KFC International +10% Unit Growth; Taco
Bell U.S. SSSG +2%;
Record Digital System Sales Mix of Over
50%
Yum! Brands, Inc. (NYSE: YUM) today reported results for the
first quarter ended March 31, 2024. Worldwide system sales,
excluding foreign currency translation, grew 2%, with 6% unit
growth and a 3% same-store sales decline. First-quarter GAAP
operating profit declined 1% and first-quarter core operating
profit grew 6%. First-quarter GAAP EPS was $1.10 and first-quarter
EPS excluding Special Items was $1.15. First-quarter EPS includes
negative after-tax impacts of $0.08 from investment losses and
$0.03 from foreign currency translation.
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the full release here:
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DAVID GIBBS COMMENTS
David Gibbs, CEO, said “Despite a difficult operating
environment, we delivered 6% Core Operating Profit growth
demonstrating the resilience of our business model. As expected,
same-store sales were pressured this quarter, but we are encouraged
by strong 2-year same-store sales growth and positive momentum
exiting the quarter. First-quarter unit growth was robust with over
800 new unit openings, leading to 6% unit growth and positioning us
to surpass 60,000 restaurants this year. Our digital sales mix
reached a new record, exceeding 50% for the first time in our
history. Our world-class franchisees, globally iconic brands, and
distinctive digital capabilities give me high confidence in our
future growth."
FIRST-QUARTER HIGHLIGHTS
- Worldwide system sales grew 2%, excluding foreign currency
translation, with KFC at 4%, Taco Bell at 4% and Pizza Hut
(4)%.
- Unit count increased 6% driven by 808 gross new units.
- Digital sales approached $8 billion, with record digital mix
over 50%.
- GAAP operating profit declined 1% and core operating profit
grew 6%.
- Foreign currency translation unfavorably impacted divisional
operating profit by $11 million.
Reported Results
% Change
System Sales
Ex F/X
Same-Store Sales
Units
GAAP Operating
Profit
Core
Operating Profit1
KFC Division
+4
(2)
+8
+3
+6
Taco Bell Division
+4
+1
+3
+2
+2
Pizza Hut Division
(4)
(7)
+5
(11)
(10)
Worldwide
+2
(3)
+6
(1)
+6
First-Quarter
2024
2023
% Change
GAAP EPS
$1.10
$1.05
+5
Less Special Items EPS1
$(0.05)
$(0.01)
NM
EPS Excluding Special Items
$1.15
$1.06
+9
1 See reconciliation of Non-GAAP
Measurements to GAAP Results within this release for further detail
of Core Operating Profit and Special Items.
All comparisons are versus the same period
a year ago.
System sales growth figures exclude
foreign currency translation ("F/X") and core operating profit
growth figures exclude F/X and Special Items. Special Items are not
allocated to any segment and therefore only impact worldwide GAAP
results. See reconciliation of Non-GAAP Measurements to GAAP
Results within this release for further details.
Digital system sales includes all
transactions at system restaurants where consumers utilize ordering
interaction that is primarily facilitated by automated
technology.
KFC DIVISION
First-Quarter
%/ppts Change
2024
2023
Reported
Ex F/X
Restaurants
30,251
28,003
+8
N/A
System Sales ($MM)
8,128
8,057
+1
+4
Same-Store Sales Growth (%)
(2)
+9
NM
NM
Franchise and Property Revenues ($MM)
397
412
(4)
(1)
Operating Profit ($MM)
313
305
+3
+6
Operating Margin (%)
49.5
44.4
+5.1
+5.8
First-Quarter (%
Change)
International
U.S.
System Sales Growth Ex F/X
+6
(8)
Same-Store Sales Growth
(2)
(7)
- KFC Division opened 509 gross new restaurants across 43
countries.
- Foreign currency translation unfavorably impacted operating
profit by $10 million.
