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COMPANY PROFILE

Yum! Brands, Inc.

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PUBLICATION DATE: 05 Apr 2023
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Yum! Brands, Inc.
TABLE OF CONTENTS

TABLE OF CONTENTS

Company Overview ........................................................................................................3

Key Facts ......................................................................................................................... 3
SWOT Analysis ...............................................................................................................4

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Yum! Brands, Inc.
Company Overview

Company Overview

COMPANY OVERVIEW
Yum! Brands, Inc. (YUM) is a global quick-service restaurant company. The company develops, operates,
franchises and licenses a global system of both traditional and non-traditional quick-service restaurants. It
operates restaurants under the brand name of KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill
brands. KFC restaurants provide fried and non-fried chicken products such as sandwiches, chicken strips,
chicken-on-the-bone and other related chicken products. Pizza Hut offers a wide variety of pizzas. Taco
Bell’s restaurants serve Mexican-style food products, including tacos, burritos, nachos, quesadillas,
salads and other related food items. The Habit Burger Grill offers charbroiled hamburgers. The company’s
restaurants provide dine-in or carry-out, delivery, and drive-thru option services and operates worldwide.
YUM is headquartered in Louisville, Kentucky, the US.

The company reported revenues of (US Dollars) US$6,842 million for the fiscal year ended December
2022 (FY2022), an increase of 3.9% over FY2021. In FY2022, the company’s operating margin was
31.9%, compared to an operating margin of 32.5% in FY2021. In FY2022, the company recorded a net
margin of 19.4%, compared to a net margin of 23.9% in FY2021.
Key Facts

KEY FACTS

Head Office Yum! Brands, Inc.

1441 Gardiner Ln
Louisville
Kentucky
Louisville
Kentucky
USA
Phone 1 502 8748300
Fax
Web Address www.yum.com
Revenue / turnover (USD Mn) 6,842.0
Financial Year End December
Employees 23,000
New York Stock Exchange Ticker YUM

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SWOT Analysis

SWOT Analysis

SWOT ANALYSIS
Yum! Brands, Inc. (YUM) is a global quick-service restaurant chain. Franchise business model, business
performance of Taco Bell segment, and brand portfolio, are the company’s major strengths, whereas its
cost efficiency remains an area of concern. However, strategic initiatives, increasing consumer spending,
and growing foodservice sector in the US are likely to offer new growth. In the future, unforeseen
circumstances, changing consumer preferences, and increasing manpower costs in the US may affect
the company’s business performance.

Strength Weakness

Franchise Business Model Cost Efficiency

Brand Portfolio
Business Performance: Taco Bell segment
Opportunity Threat

Consumer Spending in the US Changing Consumer Preferences

Foodservice Sector in the US Increasing Manpower Costs in the US
Strategic Initiatives Unforeseen Circumstances

Strength

Franchise Business Model

YUM leverages on strong franchise network for rapid expansion of the business. Efficient store modeling
enabled the company to generate strong store-level financial returns over the years and high franchise
owned restaurants enable the company to reduce operating costs and expenses. YUM franchise system
produced strong and consistent earnings through royalty fees and supply chain revenues. In FY2022, the
company operated 55,361 restaurants in 156 countries and territories. As of December 31, 2022, KFC
operated 27,760 outlets, of which 27,541 were franchise owned outlets; Pizza Hut operated 19,034
outlets, of which 19,013 were franchise owned; Taco Bell operated 8,218 outlets, of which 7,754 outlets
were franchise owned; and Habit Burger Grill operated 349 outlets, of which 63 outlets were franchised
owned. In FY2022, 98% of the company’s restaurants were franchised.

Brand Portfolio

A strong brand portfolio helps the company maintain its loyal customer base and attract new customers,
which results in an increase in revenue. YUM operates and franchises its outlets under select brand
names across the world. As of December 31, 2022, YUM operated 55,361 restaurants in 156 countries
and territories under brands including KFC, Pizza Hut, Taco Bell and Habit Burger Grill. In March 2020,
the company acquired Habit Burger Grill for US$375 million.

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SWOT Analysis

Business Performance: Taco Bell segment

The company reported growth in Taco Bell segment which enhanced overall performance. During the
year, it reported revenue of US$2,437.0 million for FY2022, as compared to US$2,238 million in the
previous year, which grew 8.9% YoY. The segment accounted for 35.6% of the company's revenue in
FY2022. It also reported operating profit of US$850.0 million in FY2022, which grew 12.1% YoY. Growth
in revenue was due to increase in company sales, franchise contributions for advertising and other
service, and franchise and property revenues.

