaurant level margins were 17.4%, up 180 basis points
year-over-year.
- Ex-special EPS was $1.26, lower year-over-year driven by a
$0.23 headwind from fluctuations in our quarterly tax rate that
resulted in our quarterly effective rate being above our guided
range in 2023 and below our guided range in 2022.
% Change
System Sales Ex
F/X
Same-Store Sales
Units
GAAP Operating
Profit
Core Operating
Profit1
KFC Division
+7
+2
+8
+6
+7
Taco Bell Division
+6
+3
+4
+16
+16
Pizza Hut Division
+1
(2)
+4
(1)
(2)
Worldwide
+5
+1
+6
+5
+8
FULL-YEAR HIGHLIGHTS
- Worldwide system sales grew 10% excluding foreign currency
translation, with KFC at 12%, Taco Bell at 9%, and Pizza Hut at
5%.
- We opened a record 4,754 gross units during the year.
- Digital sales increased 22% year-over-year, with digital mix
exceeding 45%.
- Restaurant level margins were 17.2%, up 140 basis points
year-over-year.
- Foreign currency translation unfavorably impacted divisional
operating profit by $49 million.
% Change
System Sales Ex
F/X
Same-Store Sales
Units
GAAP Operating
Profit
Core Operating
Profit1
KFC Division
+12
+7
+8
+9
+12
Taco Bell Division
+9
+5
+4
+11
+11
Pizza Hut Division
+5
+2
+4
+1
+3
Worldwide
+10
+6
+6
+6
+12
1See reconciliation of Non-GAAP
Measurements to GAAP Results in our Consolidated Summary of Results
for further detail of Core Operating Profit.
KFC DIVISION
Fourth-Quarter
Full-Year
%/ppts Change
%/ppts Change
2023
2022
Reported
Ex F/X
2023
2022
Reported
Ex F/X
Restaurants
29,900
27,760
+8
NA
29,900
27,760
+8
NA
System Sales ($MM)
8,888
8,307
+7
+7
33,863
31,116
+9
+12
Same-Store Sales Growth (%)
+2
+5
NM
NM
+7
+4
NM
NM
Franchise & Property Revenues
($MM)
444
450
(1)
(2)
1,698
1,645
+3
+6
Operating Profit ($MM)
329
310
+6
+7
1,304
1,198
+9
+12
Operating Margin (%)
43.3
39.0
4.3
4.6
46.1
42.3
3.8
4.2
Fourth-Quarter (%
Change)
Full-Year (% Change)
International
U.S.
International
U.S.
System Sales Growth Ex F/X
+9
Even
+14
+2
Same-Store Sales Growth
+2
Even
+8
+2
- KFC Division opened 1,067 gross new restaurants during the
quarter.
- For the year, KFC Division opened 2,716 gross new restaurants
in 97 countries.
- Foreign currency translation unfavorably impacted operating
profit by $1 million for the quarter and $41 million for the
year.
KFC Markets1
Percent of KFC System
Sales2
System Sales Growth Ex
F/X
Fourth-Quarter (%
Change)
Full-Year (%
Change)
China
27%
+18
+20
United States
15%
Even
+2
Europe (excluding United Kingdom)
11%
+9
+17
Asia
10%
(2)
+8
Australia
7%
+6
+9
Latin America
7%
+16
+17
United Kingdom
6%
+2
+6
Middle East / Turkey / North Africa
6%
(5)
+21
Africa
5%
+13
+15
Thailand
2%
+13
+13
Canada
2%
+6
+7
India
2%
+14
+19
1Refer to
investors.yum.com/financial-information/financial-reports/ for a
list of the countries within each of the markets.
2Reflects Full Year 2023.
TACO BELL DIVISION
Fourth-Quarter
Full-Year
%/ppts Change
%/ppts Change
2023
2022
Reported
Ex F/X
2023
2022
Reported
Ex F/X
Restaurants
8,564
8,218
+4
NA
8,564
8,218
+4
NA
System Sales ($MM)
4,887
4,619
+6
+6
15,915
14,653
+9
+9
Same-Store Sales Growth (%)
+3
+11
NM
NM
+5
+8
NM
NM
Franchise & Property Revenues
($MM)
281
263
+7
+6
918
837
+10
+10
Operating Profit ($MM)
286
246
+16
+16
944
850
+11
+11
Operating Margin (%)
34.9
32.1
2.8
2.8
35.8
34.9
0.9
0.9
- Taco Bell Division opened 201 gross new restaurants during the
quarter.
- For the year, Taco Bell Division opened 417 gross new
restaurants in 25 countries.
- Taco Bell U.S. system sales grew 6% and Taco Bell International
system sales grew 7% for the quarter.
- For the year, Taco Bell U.S. system sales grew 8% and Taco Bell
International system sales grew 16%.
