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What changed in Yum! Brands's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Yum! Brands's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+368 added−392 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-27)

Top changes in Yum! Brands's 2023 10-K

368 paragraphs added · 392 removed · 291 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe Company also believes that RSCS fosters closer alignment of interests and a stronger relationship with our franchisee community. Most food products, paper and packaging supplies, and equipment used in restaurant operations are distributed to individual restaurant units by third-party distribution companies.
Biggest changeMost food products, paper and packaging supplies, and equipment used in restaurant operations are distributed to individual restaurant units by third-party distribution companies. In the U.S., McLane Foodservice, Inc. is the exclusive distributor for the majority of items used in Company-owned restaurants and for a substantial number of franchisee restaurants.
Our commitments and progress towards executing this strategy are reflected below. Culture & Talent We believe that our culture and talent provide us with a competitive advantage with respect to the performance of our business. Our areas of focus in this regard include the following: • Measuring YUM employee engagement regularly.
Our commitments and progress towards executing this strategy are reflected below. Culture & Talent We believe that our culture and talent provide us with a competitive advantage with respect to the performance of our business. Our areas of focus in this regard include the following: 7 • Measuring YUM employee engagement regularly.
Our Growth agenda is based on four key drivers: • Unrivaled Culture and Talent: Leverage our culture and people capability to fuel brand performance and franchise success • Unmatched Operating Capability: Recruit and equip the best restaurant operators in the world to deliver great customer experiences • Relevant, Easy and Distinctive Brands: Innovate and elevate iconic restaurant brands people trust and champion • Bold Restaurant Development: Drive market and franchise expansion with strong economics and value Information about Operating Segments As of December 31, 2022, YUM consists of four operating segments: • The KFC Division which includes our worldwide operations of the KFC concept • The Taco Bell Division which includes our worldwide operations of the Taco Bell concept • The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept • The Habit Burger Grill Division which includes our worldwide operations of the Habit Burger Grill concept Franchise Agreements The franchise programs of the Company are designed to promote consistency and quality, and the Company is selective in granting franchises.
Our Growth agenda is based on four key drivers: • Unrivaled Culture and Talent: Leverage our culture and people capability to fuel brand performance and franchise success • Unmatched Operating Capability: Recruit and equip the best restaurant operators in the world to deliver great customer experiences • Relevant, Easy and Distinctive Brands: Innovate and elevate iconic restaurant brands people trust and champion • Bold Restaurant Development: Drive market and franchise unit expansion with strong economics and value Information about Operating Segments As of December 31, 2023, YUM consists of four operating segments: • The KFC Division which includes our worldwide operations of the KFC concept • The Taco Bell Division which includes our worldwide operations of the Taco Bell concept • The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept • The Habit Burger Grill Division which includes our worldwide operations of the Habit Burger Grill concept Franchise Agreements The franchise programs of the Company are designed to promote consistency and quality, and the Company is selective in granting franchises.
We promote these efforts through initiatives such as our leadership development program (Heartstyles), our unconscious bias program (Inclusive Leadership) and training programs with respect to our compliance polices, 7 including our Code of Conduct.
We promote these efforts through initiatives such as our leadership development program (Heartstyles), our unconscious bias program (Inclusive Leadership) and training programs with respect to our compliance polices, including our Code of Conduct.
In exchange, master franchisees retain a certain percentage of fees payable by the sub-franchisees under their franchise agreements and typically pay lower fees for the restaurants they operate. 4 On October 31, 2016, we completed the spin-off of our China business into an independent, publicly-traded company under the name of Yum China Holdings, Inc. (“Yum China”).
In exchange, master franchisees retain a certain percentage of fees payable by the sub-franchisees under their franchise agreements and often pay lower fees for the restaurants they operate. 4 On October 31, 2016, we completed the spin-off of our China business into an independent, publicly-traded company under the name of Yum China Holdings, Inc. (“Yum China”).
Overview of Business YUM has over 55,000 restaurants in more than 155 countries and territories primarily operating under the four concepts of KFC, Taco Bell, Pizza Hut and The Habit Burger Grill (the “Concepts”). The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style food and pizza categories, respectively.
Overview of Business YUM has over 58,000 restaurants in more than 155 countries and territories primarily operating under the four concepts of KFC, Taco Bell, Pizza Hut and The Habit Burger Grill (the “Concepts”). 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. At December 31, 2022, 98% of our Concepts’ units are operated by independent franchisees or licensees under the terms of franchise or license agreements.
The Habit Burger Grill is a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. At December 31, 2023, 98% of our Concepts’ units are operated by independent franchisees or licensees under the terms of franchise or license agreements.
The most recent survey conducted was in 2021 and reflected an engagement level among our employees significantly exceeding the average engagement levels of benchmarked companies. • Providing YUM employees with training and development that builds world-class leaders and drives business results.
The most recent survey conducted was in 2023 and reflected an engagement level among our employees significantly exceeding the average engagement levels of benchmarked companies. • Providing YUM employees with training and development that builds world-class leaders and drives business results.
In addition to the persons employed by the Company and its subsidiaries, our approximately 54,000 franchise restaurants around the world are responsible for the employment of over an estimated 1 million people who work in and support those restaurants.
In addition to the persons employed by the Company and its subsidiaries, our approximately 57,000 franchise restaurants around the world are responsible for the employment of over an estimated 1 million people who work in and support those restaurants.
Most restaurants in each Concept offer consumers the ability to dine in, carryout and/or have the Concepts’ food delivered either through store-level or third-party delivery services. In addition, Taco Bell and KFC offer a drive-thru option in many stores. Pizza Hut and Habit Burger Grill offer a drive-thru option on a much more limited basis.
Most restaurants in each Concept offer consumers the ability to dine in, carryout and/or have the Concepts’ food delivered either by store-level personnel or third-party delivery services such as aggregators. In addition, Taco Bell, KFC and Habit Burger Grill offer a drive-thru option in many stores. Pizza Hut offers a drive-thru option on a much more limited basis.
Our international franchisees generally select and manage their own third-party suppliers and distributors, subject to our internal standards. All suppliers and distributors are expected to provide products and/or services that comply with all applicable laws, rules and regulations in the state and/or country in which they operate as well as comply with our internal standards.
All suppliers and distributors are expected to provide products and/or services that comply with all applicable laws, rules and regulations in the state and/or country in which they operate as well as comply with our internal standards.
The Company has franchise relationships that are particularly important to our business, such as our relationship with Yum China (defined below) and our relationships with certain other large franchisees. The Company has successfully increased franchise restaurant ownership in recent years, and currently has approximately 1,500 franchisees with whom we have franchise contracts.
The Company has franchise relationships that are particularly important to our business, such as our relationship with Yum China (defined below) and our relationships with certain other large franchisees. The Company currently has approximately 1,500 franchisees with whom we have franchise contracts. The Company utilizes both store-level franchise and master franchise programs to grow our businesses.
Each franchise organization and their respective restaurant management teams are responsible for the day-to-day operation of each unit, including all matters related to employment of restaurant staff, and for ensuring compliance with operating standards. We have accelerated our deployment of digital and technology initiatives to enhance the customer experience and our off-premise capabilities.
Each franchise organization and their respective restaurant management teams are responsible for the day-to-day operation of their units, including all matters related to employment of restaurant staff, and for ensuring compliance with operating standards. Digital and technology are at the core of our Recipe for Good Growth.
The Company utilizes both store-level franchise and master franchise programs to grow our businesses. Of our over 54,000 franchised units at December 31, 2022, approximately 35% operate under our master franchise programs, including nearly 12,100 units in mainland China. The remainder of our franchise units operate under store-level franchise agreements.
Of our over 57,000 franchised units at December 31, 2023, approximately 35% operate under our master franchise programs, including over 13,700 units in mainland China. The remainder of our franchise units operate under store-level franchise agreements.
Given the various types and vast number of competitors, our Concepts do not constitute a significant portion of the retail food industry in terms of number of system units or system sales, either on a worldwide or individual country basis.
Given the various types and vast number of competitors, our Concepts do not constitute a significant portion of the retail food industry in terms of number of system units or system sales, either on a worldwide or individual country basis. 6 Environmental Matters The Company is not aware of any federal, state or local environmental laws or regulations that will materially affect our earnings or competitive position, or result in material capital expenditures.