Weakness

Cost Efficiency

The company reported deterioration in cost efficiency in FY2022. YUM reported operating cost as a
percentage of revenue of 68.04%, compared to 67.51% in FY2021. This was due to an increase of 4% in
revenue to US$6,842 million from US$6,584 million in the previous year. Growth in revenue was due to
an increase of 7% in franchise and property revenues, and 6% in franchise contributions for advertising
and other services in the review year. Its operating costs also increased to US$4,655 million from
US$4,445 million in the previous year.

Opportunity

Consumer Spending in the US

The company stands to benefit from the increase in consumer spending in the US. According to a report
by the US Bureau of Economic Analysis (BEA), in January 2023, the personal income (PI) in the US
increased by about 0.6% and personal consumption expenditure (PCE) increased by 1.8% or US$312.5
billion over that in the preceding month. The real DPI increased 1.4% and PCE price index increased
0.6% in January 2023 over that in the previous month. Growing personal income and personal
consumption expenditure indicate improved consumer spending in the US.

Foodservice Sector in the US

The company is likely to benefit from the growing US foodservice sector, which includes quick service
restaurants (QSR), full-service restaurants (FSR), and coffee shops. According to an in-house report, the
sales and the number of transactions in the foodservice sector in the US are expected to reach
US$1,148,535 million and 107,403 million, respectively, in 2026. The value and the number of
transactions of QSRs is expected to reach US$481,864 million and 48,889 million, respectively, in 2026.
The sales and the number of transactions of FSRs are expected to reach US$369,157 million and 17,245
million, respectively, in FY2026. The coffee and tea shops segment is expected to register sales and
number of transactions of US$55,293 million and 9,431 million, respectively, in FY2026. The foodservice
sector is expected to register growth in take-away transactions, economic recovery, easing of restrictions,
and adding healthy food options in the menu.

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SWOT Analysis

Strategic Initiatives

The company focuses to expand its reach which will diversify its offerings to its customers. In line with
this, in December 2022, the company set to add around 100,000 new restaurants in several locations
across the globe. This initiative aids the company to become the largest fast food company in the world.
The company also added more than 4,000 new restaurants around the globe between 2021 and 2022.

Threat

Changing Consumer Preferences

The foodservice industry is an ever changing segment with varied consumer preferences. Consumer
preferences may vary with changing tastes, dietary concerns and trends. The company should anticipate
and offer products that appeal according to the changing preference of consumers. If the company fails to
respond to such changes, the demand for its products could decline, affecting its operations. The
company has to remain up-to-date with consumer tastes and latest trends to maintain and expand its
market position. Failing to capture the latest consumer trends may result in loss of customers to the
company.

Increasing Manpower Costs in the US

Increasing manpower costs could increase the company’s operating costs and hamper its profits. The
tight labor markets, government mandated increases in minimum wages and a higher proportion of full-
time employees are resulting in an increase in labor costs. Effective January 2020, 26 states in the US
increased their minimum wages. Arizona, California, District of Columbia, New Jersey and Maine
increased their minimum wages by US$1 per hour to US$12, US$13, US$15, US$11 and US$12,
respectively. Alaska, Colorado, Florida, and Michigan increased their minimum wages to US$10.19,
US$12, US$8.56, and US$9.65, respectively. Other states such as Ohio and Rhode Island increased
their hourly minimum wages to US$8.7, and US$10.5, respectively.

Unforeseen Circumstances

The company’s operations could be affected by unfavourable events. The spread of the coronavirus,
Ebola virus, swine flu, and SARS resulted in a decline in tourist arrivals in the affected countries.
Precautionary measures such as the suspension of flights affected the leisure market. Natural disasters
such as wildfires in Greece and Turkey, Cyclone Tauktae and Yaas in India, earthquake in Haiti, floods in
Western Europe, and heavy snowstorms in Spain in 2021 reduced the revenue of industry operators.
Similar incidents may also lead to people reducing the frequency of their travel to certain countries. The
Russia-Ukraine war, which started in February 2022, and the takeover of Afghanistan by Taliban in
August 2021, raised security concerns across the world.

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