KFC Markets1
Percent of KFC
System Sales2
System Sales Growth
Ex F/X
First-Quarter
(% Change)
China
27%
+8
United States
15%
(8)
Europe
11%
+7
Asia
10%
(5)
Australia
7%
+4
Latin America
7%
+22
United Kingdom
6%
(1)
Middle East / Turkey / North Africa
6%
(5)
Africa
5%
+11
Thailand
2%
+8
Canada
2%
+2
India
2%
+12
1Refer to
investors.yum.com/financial-information/financial-reports/ for a
list of the countries within each of the markets.
2Reflects Full Year 2023.
TACO BELL DIVISION
First-Quarter
%/ppts Change
2024
2023
Reported
Ex F/X
Restaurants
8,555
8,276
+3
N/A
System Sales ($MM)
3,597
3,464
+4
+4
Same-Store Sales Growth (%)
+1
+8
NM
NM
Franchise and Property Revenues ($MM)
210
201
+5
+5
Operating Profit ($MM)
208
204
+2
+2
Operating Margin (%)
34.8
35.6
(0.8)
(0.8)
- Taco Bell Division opened 56 gross new restaurants across 14
countries.
- Taco Bell U.S. system sales grew 4% and Taco Bell International
system sales excluding foreign currency grew 6%.
- Taco Bell U.S. same-store sales grew 2% and Taco Bell
International same-store sales declined 2%.
- Company-owned restaurant margins were 22.5%, slightly above the
first quarter last year.
PIZZA HUT DIVISION
First-Quarter
%/ppts Change
2024
2023
Reported
Ex F/X
Restaurants
19,942
19,046
+5
N/A
System Sales ($MM)
3,167
3,336
(5)
(4)
Same-Store Sales Growth (%)
(7)
+7
NM
NM
Franchise and Property Revenues ($MM)
148
155
(5)
(4)
Operating Profit ($MM)
93
104
(11)
(10)
Operating Margin (%)
39.0
41.2
(2.2)
(1.7)
First-Quarter (%
Change)
International
U.S.
System Sales Growth Ex F/X
(3)
(6)
Same-Store Sales Growth
(8)
(6)
- Pizza Hut Division opened 240 gross new restaurants across 23
countries.
- Foreign currency translation unfavorably impacted operating
profit by $1 million.
Pizza Hut Markets1
Percent of Pizza Hut
System Sales2
System Sales Growth
Ex F/X
First-Quarter
(% Change)
United States
41%
(6)
China
18%
(1)
Asia
13%
(4)
Europe
12%
(5)
Latin America
6%
+3
Middle East / Africa
5%
(8)
Canada
3%
+4
India
2%
(1)
1Refer to
investors.yum.com/financial-information/financial-reports/ for a
list of the countries within each of the markets.
2Reflects Full Year 2023.
HABIT BURGER GRILL
DIVISION
- The Habit Burger Grill Division opened 3 gross new restaurants
this quarter.
- The Habit Burger Grill Division system sales declined 2% with
same-store sales declining 8%.
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.
- During the quarter ended March 31, 2024, we sold our ownership
interest in Devyani International Limited for pre-tax proceeds of
$104 million and recognized pre-tax investment losses of $20
million related to changes in fair value during the quarter prior
to the date of sale.
- On April 29th, 2024, we completed the previously announced
acquisition of 218 KFC franchise restaurants in the U.K. and
Ireland.
- Disclosures pertaining to outstanding debt in our Restricted
Group capital structure will be provided at the time of the filing
of the first-quarter Form 10-Q.
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 May 1, 2024. The number is 833/470-1428 for U.S. callers,
833/950-0062 for Canada callers, and 929/526-1599 for all other
international callers, conference ID 268136.
The call will be available for playback beginning at 10:00 a.m.
Eastern Time May 1, 2024 through May 8, 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 979438.
The webcast and the playback can be accessed by visiting Yum!
Brands' website, investors.yum.com/events-and-presentations and
selecting “Q1 2024 Yum! Brands, Inc. Earnings 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 in our Condensed Consolidated Summary of Results.
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, other strategic
transactions or initiatives, 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, including
utilization of artificial intelligence; 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 59,000
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
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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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