In the U.S., the Company, along with the representatives of the Company’s KFC, Taco Bell and Pizza Hut franchisee groups, are members of Restaurant Supply Chain Solutions, LLC (“RSCS”), a third party which is responsible for purchasing certain restaurant products and equipment. Additionally, The Habit Burger Grill entered into a purchasing agreement with RSCS effective July 31, 2020.
The Company does not typically experience significant continuous shortages of supplies, and alternative sources for most of these supplies are generally available. 5 In the U.S., the Company, along with the representatives of the Company’s KFC, Taco Bell and Pizza Hut franchisee groups, are members of Restaurant Supply Chain Solutions, LLC (“RSCS”), a third party which is responsible for purchasing certain restaurant products and equipment.
When prices increase, the Concepts may attempt to pass on such increases to their customers, although there is no assurance that this can be done in practice. The Company does not typically experience significant continuous shortages of supplies, and alternative sources for most of these supplies are generally available.
When prices increase, the Concepts may attempt to pass on such increases to their customers, although there is no assurance that this can be done in practice.
The following is a brief description of each Concept and a summary of our Concepts’ operations as of and for the year ended December 31, 2022: Number of Units % of Units International Number of Countries and Territories % Franchised System Sales (a) (in Millions) KFC Division 27,760 86 % 149 99 % $ 31,116 Taco Bell Division 8,218 12 % 32 94 % 14,653 Pizza Hut Division 19,034 66 % 106 99 % 12,853 Habit Burger Grill Division 349 3 % 3 18 % 661 YUM 55,361 67 % 156 98 % $ 59,283 (a) Constitutes sales of all restaurants, both Company-owned and franchised.
The following is a brief description of each Concept and a summary of our Concepts’ operations as of and for the year ended December 31, 2023: Number of Units % of Units International Number of Countries and Territories % Franchised System Sales (a) (in Millions) KFC Division 29,900 87 % 149 99 % $ 33,863 Taco Bell Division 8,564 14 % 32 94 % 15,915 Pizza Hut Division 19,866 67 % 109 99 % 13,315 Habit Burger Grill Division 378 3 % 3 19 % 696 YUM 58,708 69 % 157 98 % $ 63,789 (a) Constitutes sales of all restaurants, both Company-owned and franchised.
Approximately 85% of our employees work in restaurants while the remainder work in our restaurant-support centers. In the U.S., approximately 90% of our Company-owned restaurant employees are part-time and approximately 50% have been employed by the Company for less than a year.
In the U.S., approximately 90% of our Company-owned restaurant employees are part-time and approximately 50% have been employed by the Company for less than a year. Some of our International employees are subject to labor council relationships whose terms vary due to the diverse countries in which the Company operates.
During 2022, there were no material capital expenditures for environmental control facilities and no such material expenditures are anticipated. 6 Government Regulation U.S. Operations.
However, the Company cannot predict the effect on our operations due to possible future environmental legislation or regulations. During 2023, there were no material capital expenditures for environmental control facilities and no such material expenditures are anticipated. Government Regulation U.S. Operations.
See Item 1A “Risk Factors” of this Form 10-K for a discussion of risks relating to federal, state, local and international regulation of our business. Human Capital Management Overview As of December 31, 2022, the Company and its subsidiaries employed approximately 36,000 persons, including approximately 23,000 employees in the U.S. and approximately 13,000 employees outside the U.S.
See Item 1A “Risk Factors” of this Form 10-K for a discussion of risks relating to federal, state, local and international regulation of our business.
The core mission of RSCS is to provide the lowest possible sustainable store-delivered prices for 5 restaurant products and equipment. This arrangement combines the purchasing power of the Company-owned and franchisee restaurants, which the Company believes leverages the system’s scale to drive cost savings and effectiveness in the purchasing function.
This arrangement combines the purchasing power of the Company-owned and franchisee restaurants, which the Company believes leverages the system’s scale to drive cost savings and effectiveness in the purchasing function. The Company also believes that RSCS fosters closer alignment of interests and a stronger relationship with our franchisee community.
In the U.S., McLane Foodservice, Inc. is the exclusive distributor for the majority of items used in Company-owned restaurants and for a substantial number of franchisee restaurants. Outside the U.S., we and our Concepts’ franchisees primarily use decentralized sourcing and distribution systems involving many different global, regional and local suppliers and distributors.
Outside the U.S., we and our Concepts’ franchisees primarily use decentralized sourcing and distribution systems involving many different global, regional and local suppliers and distributors. Our international franchisees generally select and manage their own third-party suppliers and distributors, subject to our internal standards.
This includes increasing our focus on driving digital sales where customers utilize ordering interaction that is primarily facilitated by automated technology. In 2022, our system restaurants generated digital sales of $24 billion and over 47,000 restaurants now offer delivery, which represents approximately 85% of our global system.
Digital sales include transactions where consumers at system restaurants utilize ordering interaction that is primarily facilitated by automated technology. In 2023, our system restaurants generated digital sales of $29 billion, representing over 45% of overall system sales. The Company and its Concepts own numerous registered trademarks.
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Delivery can be provided through either a delivery system owned and operated by our restaurants or through third-party delivery companies such as aggregators. The Company and its Concepts own numerous registered trademarks.
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In recent years the Company has focused on building and acquiring a distinctive set of solutions with next-generation capabilities tailored for our brands and scaling these common digital and technology platforms across the globe.
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Environmental Matters The Company is not aware of any federal, state or local environmental laws or regulations that will materially affect our earnings or competitive position, or result in material capital expenditures. However, the Company cannot predict the effect on our operations due to possible future environmental legislation or regulations.
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The Company's technology initiatives are aligned with the “Easy” element of its Relevant, Easy and Distinctive Brands growth driver: easy experiences for our customers, easy operations for our team members and franchisees and easy insights from our data. Together, our technological initiatives are designed to simultaneously enhance the experience for our customers and restaurant-level employees while driving profitable sales growth.
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Some of our International employees are subject to labor council relationships whose terms vary due to the diverse countries in which the Company operates.
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Additionally, The Habit Burger Grill entered into a purchasing agreement with RSCS effective July 31, 2020. The core mission of RSCS is to provide the lowest possible sustainable store-delivered prices for restaurant products and equipment.
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In 2021, approximately 42% of our global corporate leadership roles were held by women and approximately 51% of our global workforce were women. • Increasing representation of underrepresented U.S. associates among our executive and management ranks, franchisees and suppliers over the next 10 years to achieve our aspirational goals to be representative of our customers and communities.
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Human Capital Management Overview As of December 31, 2023, the Company and its subsidiaries employed approximately 35,000 persons (collectively referred to throughout this filing as "our employees" or "YUM employees"), including approximately 25,000 employees in the U.S. and approximately 10,000 employees outside the U.S. Approximately 85% of our employees work in restaurants while the remainder work in our restaurant-support centers.
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Through our membership with the OneTen coalition, we are partnering with a group of U.S. businesses to create career mobility and advancement opportunities for underrepresented people and communities. • Continuing to make Inclusive Leadership training and anti-racism training available across our system.
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In 2022, approximately 43% of our global corporate leadership roles were held by women and approximately 52% of our global workforce were women. • Continuing to make Inclusive Leadership training and anti-racism training available across our system.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf our IT Systems, or those of businesses with which we interact are 13 disrupted or compromised as a result of a cyber-attack or other security incident, or if our employees, franchisees or vendors fail to comply with applicable laws and regulations or fail to meet contractual and industry standards, and Confidential Information is obtained or accessed by unauthorized persons or used inappropriately, it could result in liabilities and penalties, damage our brands and reputation, cause interruption of normal business performance, cause us to incur substantial costs, result in a loss of consumer confidence and sales and disrupt our supply chain, business and plans.
Biggest changeIf our IT Systems or the information systems of any of our franchisees are disrupted or compromised, or the information systems of businesses with which we interact, such as suppliers or distributors or third-party delivery providers, are disrupted or compromised, in a manner which impacts us or our IT Systems, as a result of a cyber-attack, data or security breach, or other security incident, or if our employees, franchisees or vendors fail to comply with applicable laws and regulations or fail to meet contractual and industry standards in connection therewith, any such developments could result in liabilities and penalties, have an adverse impact on our financial results and growth prospects, damage our brands and reputation, cause interruption of normal business operations, cause us to incur substantial costs, result in a loss of consumer confidence and sales and disrupt our supply chain, business and plans.
