Yum! Brands Reports Third-Quarter Results
0% System Sales Growth Driven by 6% Same-Store Sales Growth and 6% Unit Growth; 12% GAAP Operating Profit Growth and 16% Core Operating Profit Growth
Yum! Brands, Inc. (NYSE: YUM) today reported results for the third quarter ended September 30, 2023. Worldwide system sales, excluding foreign currency translation, grew 10%, with 6% same-store sales growth and 6% unit growth. Third-quarter GAAP operating profit grew 12% and third-quarter core operating profit grew 16%. Third-quarter GAAP EPS was $1.46 and third-quarter EPS excluding Special Items was $1.44. Third-quarter EPS includes a favorable $0.05 mark-to-market impact from the remeasurement of the Company's investment in Devyani International Ltd. and a negative $0.01 impact from foreign currency translation.
DAVID GIBBS COMMENTS
David Gibbs, CEO, said “We're incredibly pleased to report yet another excellent quarter with 10% system sales growth driven by 6% same-store sales growth and 6% unit growth with a Q3 record of over 1,100 gross new units. Our twin growth engines, KFC International and Taco Bell U.S., led the way, with KFC showing broad-based strength across both developed and emerging markets. With our strong year-to-date performance, we continue to expect that our full-year 2023 results will outperform on all aspects of our long-term growth algorithm. We set another digital sales record this quarter, with the next leg of our digital growth planned through enhancements of our customer insights platforms and expansions of our global loyalty programs. The exceptional performance of our teams and franchisees gives us confidence in sustaining our top and bottom line momentum in the years ahead.”
THIRD-QUARTER HIGHLIGHTS
- Worldwide system sales grew 10%, excluding foreign currency translation, with KFC at 12%, Taco Bell at 11% and Pizza Hut 4%.
- Unit count increased 6% driven by 1,130 gross new units, a Q3 record.
- Record digital sales exceeded $7 billion, with digital mix over 45%.
- GAAP operating profit grew 12% and core operating profit grew 16%.
- Foreign currency translation unfavorably impacted divisional operating profit by $5 million.
| Reported Results | % Change | ||||
|
| System Sales | Same-Store Sales | Units | GAAP Operating | Core |
| KFC Division | +12 | +6 | +8 | +13 | +14 |
| Taco Bell Division | +11 | +8 | +5 | +11 | +11 |
| Pizza Hut Division | +4 | +1 | +4 | +5 | +7 |
| Worldwide | +10 | +6 | +6 | +12 | +16 |
|
| Third-Quarter | Year-to-Date | ||||
|
| 2023 | 2022 | % Change | 2023 | 2022 | % Change |
| GAAP EPS | $1.46 | $1.14 | +27 | $3.97 | $3.28 | +21 |
| Less Special Items EPS1 | $0.02 | $0.05 | NM | $0.06 | $0.07 | NM |
| EPS Excluding Special Items | $1.44 | $1.09 | +32 | $3.91 | $3.21 | +22 |
| 1See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Core Operating Profit and Special Items. |
|
|
| All comparisons are versus the same period a year ago. |
|
|
| System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further details. |
|
|
| Digital system sales includes all transactions at system restaurants where consumers utilize ordering interaction that is primarily facilitated by automated technology. |
KFC DIVISION
|
| Third-Quarter | Year-to-Date | ||||||
|
|
|
| %/ppts Change |
|
| %/ppts Change | ||
|
| 2023 | 2022 | Reported | Ex F/X | 2023 | 2022 | Reported | Ex F/X |
| Restaurants | 29,051 | 26,872 | +8 | N/A | 29,051 | 26,872 | +8 | N/A |
| System Sales ($MM) | 8,620 | 7,824 | +10 | +12 | 24,975 | 22,809 | +9 | +14 |
| Same-Store Sales Growth (%) | +6 | +7 | NM | NM | +9 | +3 | NM | NM |
| Franchise and Property Revenues ($MM) | 426 | 418 | +2 | +3 | 1,254 | 1,195 | +5 | +8 |
| Operating Profit ($MM) | 344 | 304 | +13 | +14 | 975 | 888 | +10 | +14 |
| Operating Margin (%) | 49.2 | 43.4 | +5.8 | +6.3 | 47.1 | 43.5 | +3.6 | +4.0 |
|
| Third-Quarter (% Change) | Year-to-Date (% Change) | ||
|
| International | U.S. | International | U.S. |
| System Sales Growth Ex F/X | +14 | Even | +16 | +3 |
| Same-Store Sales Growth | +7 | Even | +11 | +2 |
- KFC Division opened 664 gross new restaurants across 57 countries.