- Taco Bell U.S. same-store sales grew 3% and Taco Bell
International same-store sales declined 2% for the quarter.
- For the year, Taco Bell U.S. same-store sales grew 6% and Taco
Bell International same-store sales grew 1%.
- Company-owned restaurant margins were approximately 23% for the
quarter, flat year-over-year.
- For the year, company-owned restaurant margins were
approximately 24%, flat year-over-year.
PIZZA HUT DIVISION
Fourth-Quarter
Full-Year
%/ppts Change
%/ppts Change
2023
2022
Reported
Ex F/X
2023
2022
Reported
Ex F/X
Restaurants
19,866
19,034
+4
NA
19,866
19,034
+4
NA
System Sales ($MM)
3,535
3,508
+1
+1
13,315
12,853
+4
+5
Same-Store Sales Growth (%)
(2)
+1
NM
NM
+2
Even
NM
NM
Franchise & Property Revenues
($MM)
168
169
Even
(1)
622
607
+3
+4
Operating Profit ($MM)
99
100
(1)
(2)
391
387
+1
+3
Operating Margin (%)
35.0
34.5
0.5
0.4
38.3
38.5
(0.2)
0.3
Fourth-Quarter (%
Change)
Full-Year (% Change)
International
U.S.
International
U.S.
System Sales Growth Ex F/X
+4
(3)
+8
+2
Same-Store Sales Growth
Even
(4)
+3
+1
- Pizza Hut Division opened 575 gross new restaurants during the
quarter.
- For the year, Pizza Hut Division opened 1,586 gross new
restaurants in 73 countries.
- Foreign currency translation favorably impacted operating
profit by $1 million for the quarter and unfavorably impacted
operating profit $8 million for the year.
Pizza Hut Markets1
Percent of Pizza Hut System
Sales2
System Sales Growth Ex
F/X
Fourth-Quarter (%
Change)
Full-Year (%
Change)
United States
41%
(3)
+2
China
18%
+25
+22
Asia
13%
(4)
+1
Europe
12%
(3)
Even
Latin America
6%
(2)
+2
Middle East / Africa
5%
(3)
+11
Canada
3%
+8
+8
India
2%
(1)
+6
1Refer to
investors.yum.com/financial-information/financial-reports/ for a
list of the countries within each of the markets. Note that during
the first quarter of 2023 Pizza Hut Division realigned their
international market structure.
2Reflects Full Year 2023.
THE HABIT BURGER GRILL
DIVISION
- The Habit Burger Grill Division grew system sales 2% for the
quarter and 6% for the year.
- The Habit Burger Grill Division same-store sales declined 5%
for the quarter and 3% for the year.
- The Habit Burger Grill Division opened 10 gross new restaurants
during the quarter.
- For the year, The Habit Burger Grill Division opened 35 gross
new restaurants.
OTHER ITEMS
- During the quarter the Company paid off a $325 million debt
maturity with no further significant debt maturities in 2024 or
2025. Our net leverage ratio ended the quarter at 4.2x.
- On December 6th, the Company announced the acquisition of 218
KFC restaurants in the U.K. and Ireland. The transaction will be
funded from the Company’s cash on hand and is expected to have an
immaterial impact on the Company’s 2024 EPS. We expect the
transaction to close in the second quarter.
- In January 2024 the Company's Board of Directors approved a
$0.67 quarterly dividend, an increase of 11%.
- See reconciliation of Non-GAAP Measurements to GAAP results
within this release for further detail of Special Items by
financial statement line item including the impact of Special Items
on General and administrative expenses.
- Disclosures pertaining to outstanding debt in our Restricted
Group capital structure will be provided at the time of the filing
of the 2023 Form 10-K.
CONFERENCE CALL
Yum! Brands, Inc. will host a conference call to review the
company's financial performance and strategies at 8:15 a.m. Eastern
Time Wednesday, February 7, 2024. The number is 833/470-1428 in the
U.S., 833/950-0062 in Canada and 1-929-526-1599 for international
callers, conference ID 491669.
The call will be available for playback beginning at 10:00 a.m.
Eastern Time February 7, 2024 through February 14, 2024. To access
the playback, dial 866/813-9403 in the U.S., 226/828-7578 in
Canada, 0204/525-0658 for U.K. (local), and +1/929-458-6194
internationally, conference ID 928786.
The webcast and the playback can be accessed via the website by
visiting Yum! Brands' website,
investors.yum.com/events-and-presentations and selecting “Q4 2023
Earnings Conference Call.”
ADDITIONAL INFORMATION
ONLINE
Quarter end dates for each division, restaurant count details,
definitions of terms and Restricted Group financial information are
available at investors.yum.com. Reconciliation of non-GAAP
financial measures to the most directly comparable GAAP measures
are included within this release.