Franchisee use of our Concepts’ trademarks are governed through franchise agreements and we monitor use of our trademarks by both franchisees and third parties, but franchisees or other third parties may refer to or make statements about our Concepts’ brands that do not make proper use of our trademarks or required designations, that improperly alter trademarks or branding, or that are critical of our Concepts’ brands or place our Concepts’ brands in a context that may tarnish their reputation.
Franchisee use of our Concepts’ trademarks are governed through franchise agreements and we monitor use of our trademarks by both franchisees and third parties, but franchisees or other third parties use or may refer to or make statements about our Concepts’ brands that do not make proper use of our trademarks or required designations, that improperly alter trademarks or branding, or that are critical of our Concepts’ brands or place our Concepts’ brands in a context that may tarnish their reputation.
Our high level of indebtedness could have important potential consequences, including, but not limited to: • increasing our vulnerability to, and reducing our flexibility to plan for and respond to, adverse economic and industry conditions and changes in our business and the competitive environment; • requiring the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions, dividends, share repurchases or other corporate purposes; • increasing our vulnerability to a downgrade of our credit rating, which could adversely affect our cost of funds, liquidity and access to capital markets; • restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; • placing us at a disadvantage compared to other less leveraged competitors or competitors with comparable debt at more favorable interest rates; • increasing our exposure to the risk of increased interest rates insofar as current and future borrowings are subject to variable rates of interest or we are forced to refinance indebtedness at higher interest rates, which risk is heightened by the current elevated interest rate environment; • increasing our exposure to the risk of discontinuance, replacement or modification of certain reference rates; • making it more difficult for us to repay, refinance or satisfy our obligations with respect to our debt; • limiting our ability to borrow additional funds in the future and increasing the cost of any such borrowing; • imposing restrictive covenants on our operations due to the terms of our indebtedness, which, if not complied with, could result in an event of default, which if not cured or waived, could result in the acceleration of the applicable debt, and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies; and • increasing our exposure to risks related to fluctuations in foreign currency as we earn profits in a variety of currencies around the world and our debt is primarily denominated in U.S. dollars.
Our level of indebtedness could have important potential consequences, including, but not limited to: • increasing our vulnerability to, and reducing our flexibility to plan for and respond to, adverse economic and industry conditions and changes in our business and the competitive environment; • requiring the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, indebtedness, thereby reducing or eliminating the availability of such cash flow to fund working capital, capital expenditures, acquisitions, dividends, share repurchases or other corporate purposes; • increasing our vulnerability to a downgrade of our credit rating, which could adversely affect our cost of funds, liquidity and access to capital markets; • restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; • placing us at a disadvantage compared to other less leveraged competitors or competitors with comparable debt at more favorable interest rates; • increasing our exposure to the risk of increased interest rates insofar as current and future borrowings are subject to variable rates of interest or we are forced to refinance indebtedness at higher interest rates, which risks are heightened by the current elevated interest rate environment; • increasing our exposure to the risk of discontinuance, replacement or modification of certain reference rates; • making it more difficult for us to repay, refinance or satisfy our obligations with respect to our debt; • limiting our ability to borrow additional funds in the future and increasing the cost of any such borrowing; • imposing restrictive covenants on our operations due to the terms of our indebtedness, which, if not complied with, could result in an event of default, which if not cured or waived, could result in the acceleration of the applicable debt, and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies; and • increasing our exposure to risks related to fluctuations in foreign currency as we earn profits in a variety of currencies around the world and our debt is primarily denominated in U.S. dollars.
Our Concepts’ restaurants compete with international, national and regional restaurant chains as well as locally-owned restaurants, and the industry in which we operate is highly competitive with respect to price and quality of food products, new product development, digital engagement, advertising levels and promotional and price discounting initiatives, customer service, reputation, restaurant location, attractiveness and maintenance of properties, management and hourly personnel and qualified franchisees.
Our Concepts’ restaurants compete with international, national and regional restaurant chains as well as locally-owned restaurants, and the industry in which we operate is highly competitive with respect to price and quality of food products, new product development, digital engagement, advertising levels and promotional initiatives, customer service reputation, restaurant location and attractiveness and maintenance of properties, management and hourly personnel and qualified franchisees.
Moreover, any significant cybersecurity events could require us to devote significant management time and resources to address such events, interfere with the pursuit of other important business strategies and initiatives, and cause us to incur additional expenditures, which could be material, including to investigate such events, remedy cybersecurity problems, recover lost data, prevent future compromises and adapt systems and practices in response to such events.
Moreover, any significant cybersecurity event could require us to devote significant management time and resources to address such events, interfere with the pursuit of other important business strategies and initiatives, and cause us to incur additional expenditures, which could be material, including to investigate such events, remedy cybersecurity problems, recover lost data, prevent future compromises and adapt systems and practices in response to such events.
Additionally, the failure of our Concepts’ franchisees to focus on key elements of restaurant operations, such as compliance with our operating standards addressing quality, service and cleanliness (even if such failures do not breach the franchise documents), may be attributed by guests to our Concepts’ brand and could negatively impact our business and/or our growth prospects.
Additionally, the failure of our Concepts’ franchisees to focus on key elements of restaurant operations, such as compliance with our operating standards addressing quality, service and cleanliness (even if such failures do not breach the franchise documents), may be attributed by guests to our Concepts’ brand and could negatively impact our reputation, business and/or our growth prospects.
We have limited control over how our Concepts’ franchisees’ businesses are run, and their inability to operate successfully could adversely affect our operating results through decreased royalties, advertising funds contributions, and fees paid to us for other discrete services we may provide to our Concepts’ franchisees ( e.g. management of e-commerce platforms).
We have limited control over how our Concepts’ franchisees’ businesses are run, and their inability to operate successfully could adversely affect our operating results through decreased royalties, advertising funds contributions, and fees paid to us for other discrete services we may provide to our Concepts’ franchisees ( e.g. fees for the management of e-commerce platforms).
Moreover, if negative macroeconomic conditions result in significant disruptions to capital and financial markets, or negatively impact our credit ratings, our cost of borrowing, our ability to access capital on favorable terms and our overall liquidity and capital structure could be adversely impacted. Risks Related to Competition The retail food industry is highly competitive.
Moreover, if negative macroeconomic conditions result in significant disruptions to capital and financial markets, or negatively impact our credit ratings, our cost of borrowing, our ability to access capital on favorable terms and our overall liquidity and capital structure could be adversely impacted. 22 Risks Related to Competition The retail food industry is highly competitive.
If a significant franchisee of our Concepts becomes, or a significant number of our Concepts’ franchisees in the aggregate become, financially distressed our operating results could be impacted through reduced or delayed fee payments that cause us to record bad debt expense, reduced advertising fund contributions, and reduced new unit development.
If a significant franchisee of our Concepts becomes, or a significant number of our Concepts’ franchisees in the aggregate become, financially distressed our operating results could be impacted through reduced or delayed fee payments that cause us to record bad debt expense and reduced advertising fund contributions, and experience reduced new unit development.
For example, nutritional, health and other scientific studies and conclusions, which constantly evolve and may have contradictory implications, drive popular opinion, litigation and regulation (including initiatives intended to drive consumer behavior) in ways that may affect 18 perceptions of our Concepts’ brands generally or relative to alternatives.
For example, nutritional, health and other scientific studies and conclusions, which constantly evolve and may have contradictory implications, drive popular opinion, litigation and regulation (including initiatives intended to drive consumer behavior) in ways that may affect perceptions of our Concepts’ brands generally or relative to alternatives.
Past and potential future strategic transactions may involve various inherent risks, including, without limitation: • expenses, delays or difficulties in integrating acquired companies, joint ventures, strategic partnerships or investments into our organization, including the failure to realize expected synergies and/or the inability to retain key personnel; • diversion of management’s attention from other initiatives and/or day-to-day operations to effectively execute our growth strategy; • inability to generate sufficient revenue, profit, and cash flow from acquired companies, joint ventures, strategic partnerships or investments; • the possibility that we have acquired substantial contingent or unanticipated liabilities in connection with acquisitions or other strategic transactions; • the possibility that our Concepts and potential future acquisitions have divergent interests; and • the possibility that our interests and strategic direction do not align with those of acquired companies or other parties that maintain an interest in our investments.
