Yum! Brands Reports First-Quarter Results

KFC International +10% Unit Growth; Taco Bell U.S. SSSG +2%;

Record Digital System Sales Mix of Over 50%

LOUISVILLE, Ky.--(BUSINESS WIRE)--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.

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 Profit^1
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 EPS^1	$(0.05)	$(0.01)	NM
EPS Excluding Special Items	$1.15	$1.06	+9

^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

	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 Markets^1	Percent of KFC System Sales^2	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 Markets^1	Percent of Pizza Hut System Sales^2	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