FORWARD-LOOKING
STATEMENTS
This announcement may contain “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. We intend all
forward-looking statements to be covered by the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally can be identified by the fact
that they do not relate strictly to historical or current facts and
by the use of forward-looking words such as “expect,”
“expectation,” “believe,” “anticipate,” “may,” “could,” “intend,”
“belief,” “plan,” “estimate,” “target,” “predict,” “likely,”
“seek,” “project,” “model,” “ongoing,” “will,” “should,”
“forecast,” “outlook” or similar terminology. These statements are
based on and reflect our current expectations, estimates,
assumptions and/ or projections, our perception of historical
trends and current conditions, as well as other factors that we
believe are appropriate and reasonable under the circumstances.
Forward-looking statements are neither predictions nor guarantees
of future events, circumstances or performance and are inherently
subject to known and unknown risks, uncertainties and assumptions
that could cause our actual results to differ materially from those
indicated by those statements. There can be no assurance that our
expectations, estimates, assumptions and/or projections, including
with respect to the future earnings and performance or capital
structure of Yum! Brands, will prove to be correct or that any of
our expectations, estimates or projections will be achieved.
Numerous factors could cause our actual results and events to
differ materially from those expressed or implied by
forward-looking statements, including, without limitation: food
safety and food- or beverage-borne illness concerns; adverse
impacts of deterioration in public health conditions associated
with COVID-19, or the occurrence of other catastrophic or
unforeseen events; the success of our concepts’ franchisees; the
success of our development strategy; anticipated benefits from past
or potential future acquisitions, investments or other strategic
transactions, or our portfolio business model; our significant
exposure to the Chinese market; our global operations and related
exposure to geopolitical instability; foreign currency risks and
foreign exchange controls; our ability to protect the integrity or
availability of IT systems or the security of confidential
information and other cybersecurity risks; compliance with data
privacy and data protection legal requirements; our ability to
successfully implement technology initiatives; our increasing
dependence on digital commerce platforms; the impact of social
media; our ability to protect our trademarks or other intellectual
property; shortages or interruptions in the availability and the
delivery of food, equipment and other supplies; the loss of key
personnel, labor shortages and increased labor costs, including as
a result of state and local legislation related to wages and
working conditions, such as AB1228 in California; changes in food
prices and other operating costs; our corporate reputation, the
value and perception of our brands and changes in consumer
preferences and wellness trends; evolving expectations and
requirements with respect to social and environmental
sustainability matters; adverse effects of climate change; pending
or future litigation and legal claims or proceedings; changes in,
or noncompliance with, legal requirements; tax matters, including
changes in tax rates or laws, impositions of new taxes, tax
implications of our restructurings, or disagreements with taxing
authorities; changes in consumer discretionary spending and
macroeconomic conditions, including inflationary pressures and
elevated interest rates; competition within the retail food
industry; risks relating to our level of indebtedness. In addition,
other risks and uncertainties not presently known to us or that we
currently believe to be immaterial could affect the accuracy of any
such forward-looking statements. All forward-looking statements
should be evaluated with the understanding of their inherent
uncertainty.
The forward-looking statements included in this announcement are
only made as of the date of this announcement and we disclaim any
obligation to publicly update any forward-looking statement to
reflect subsequent events or circumstances. You should consult our
filings with the Securities and Exchange Commission (including the
information set forth under the captions “Risk Factors” and
“Forward-Looking Statements” in our most recently filed Annual
Report on Form 10-K and Quarterly Report on Form 10-Q) for
additional detail about factors that could affect our financial and
other results.
Yum! Brands, Inc., based in Louisville, Kentucky, and its
subsidiaries franchise or operate a system of over 58,000
restaurants in more than 155 countries and territories under the
company’s concepts – KFC, Taco Bell, Pizza Hut and the Habit Burger
Grill. The Company's KFC, Taco Bell and Pizza Hut brands are global
leaders of the chicken, Mexican-style food, and pizza categories,
respectively. The Habit Burger Grill is a fast casual restaurant
concept specializing in made-to-order chargrilled burgers,
sandwiches and more. In 2024, Yum! was named to the Dow Jones
Sustainability Index North America for the eighth consecutive year,
and the company was recognized among TIME Magazine’s list of Best
Companies for Future Leaders and Newsweek’s list of America’s Most
Responsible Companies. Yum! also received widespread recognition in
2023, including being listed on the Bloomberg Gender-Equality
Index; Forbes’ list of America’s Best Employers for Diversity; and
Newsweek’s list of America’s Greenest Companies. In addition, KFC,
Taco Bell and Pizza Hut brands were ranked in the top five of
Entrepreneur’s Top Global Franchises Ranking for 2023.
Category: Earnings
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240205092538/en/
Analysts are invited to contact: Matt Morris, Head of Investor
Relations, at 888/298-6986 Members of the media are invited to
contact: Virginia Ferguson, Vice President, Public Relations, at
502/874-8200
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