Past and potential future strategic transactions may involve various inherent risks, including, without limitation: • expenses, delays or difficulties in integrating acquired companies, joint ventures, strategic partnerships or investments into our organization, including the failure to realize expected synergies and/or the inability to retain key personnel; • diversion of management’s attention from other initiatives and/or day-to-day operations to effectively execute our growth strategy; • inability to generate sufficient revenue, profit, and cash flow from acquired companies, joint ventures, strategic partnerships or investments; • the possibility that we have acquired substantial contingent or unanticipated liabilities in connection with acquisitions or other strategic transactions; and • the possibility that our interests and strategic direction do not align with those of acquired companies or other parties that maintain an interest in our investments.
In addition, we are secondarily liable on certain Concepts’ franchisees’ restaurant lease agreements, including lease agreements that we have guaranteed or assigned to franchisees and our operating results and/or growth prospects could be impacted by any increased rent obligations to the extent such franchisees default on these lease agreements.
In addition, we are secondarily liable on certain Concepts’ franchisees’ restaurant lease agreements, including lease agreements that we have guaranteed or assigned to franchisees, and our operating results and/or growth prospects could be impacted by any rent obligations to the extent such franchisees default on these lease agreements.
On January 18, 2023, we announced a ransomware attack that impacted certain IT Systems which resulted in the closure of fewer than 300 restaurants in one market for one day, temporarily disrupted certain of our affected systems and resulted in data being taken from our network.
In particular, on January 18, 2023, we announced a ransomware attack that impacted certain IT Systems which resulted in the closure of fewer than 300 restaurants in one market for one day, temporarily disrupted certain of our affected systems and resulted in data being taken from our network.
In 21 addition, each U.S. holder of our Common Stock who received shares of Yum China common stock in connection with the spin-off transaction would generally be treated as having received a taxable distribution of property in an amount equal to the fair market value of the shares of Yum China common stock received.
In addition, each U.S. holder of our Common Stock who received shares of Yum China common stock in connection with the spin-off transaction would generally be treated as having received a taxable distribution of property in an amount equal to the fair market value of the shares of Yum China common stock received.
Moreover, if we are unable to successfully respond to changing consumer or dietary preferences, if our marketing efforts and/or launch of new products are unsuccessful, or if our Concepts’ restaurants are unable to compete 22 successfully with other retail food outlets, our and our Concepts’ franchisees’ businesses and/or our growth prospects could be adversely affected.
Moreover, if we are unable to successfully respond to changing consumer or dietary preferences, if our marketing efforts and/or launch of new products are unsuccessful, or if our Concepts’ restaurants are unable to compete successfully with other retail food outlets, our and our Concepts’ franchisees’ businesses and/or our growth prospects could be adversely affected.
The increasingly complex, restrictive and evolving regulatory environment at the international, federal and state level related to data privacy and data protection may require significant continued effort and cost, changes to our business practices and impact 14 our ability to obtain and use data to provide personalized experiences for our customers.
The increasingly complex, restrictive and evolving regulatory environment at the international, federal and state level related to data privacy and data protection may require significant continued effort and cost, changes to our business practices and impact our ability to obtain and use data to provide personalized experiences for our customers.
These systems are subject to damage, interruption or failure due to theft, fire, power outages, telecommunications failure, computer viruses, employee misuse, security breaches, malicious cyber-attacks including the introduction of malware or ransomware or other disruptive behavior by hackers, or other catastrophic events.
These IT Systems are subject to damage, interruption or failure due to theft, fire, power outages, telecommunications failure, computer viruses, employee misuse, security breaches, malicious cyber-attacks including the introduction of malware or ransomware or other disruptive behavior by hackers, or other catastrophic events.
Brand value is based in part on consumer perceptions on a variety of subjective factors, including the nutritional content and preparation of our food, our ingredients, food safety, and our business practices, including with respect to how we source commodities, and our pricing (including price increases and discounting).
Brand value is based in part on consumer perceptions regarding a variety of subjective factors, including the nutritional content and preparation of our food, our ingredients, food safety, our business practices, including with respect to how we source commodities, and our pricing (including price increases and discounting).
Foreign currency risks and foreign exchange controls could adversely affect our financial results. Our results of operations, growth prospects and the value of our assets are affected by fluctuations in currency exchange rates, which has had, and may continue to have adverse effects on our reported earnings.
Foreign currency risks and foreign exchange controls could adversely affect our financial results. Our results of operations, growth prospects and the value of our assets are affected by fluctuations in currency exchange rates, which have had, and may continue to have adverse effects on our reported earnings.
In addition, third-party delivery services typically charge restaurants a per order fee, and as such utilizing third-party delivery services may not be as profitable as sales directly to our customers, and may also introduce food quality and customer satisfaction risks outside of our control.
In addition, third-party delivery services typically charge restaurants a per order fee, and as such utilizing third-party delivery services may not be as profitable as sales directly to our customers, and may also 15 introduce food quality and customer satisfaction risks outside of our control.
Information posted on such platforms may be adverse to our interests and/or may be inaccurate. The dissemination of information online could harm our business and/or growth prospects, regardless of the information’s accuracy. The damage may be immediate without an opportunity for redress or correction.
Information posted on such platforms may be adverse to our interests and/or may be inaccurate. The dissemination of information online could harm our reputation, business and/or growth prospects, regardless of the information’s accuracy. The damage may be immediate without an opportunity for redress or correction.
Shortages or interruptions in the supply of food items, equipment and other supplies to our Concepts’ restaurants have happened from time to time and could reduce sales, harm our Concepts’ reputations and delay the planned openings of new restaurants by us and our Concepts’ franchisees.
Shortages or interruptions in the supply or distribution of food items, equipment and other supplies to our Concepts’ restaurants have happened from time to time and could reduce sales, harm our Concepts’ reputations and delay the planned openings of new restaurants by us and our Concepts’ franchisees.
Further, goals may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, assumptions that are subject to change, and other risks and uncertainties, many of which are outside of our control.
Further, these goals may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, assumptions that are subject to change, and other risks and uncertainties, many of which are outside of our control.
Publicity about these matters (particularly directed at the quick service and fast-casual segments of the retail food industry) may harm our Concepts’ reputations and adversely affect our business and/or our growth prospects.
Publicity about these matters (particularly directed at the quick service and fast-casual segments of the retail food industry) may 18 harm our Concepts’ reputations and adversely affect our business and/or our growth prospects.
We could also be adversely affected if government authorities impose mandatory or voluntary closures, impose restrictions on operations of restaurants, or restrict the import or export of products, or if suppliers issue mass recalls of products.
We could also be adversely affected if government authorities impose mandatory or voluntary 9 closures, impose restrictions on operations of restaurants, or restrict the import or export of products, or if suppliers issue mass recalls of products.
Our business and/or growth prospects could be adversely impacted by various future occurrences (which may be beyond our control), including future health epidemics or pandemics, natural disasters, geopolitical events, acts of war, terrorism, political, financial or social instability, boycotts, social or civil unrest, workplace violence, or other events that lead to avoidance of public places or restrictions on public gatherings such as in our and our Concepts’ restaurants.
In addition, our business and/or growth prospects could be adversely impacted by various other future occurrences (which may be beyond our control), including health epidemics or pandemics, natural disasters, geopolitical events, acts of war, terrorism, political, financial or social instability, boycotts, social or civil unrest, workplace violence, or other events that lead to avoidance of public places or restrictions on public gatherings such as in our and our Concepts’ franchisees’ restaurants.
Any inability to generate sufficient cash flow or refinance our indebtedness on favorable terms could have an adverse effect on our business, growth prospects and financial condition.
Any inability to generate sufficient cash flow or refinance our indebtedness on favorable terms could have an adverse effect on our business, growth prospects and financial condition. 23
A failure of us, our employees, our Concepts’ franchisees or third parties acting at our direction, or others perceived to be associated with us or our Concepts’ franchisees, to abide by applicable laws and regulations regarding the use of social media, or to appropriately use social media, could adversely impact our Concepts’ brands, our reputation, our business and our growth prospects, result in negative publicity, or subject us or our Concepts’ franchisees to fines, other penalties or litigation.