- Foreign currency translation unfavorably impacted operating profit by $4 million.
| KFC Markets1 | Percent of KFC | System Sales Growth Ex F/X | |
| Third-Quarter | Year-to-Date | ||
| China | 25% | +16 | +21 |
| United States | 15% | Even | +3 |
| Europe | 12% | +13 | +19 |
| Asia | 11% | +9 | +11 |
| Australia | 7% | +11 | +11 |
| United Kingdom | 7% | +10 | +8 |
| Middle East / Turkey / North Africa | 6% | +24 | +30 |
| Latin America | 6% | +16 | +17 |
| Africa | 5% | +15 | +16 |
| Thailand | 2% | +9 | +12 |
| Canada | 2% | +9 | +7 |
| India | 2% | +16 | +21 |
| 1Refer to investors.yum.com/financial-information/financial-reports/ for a list of the countries within each of the markets. |
| 2Reflects Full Year 2022 adjusted for the exclusion of Russia. |
TACO BELL DIVISION
|
| Third-Quarter | Year-to-Date | ||||||
|
|
|
| %/ppts Change |
|
| %/ppts Change | ||
|
| 2023 | 2022 | Reported | Ex F/X | 2023 | 2022 | Reported | Ex F/X |
| Restaurants | 8,385 | 7,974 | +5 | N/A | 8,385 | 7,974 | +5 | N/A |
| System Sales ($MM) | 3,804 | 3,417 | +11 | +11 | 11,028 | 10,034 | +10 | +10 |
| Same-Store Sales Growth (%) | +8 | +6 | NM | NM | +7 | +6 | NM | NM |
| Franchise and Property Revenues ($MM) | 218 | 196 | +12 | +12 | 637 | 574 | +11 | +11 |
| Operating Profit ($MM) | 226 | 204 | +11 | +11 | 658 | 604 | +9 | +9 |
| Operating Margin (%) | 36.0 | 35.9 | 0.1 | 0.1 | 36.1 | 36.1 | Even | Even |
- Taco Bell Division opened 74 gross new restaurants across 13 countries.
- Taco Bell U.S. system sales grew 11% and Taco Bell International system sales excluding foreign currency grew 16%.
- Taco Bell U.S. same-store sales grew 8% and Taco Bell International same-store sales grew 1%.
- Company-owned restaurant margins were 23.8%, approximately flat year-over-year.
- Foreign currency translation favorably impacted operating profit by $1 million.
PIZZA HUT DIVISION
|
| Third-Quarter | Year-to-Date | ||||||
|
|
|
| %/ppts Change |
|
| %/ppts Change | ||
|
| 2023 | 2022 | Reported | Ex F/X | 2023 | 2022 | Reported | Ex F/X |
| Restaurants | 19,469 | 18,807 | +4 | N/A | 19,469 | 18,807 | +4 | N/A |
| System Sales ($MM) | 3,243 | 3,146 | +3 | +4 | 9,780 | 9,345 | +5 | +7 |
| Same-Store Sales Growth (%) | +1 | +1 | NM | NM | +4 | Even | NM | NM |
| Franchise and Property Revenues ($MM) | 150 | 145 | +3 | +4 | 454 | 438 | +4 | +6 |
| Operating Profit ($MM) | 97 | 92 | +5 | +7 | 292 | 287 | +2 | +5 |
| Operating Margin (%) | 40.3 | 39.0 | 1.3 | 1.8 | 39.6 | 40.1 | (0.5) | 0.2 |
|
| Third-Quarter (% Change) | Year-to-Date (% Change) | ||
|
| International | U.S. | International | U.S. |
| System Sales Growth Ex F/X | +7 | +1 | +9 | +4 |
| Same-Store Sales Growth | +2 | Even | +5 | +3 |
- Pizza Hut Division opened 383 gross new restaurants across 33 countries.
- Foreign currency translation unfavorably impacted operating profit by $2 million.
| Pizza Hut Markets1 | Percent of Pizza Hut | System Sales Growth Ex F/X | |
| Third-Quarter | Year-to-Date | ||
| United States | 41% | +1 | +4 |
| China | 16% | +14 | +21 |
| Asia | 14% | +3 | +2 |
| Europe | 14% | +1 | +1 |
| Latin America | 6% | (1) | +3 |
| Middle East / Africa | 4% | +15 | +16 |
| Canada | 3% | +10 | +8 |
| India | 2% | +1 | +9 |
| 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 2022 adjusted for the exclusion of Russia. |
HABIT BURGER GRILL DIVISION
- The Habit Burger Grill Division opened 9 gross new restaurants this quarter.
- The Habit Burger Grill Division system sales grew 4% with same-store sales declining 5%.
OTHER ITEMS
- 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.
- Our net leverage ratio was 4.4x at quarter end, reflecting our previously stated intention to allow our net leverage ratio to drift modestly lower this year.
- Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the third-quarter Form 10-Q.