A failure of us, our employees, our Concepts’ franchisees or third parties acting at our direction or on our behalf, or others perceived to be associated with us or our Concepts’ franchisees, to abide by applicable laws and regulations regarding the use of social media, or to appropriately use social media, could adversely impact our Concepts’ brands, our reputation, our business and our growth prospects, result in negative publicity, or subject us or our Concepts’ franchisees to fines, other penalties or litigation.
In addition, failure to comply with applicable requirements may subject us and our Concepts’ franchisees to fines, sanctions, governmental investigation, lawsuits and other potential liability, as well as reputational harm. Unreliable or inefficient restaurant or consumer-facing technology or the failure to successfully implement technology initiatives in the future could adversely impact operating results, growth prospects and the overall consumer experience.
In addition, failure to comply with applicable requirements may subject us and our Concepts’ franchisees to fines, sanctions, governmental investigation, lawsuits and other potential liability, as well as reputational harm. 14 Unreliable or inefficient restaurant technology or the failure to successfully implement technology initiatives in the future could adversely impact operating results, growth prospects and the overall consumer experience.
Defending against such claims can be costly, and as a result of defending such claims, we may be prohibited from using such intellectual property or proprietary information in the future or forced to pay damages, royalties, or other fees for using such proprietary information, any of which could negatively affect our business, growth prospects, reputation, financial condition, and results of operations.
Defending against such claims can be costly, and as a result of defending such claims, we may be prohibited from using such intellectual property or proprietary information in the future or forced to pay damages, royalties, or other fees for using such proprietary information, any of which could negatively affect our business, growth prospects, reputation and financial results.
Risks Related to Our Indebtedness Our substantial indebtedness makes us more sensitive to adverse economic conditions, may limit our ability to plan for or respond to significant changes in our business, and requires a significant amount of cash to service our debt payment obligations that we may be unable to generate or obtain.
Risks Related to Our Indebtedness Our level of indebtedness makes us more sensitive to adverse economic conditions, may limit our ability to plan for or respond to significant changes in our business, and requires a significant amount of cash to service our debt payment obligations that we may be unable to generate or obtain.
Public concern over avian flu may cause fear about the consumption of chicken, eggs and other products derived from poultry, which could cause customers to consume less poultry and related products, which would adversely affect us given poultry is offered at our Concepts’ restaurants.
Public concern over avian flu may cause fear about the consumption of chicken, eggs and other products derived from poultry, which could cause customers to consume less poultry and related products, which would adversely affect us given that poultry is widely offered at our Concepts’ restaurants.
There is no assurance that any remedial actions will meaningfully limit the success of future attempts to breach our IT Systems, particularly because malicious actors are increasingly sophisticated and utilizing tools and techniques specifically designed to circumvent security measures, avoid detection and obfuscate forensic evidence, which means we may be unable to identify, investigate or remediate effectively or in a timely manner.
There is no assurance that any remedial actions will meaningfully limit the success of future attempts to breach our IT Systems, particularly because malicious actors are increasingly sophisticated and 13 utilize tools and techniques specifically designed to circumvent security measures, avoid detection and obfuscate forensic evidence, which means we may be unable to identify, investigate or remediate effectively or in a timely manner.
Family and Medical Leave Act as well as a variety of similar laws which provide protected leave rights to employees. • Employment laws related to workplace health and safety, non-discrimination, non-harassment, whistleblower protections, and other terms and conditions of employment. • Laws and regulations in government-mandated health care benefits such as the Patient Protection and Affordable Care Act in the U.S. • Laws and regulations relating to nutritional content, nutritional labeling, product safety, product marketing and menu labeling. • Laws relating to state and local licensing. • Laws relating to the relationship between franchisors and franchisees. • Laws and regulations relating to health, sanitation, food, workplace safety, child labor, including laws regulating the use of certain “hazardous equipment”, building and zoning, and fire safety and prevention. • Laws and regulations relating to union organizing rights and activities. • Laws relating to information security, privacy, cashless payments, and consumer protection. • Laws relating to currency conversion or exchange. • Laws relating to international trade and sanctions. • Anti-bribery and anti-corruption laws, including the U.S.
Family and Medical Leave Act as well as a variety of similar laws which provide protected leave rights to employees. • Employment laws related to workplace health and safety, non-discrimination, non-harassment, whistleblower protections, and other terms and conditions of employment. • Laws and regulations in government-mandated health care benefits such as the Patient Protection and Affordable Care Act in the U.S. • Laws and regulations relating to nutritional content, nutritional labeling, product safety, product marketing and menu labeling. • Laws relating to state and local licensing. • Laws relating to the relationship between franchisors and franchisees. • Laws and regulations relating to health, sanitation, food, workplace safety, child labor, including laws regulating the use of certain “hazardous equipment”, building and zoning, and fire safety and prevention. • Laws and regulations relating to union organizing rights and activities. • Laws relating to information security, privacy, cashless payments, and consumer protection. • Laws relating to our use of third party aggregators. • Laws relating to currency conversion or exchange. 20 • Laws relating to international trade and sanctions. • Anti-bribery and anti-corruption laws, including the U.S.
More specifically, an increase in the value of the U.S. dollar, relative to other currencies, such as the Chinese Renminbi (“RMB”), Australian Dollar, the British Pound and the Euro, as well as currencies in certain other markets could have an adverse effect on our reported earnings.
More specifically, an increase in the value of the U.S. dollar, relative to other currencies, such as the Chinese Renminbi (“RMB”), Australian Dollar, the British Pound and the Euro, as well as currencies in certain other markets have had and could continue to have an adverse effect on our reported earnings.
In addition, social media is frequently used by our Concepts to communicate with customers and the public. Failure by our Concepts to use social media effectively or appropriately, particularly as compared to our Concepts’ competitors, could lead to a decline in brand value, customer visits and revenue.
In addition, social media is frequently used by our Concepts or Concepts’ franchisees to communicate with customers and the public. Failure by our Concepts or Concepts’ franchisees to use social media effectively or appropriately, particularly as compared to our Concepts’ competitors, could lead to a decline in brand reputation, brand value, customer visits and revenue.
In addition, fluctuations in the value of currencies in which we or our Concepts’ franchisees operate could lead to increased costs and lower profitability to us or our Concepts’ franchisees and/or cause us or our Concepts’ franchisees to increase prices to customers, which could negatively impact sales in these markets and harm our financial condition and operating results.
In addition, fluctuations in the value of currencies in which we or our Concepts’ franchisees operate could lead to increased costs and lower profitability to us or our Concepts’ franchisees and/or cause us or our Concepts’ franchisees to increase prices to customers, which could negatively impact sales in these markets and harm our financial results.
We have incurred, and may continue to incur, certain expenses related to this attack, including expenses to respond to, remediate and investigate this matter. We remain subject to risks and uncertainties as a result of the incident, including as a result of the data that was taken from the Company’s network.
We have incurred, and will continue to incur, certain expenses related to this attack, including expenses to respond to, remediate and investigate this matter. We remain subject to risks and uncertainties as a result of the incident, including as a result of the data that was taken from the Company’s network.
Should customers become unable to access mobile payment apps in China, should the relationship between Yum China and one or more third-party mobile payment processors become interrupted, or should Yum China’s ability to use Alipay, WeChat Pay, Union Pay or other third-party mobile payment apps in its operations be restricted, its business could be adversely affected, which could have a negative impact on the royalty paid to us.
Should customers become unable to access mobile payment apps in China, should the relationship between Yum China and one or more third-party mobile payment processors become interrupted, or should Yum China’s ability to use Alipay, WeChat Pay, Union Pay or other third-party mobile payment apps in its operations be restricted, its business could be adversely affected, which could have a negative impact on the license fee paid to us.
As the result of these increased expectations and evolving requirements, as well as our commitment to social and environmental sustainability matters, we may continue to establish or expand goals, commitments or targets, and take actions to meet such goals, commitments and targets.
As a result of these increased expectations and evolving requirements, as well as our commitment to social and environmental sustainability matters, we may continue to establish or expand goals, commitments or targets, and take actions to meet such goals, commitments and targets.
In addition, in the U.S., the Company and the Company’s KFC, Taco Bell and Pizza Hut franchisee groups are members of Restaurant Supply Chain Solutions, LLC (“RSCS”), which is a third party responsible for purchasing certain restaurant products and equipment. The Habit Burger Grill entered into a purchasing agreement with RSCS in 2020. McLane Foodservice, Inc.
In addition, in the U.S., the Company and the Company’s KFC, Taco Bell and Pizza Hut franchisee groups are members of Restaurant Supply Chain Solutions, LLC (“RSCS”), which is a third party responsible for purchasing certain restaurant products and equipment. The Habit Burger Grill entered into a purchasing agreement with RSCS in 2020.
The loss of key personnel, labor shortages and increased labor costs could adversely effect our business and/or growth prospects. Much of our future success depends on the continued availability and service of senior management personnel.
The loss of key personnel, labor shortages and increased labor costs could adversely affect our business and/or growth prospects. Much of our future success depends on the continued availability and service of senior management personnel.
Some of the factors that impact discretionary consumer spending include unemployment and underemployment rates, fluctuations in disposable income, the price of gasoline, other inflationary pressures, higher taxes, reduced access to credit, elevated interest rate levels, stock market performance and changes in consumer confidence.
Some of the factors that may impact discretionary consumer spending and macroeconomic conditions include unemployment and underemployment rates, fluctuations in disposable income, the price of gasoline, other inflationary pressures, higher taxes, reduced access to credit, elevated interest rate levels, stock market performance and changes in consumer confidence.
The inability to recruit and retain a sufficient number of qualified individuals at the store level may result in reduced operating hours, have a negative impact on service or customer experience, delay our planned use, development or deployment of technology, or impact the planned openings of new restaurants by us and our Concepts’ franchisees, any of which could adversely affect our business and/or our growth prospects.
The inability to recruit and retain a sufficient number of qualified individuals at the store level may result in reduced operating hours, have a negative impact on service or customer experience, delay our planned use, development or deployment of technology, impact planned openings of new restaurants, or result in closures of existing restaurants by us and our Concepts’ franchisees, any of which could adversely affect our business.
Moreover, regardless of whether any such lawsuits have merit, or whether we are ultimately held liable or settle, such litigation may be expensive to defend, may divert resources and management attention away from our operations, and may negatively impact our results of operations and/or our growth prospects.
Moreover, regardless of whether any such lawsuits have merit, or whether we are ultimately held liable or settle, such litigation may be expensive to defend, may divert resources and management attention away from our operations, and may negatively impact our financial results.
For example, the Organization for Economic Cooperation and Development (the “OECD”), the European Union and other countries (including countries in which we operate) have committed to enacting substantial changes to numerous long-standing tax principles impacting how large multinational enterprises are taxed in an effort to limit perceived base erosion and profit shifting incentives.
For example, the Organization for Economic Cooperation and Development (the “OECD”), the E.U. and other countries (including countries in which we operate) have committed to enacting substantial changes to numerous long-standing tax principles impacting how large multinational enterprises are taxed in an effort to limit perceived base erosion and profit shifting incentives.
Any significant deterioration in current negative macroeconomic conditions, or any recovery therefrom that is significantly slower than anticipated, could have an adverse effect on our business, growth prospects, financial conditions, or results of operations. In addition, negative macroeconomic conditions or other adverse business developments may result in future asset impairment charges.
Any significant deterioration in current negative macroeconomic conditions in markets where we operate, or any recovery therefrom that is significantly slower than anticipated, could have an adverse effect on our business, growth prospects, financial conditions, or results of operations. In addition, negative macroeconomic conditions or other adverse business developments may result in future asset impairment charges.
Our brands may also be targets of infringement claims that could interfere with the use of certain names, trademarks and/or the proprietary know-how, recipes, or trade secrets used in our business.
Our brands may also be targets of infringement claims that could interfere with the use of certain names, trademarks, works of authorship and/or the proprietary know-how, inventions, recipes, or trade secrets used in our business.
In addition, the retail food industry has been subject to scrutiny and claims that the menus and practices of restaurant chains have led to customer health issues, such as weight gain and other adverse effects.
The retail food industry has also been subject to scrutiny and claims that the menus and practices of restaurant chains have led to customer health issues, such as weight gain and other adverse effects.
If the third-party aggregators that we utilize for delivery, including marketplace and delivery as a service, cease or curtail their operations, fail to maintain sufficient labor force 15 to satisfy demand, materially change fees, access or visibility to our products or give greater priority or promotions to our competitors, our business and/or growth prospects may be negatively impacted.
If the third-party aggregators that we utilize for delivery, including marketplace and delivery as a service, cease or curtail their operations, fail to maintain sufficient labor force to satisfy demand, provide poor customer service, materially change fees, access or visibility to our products, or give greater priority or promotions to our competitors, our reputation, business and/or growth prospects may be negatively impacted.
Our accruals for tax liabilities are based on past experience, interpretations of applicable law, and judgments about potential actions by tax authorities, but such accruals require significant judgment which may be incorrect and may result in payments greater than the amounts accrued.
Our accruals for tax liabilities are based on past experience, interpretations of applicable law, and judgments about potential actions by tax authorities. Such tax positions require significant judgment which may be incorrect or challenged by tax authorities and may result in payments greater than the amounts accrued.
These labor market conditions and the ongoing inflationary 17 environment in countries where our Concepts and their franchisees operate have increased, and may continue to increase , the labor costs for our Concepts and their franchisees, including due to the payment of higher wages to attract or retain qualified employees (including franchisee management, restaurant managers and other crew members) and increased overtime costs to meet demand.
These labor market conditions and the ongoing inflationary environment in markets where we operate have increased in recent years, and may continue to increase, the labor costs for our Concepts and their franchisees, including due to the payment of higher wages to attract or retain qualified employees (including franchisee management, restaurant managers and other crew members) and due to increased overtime 17 costs to meet demand.
Our Concepts may be unable to successfully implement strategies that we believe are necessary for further growth if our Concepts’ franchisees do not participate, which may harm our growth prospects and financial condition.
Our Concepts may be unable to successfully implement strategies that we believe are necessary for growth if our Concepts’ franchisees do not participate, which may harm our growth prospects and financial results.
These claims or disputes may relate to personal injury, employment, real estate related, environmental, tort, intellectual property, breach of contract, data privacy, securities, derivative and other litigation matters. See the discussion of legal proceedings in Note 20 to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
These claims or disputes may relate to personal injury, employment, real estate, environmental, tort, intellectual property, breach of contract, technology services, data privacy, securities, consumer protection, derivative and other litigation matters. See the discussion of legal proceedings in Note 20 to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
We regard our registered trademarks (e.g., Yum®, KFC®, Taco Bell®, Pizza Hut® and The Habit®) and unregistered trademarks related to our restaurant businesses, as having significant value and being important to our marketing efforts. Our trademarks, many of which are registered in various jurisdictions, create brand awareness and help build goodwill among our customers.
We regard our registered trademarks (e.g., Yum®, KFC®, Taco Bell®, Pizza Hut® and The Habit®), unregistered trademarks, copyrightable works, inventions, and trade secrets related to our restaurant businesses as having significant value and being important to our marketing efforts. Our trademarks, many of which are registered in various jurisdictions, create brand awareness and help build goodwill among our customers.
For example, we are subject to numerous global laws including but not limited to, the European Union’s (“E.U.”) General Data Protection Regulation (“GDPR”) and the UK General Data Protection Regulations (which implements the GDPR into UK law), which impose strict data protection requirements and provide for significant penalties for noncompliance.
For example, we are subject to numerous global laws, including but not limited to, the European Union’s (“E.U.”) General Data Protection Regulation (“GDPR”) and the UK General Data Protection Regulations, which impose strict data protection requirements and provide for significant penalties for noncompliance.
As of December 31, 2022, our total outstanding short-term borrowings and long-term debt was approximately $11.9 billion. Subject to the limits contained in the agreements governing our outstanding indebtedness, we may incur additional debt from time to time, which would increase the risks related to our high level of indebtedness.
As of December 31, 2023, our total outstanding short-term borrowings and long-term debt was approximately $11.2 billion. Subject to the limits contained in the agreements governing our outstanding indebtedness, we may incur additional debt from time to time, which would increase the risks related to our level of indebtedness.
Any report linking our or our Concepts’ franchisees’ restaurants, our suppliers or distributors or otherwise involving the types of products used at our restaurants, or linking our competitors, suppliers, distributors or the retail food industry generally, to instances of food- or beverage-borne illness or food safety issues or substances having perceived health or environmental risks could result in adverse publicity and otherwise adversely affect us and possibly lead to product liability claims, litigation, governmental investigations or actions and damages.
Any report linking our or our Concepts’ franchisees’ restaurants, our suppliers or distributors or otherwise involving the types of products used at our restaurants, or linking our competitors, suppliers, distributors or the retail food industry generally, to instances of food- or beverage-borne illness or food safety issues or substances having perceived health or environmental risks could result in adverse publicity and otherwise adversely affect us and possibly lead to consumer complaints, litigation and/or governmental investigations.
Moreover, technology and consumer offerings continue to develop and evolve and we cannot predict consumer or team member acceptance of these existing and new technologies, such as new delivery channels or their impact on our business, and/or our growth prospects, nor can we be certain of our ability to implement or execute such technologies, which could result in loss of sales; dissatisfaction from our customers, employees, or employees of our Concepts’ franchisees; or negative publicity that could adversely impact our reputation, results of operations, growth prospects and financial condition.
Moreover, technology and consumer offerings continue to develop and evolve and we cannot predict consumer or team member acceptance of these existing and new technologies (e.g. automation, artificial intelligence, new delivery channels) or their impact on our business, and/or our growth prospects, nor can we be certain of our ability to implement or execute such technologies, which could result in loss of sales; dissatisfaction from our customers, employees, or employees of our Concepts’ franchisees; or negative publicity that could adversely impact our reputation or financial results.
Our Concepts and their franchisees have experienced and may continue to experience increased labor shortages and employee turnover at many of our restaurants and increased competition for qualified employees, due to ongoing challenging labor market conditions.
Our Concepts and their franchisees have experienced and may continue to experience increased labor shortages and employee turnover at many of our restaurants and increased competition for qualified employees, taking into account ongoing challenging labor market conditions.
If our Concepts’ digital commerce platforms do not meet customers’ expectations in terms of security, speed, privacy, attractiveness or ease of use, customers may be less inclined to return to such digital commerce platforms, which could negatively impact our business and/or growth prospects.
If our Concepts’ digital commerce platforms do not meet customers’ expectations in terms of security, speed, privacy, attractiveness or ease of use, customers may be less inclined to return to such digital commerce platforms, which could negatively impact us and our Concepts’ franchisees.
We have franchise relationships that are particularly important to our business, such as our relationship with Yum China. Any failure to realize the expected benefits of such franchise relationships, including with Yum China, may adversely impact our 10 business, growth prospects and operating results.
We have franchise relationships that are particularly important to our business due to their scale and/or growth prospects such as our relationship with Yum China. Any failure to realize the expected benefits of such franchise relationships, including with Yum China, may adversely impact our business, growth prospects and operating results.
Moreover, the reliance of our Concepts’ restaurants on third-party food suppliers and distributors and increasing reliance on food delivery aggregators increases the risk that food- or beverage-borne illness incidents and food safety issues could be caused by factors outside of our control.
Moreover, our Concepts’ restaurants' reliance on third-party food suppliers and distributors and increasing reliance on food delivery aggregators may increase the risk that food- or beverage-borne illness incidents and food safety issues could be caused by factors outside of our control.
If it becomes more difficult or more expensive for our Concepts’ franchisees to obtain financing to develop new restaurants, or if the perceived return on invested capital is not sufficiently attractive, the expected growth of our system could slow and our future revenues and operating cash flows could be adversely impacted.
If it becomes more difficult or more expensive for our Concepts’ franchisees to obtain financing to develop new restaurants, or if the perceived return on invested capital is not sufficiently attractive, the expected growth of our system could slow and our future financial results could be adversely impacted.
Additional risks include the impact of import restrictions or controls, sanctions, foreign exchange control regimes (including restrictions on currency conversion), health guidelines and safety protocols related to the COVID-19 pandemic, labor costs and conditions, compliance with the U.S.
Additional risks include the impact of import restrictions or controls, sanctions, foreign exchange control regimes (including restrictions on currency conversion), health guidelines and safety protocols, labor costs and conditions, compliance with the U.S.
However, from time to time we become aware of other persons or companies using names and marks that are identical or confusingly similar to our brands’ names and marks.
However, from time to time, we become aware of other persons or companies using names and marks that are identical or confusingly similar to our brands’ names and marks, or using other proprietary intellectual property we own.
Customers are increasingly using e-commerce websites and apps, such as kfc.com, tacobell.com, pizzahut.com, habitburger.com, KFC, Taco Bell, Pizza Hut and The Habit Burger Grill apps, and apps owned by third-party delivery aggregators and third-party mobile payment processors, to order and pay for our Concepts’ products.
Customers are increasingly using our internally-owned e-commerce websites and apps, such as kfc.com, tacobell.com, pizzahut.com, habitburger.com, and the KFC, Taco Bell, Pizza Hut and The Habit Burger Grill apps in the U.S., as well as apps owned by third-party delivery aggregators and third-party developers and payment processors, to order and pay for our Concepts’ products.
Yum China’s business is exposed to risks in mainland China, which include, among others, potential political, financial and social instability, changes in economic conditions (including consumer spending, unemployment levels and ongoing wage and commodity inflation), consumer preferences, the regulatory environment (including uncertainties with respect to the interpretation and enforcement of Chinese laws, rules and regulations), food safety related matters (including compliance with food safety regulations and ability to ensure product quality and safety), and the effect of the COVID-19 pandemic and related restrictions in China.
Yum China’s business is exposed to risks in mainland China, which include, among others, potential political, financial and social instability, changes in economic conditions (including consumer spending, unemployment levels and ongoing wage and commodity inflation), consumer preferences, the regulatory environment (including uncertainties with respect to the interpretation and enforcement of Chinese laws, rules and regulations), heightened data and cybersecurity risks associated with the conduct of business in China, and food safety related matters (including compliance with food safety regulations and ability to ensure product quality and safety).
A significant portion of our Concepts’ restaurants are operated outside of the U.S., and we intend to continue expansion of our global operations. As a result, our and our Concepts’ franchisees’ business and/or growth prospects are increasingly exposed to risks inherent in global operations.
Our global operations subject us to risks that could negatively affect our business. A significant portion of our Concepts’ restaurants are operated outside of the U.S., and we intend to continue expansion of our global operations. As a result, our and our Concepts’ franchisees’ business and/or growth prospects are increasingly exposed to risks inherent in global operations.
If we or our Concepts’ franchisees fail to adequately control fraudulent credit card and debit card transactions or to comply with the Payment Card Industry Data Security Standards, we or our Concepts’ franchisees may face civil liability, diminished public perception of our security measures, fines and assessments from the card brands, and significantly higher credit card and debit card related costs, any of which could adversely affect our business, growth prospects, financial condition and results of operations.
If we or our Concepts’ franchisees fail to adequately control fraudulent credit card and debit card transactions or to comply with the global Payment Card Industry Data Security Standards, we or our Concepts’ franchisees may face civil liability, diminished public perception of our security measures, fines and assessments from the card brands, and significantly higher credit card and debit card related costs, any of which could adversely affect us.
Moreover, there has been a rapid increase in the use of store-level or third-party delivery services by our Concepts.
Moreover, there has been a rapid increase in the use of owned and/or third-party delivery services by our Concepts.
If our data, processes and reporting with respect to social and environmental matters are incomplete or inaccurate, or if we fail to achieve progress with respect to these goals on a timely basis, consumer and investor trust in our brands may suffer. 19 We may be adversely affected by climate change.
If our data, processes and reporting with respect to social and environmental matters are incomplete or inaccurate, or if we fail to achieve progress with respect to these goals on a timely basis, consumer and investor trust in our brands may suffer.
For example, the outbreak of a 9 widespread future health epidemic or pandemic, particularly if located in regions where we derive significant revenue or profit could adversely affect our business and/or growth prospects.
For example, the outbreak of a widespread future health epidemic or pandemic, particularly if located in regions where we have significant operations, could adversely affect our business and/or growth prospects.
As a company dependent upon consumer discretionary spending, we (and our Concepts’ franchisees) are sensitive to changes in or uncertainty regarding macroeconomic conditions in markets where we and Concepts’ franchisees operate.
As a company dependent upon consumer discretionary spending, we (and our Concepts’ franchisees) are sensitive to macroeconomic conditions and consumer discretionary spending levels in markets where we and our Concepts’ franchisees operate.
We could be adversely affected by the physical and/or transitional effects of climate change. Our properties and operations may be vulnerable to the adverse effects of climate change, which is predicted to result in ongoing changes in global weather patterns and more frequent and severe weather-related events such as droughts, wildfires, hurricanes and other natural disasters.
Our and our franchisees’ properties and operations may be vulnerable to the adverse effects of climate change, which is predicted to result in ongoing changes in global weather patterns and more frequent and severe weather-related events such as droughts, wildfires, hurricanes and other natural disasters.
These risks, which can vary substantially by country, include political, financial or social instability or conditions, geopolitical events, corruption, anti-American sentiment, social and ethnic unrest, natural disasters, military conflicts and terrorism, as well as exposure to the macroeconomic environment in such markets (including consumer preferences and spending, unemployment levels and wage and commodity inflation), the regulatory environment (including the risks of operating in markets in which there are uncertainties regarding the interpretation and enforceability of legal requirements and the enforceability of contract rights and intellectual property rights), and income and non-income based tax rates and laws.
These risks, which can vary substantially by country, include political, financial or social instability or conditions, corruption, increasing anti-American sentiment and perception of our Concepts as American brands, social and ethnic unrest, natural disasters, military conflicts and terrorism, as well as exposure to the macroeconomic environment in such markets, the regulatory environment (including the risks of operating in markets in which there are uncertainties regarding the interpretation and enforceability of legal requirements and the enforceability of contract rights and intellectual property rights), and income and non-income based tax rates and laws.
It may be difficult to recruit and retain qualified individuals for these efforts due to intense competition for qualified technology systems’ developers necessary to innovate, develop and implement new technologies for our growth initiatives, including increasing our digital relationship with customers. Our strategic digital and technology initiatives may not be timely implemented or may not achieve the desired results.
It may be difficult to recruit and retain qualified individuals for these efforts due to intense competition for qualified technology systems’ developers necessary to innovate, develop and implement new technologies for our growth initiatives, including increasing our digital relationship with customers.
We received opinions of outside counsel substantially to the effect that, for U.S. federal income tax purposes, the Yum China spin-off and certain related transactions qualified as generally tax-free under Sections 355 and 361 of the U.S. Internal Revenue Code.
Risks Related to the Yum China Spin-Off The Yum China spin-off and certain related transactions could result in substantial U.S. tax liability. We received opinions of outside counsel substantially to the effect that, for U.S. federal income tax purposes, the Yum China spin-off and certain related transactions qualified as generally tax-free under Sections 355 and 361 of the U.S.
There can be no assurance that the steps we have taken to protect our intellectual property or the legal protections that may be available will be adequate or that our Concepts’ franchisees will maintain the quality of the goods and services offered under our brands’ trademarks or always act in accordance with guidelines we set for maintaining our brands’ intellectual property rights and defending or enforcing our trademarks and other intellectual property could result in the expenditure of significant resources any of which could result in significant harm to our business, growth prospects, reputation, financial condition and results of operations.
There can be no assurance that the steps we have taken to protect our intellectual property or the legal protections that may be available will be adequate or that our Concepts’ franchisees will maintain the quality of the goods and services offered under our brands’ trademarks or always act in accordance with guidelines we set for maintaining our brands’ intellectual property rights and defending or enforcing our trademarks and other intellectual property could result in significant expenditures.
In addition, our operations could be disrupted if any of our or our business partner employees were suspected of having the avian flu or swine flu, or other illnesses such as hepatitis A or norovirus, since this could require us or our business partners to quarantine some or all of such employees or close our restaurant facilities.
In addition, our operations could be disrupted if any employees at our, our Concepts’ franchisees’ restaurants or our business partner employees had or were suspected of having the avian flu or swine flu, or other highly communicable illnesses such as hepatitis A or norovirus, since this could require us, our Concepts’ franchisees, or our business partners to quarantine some or all of such employees and close facilities, including restaurants.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. As of year end 2022, the Company’s Concepts owned land, building or both for 322 restaurants worldwide in connection with the operation of our 990 Company-owned restaurants.
Biggest changeItem 2. Properties. As of year end 2023, the Company’s Concepts owned land, building or both for 326 restaurants worldwide in connection with the operation of our 1,017 Company-owned restaurants.
The YUM corporate headquarters and a KFC research facility in Louisville, Kentucky are owned by KFC. Additional information about the Company’s properties is included in the Consolidated Financial Statements in Part II, Item 8. The Company believes that its properties are generally in good operating condition and are suitable for the purposes for which they are being used.
The YUM corporate headquarters and a KFC research facility in Louisville, Kentucky are owned by KFC. Additional information about the Company’s properties is included in the Consolidated Financial Statements in Part II, Item 8. 25 The Company believes that its properties are generally in good operating condition and are suitable for the purposes for which they are being used.
The Company currently also owns land, building or both related to approximately 500 franchise restaurants that it leases to franchisees and leases land, building or both related to approximately 250 franchise restaurants that it subleases to franchisees, principally in the U.S., United Kingdom, Australia and Germany.
The Company currently also owns land, building or both related to approximately 450 franchise restaurants that it leases to franchisees and leases land, building or both related to approximately 250 franchise restaurants that it subleases to franchisees, principally in the U.S., United Kingdom, Australia and Germany.
These restaurants are further detailed as follows: • The KFC Division owned land, building or both for 66 restaurants. • The Taco Bell Division owned land, building or both for 254 restaurants. • The Pizza Hut Division owned land, building or both for 2 restaurants.
These restaurants are further detailed as follows: • The KFC Division owned land, building or both for 66 restaurants. • The Taco Bell Division owned land, building or both for 258 restaurants. • The Pizza Hut Division owned land, building or both for 2 restaurants.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMatters faced by the Company include, but are not limited to, claims from franchisees, suppliers, employees, customers, governments and others related to operational, foreign exchange, tax, franchise, contractual or employment issues as well as claims that the Company has infringed on third-party intellectual property rights.
Biggest changeMatters faced by the Company include, but are not limited to, claims from franchisees, suppliers, employees, customers, governments and others related to operational, foreign exchange, tax, franchise, contractual, cybersecurity or employment issues as well as claims that the Company has infringed on third-party intellectual property rights.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changePrior to this, from April 2013 to December 2019, he was Managing Director for the KFC Middle East, North Africa, Pakistan and Turkey markets. Before joining YUM in 2009, Mr. Sami served in various leadership roles at Procter & Gamble, the Coca-Cola Company and Reckitt Benckiser. Tracy Skeans, 50, is Chief Operating Officer and Chief People Officer of YUM.
Biggest changeFrom January 2020 to December 2021 he served in a dual role as KFC Division Chief Operating Officer and Managing Director of KFC Asia. Prior to this, from April 2013 to December 2019, he was Managing Director for the KFC Middle East, North Africa, Pakistan and Turkey markets. Before joining YUM in 2009, Mr.
Prior to joining PepsiCo, he was a partner in the Dallas office of McKinsey & Company, a strategic management consulting firm. Executive officers are elected by and serve at the discretion of the Board of Directors. 25 PART II
Prior to joining PepsiCo, he was a partner in the Dallas office of McKinsey & Company, a strategic management consulting firm. Executive officers are elected by and serve at the discretion of the Board of Directors. 27 PART II
Prior to these positions, he served as Chief Executive Officer of Pizza Hut Division from January 2015 to April 2016. From January 2014 to December 2014, Mr. Gibbs served as President of Pizza Hut U.S. Prior to this position, Mr. Gibbs served as President and Chief Financial Officer of Yum! Restaurants International, Inc.
Prior to these positions, he served as Chief Executive Officer of Pizza Hut Division from January 2015 to April 2016. From January 2014 to December 2014, Mr. Gibbs served as President of Pizza Hut U.S. Prior to this position, Mr. Gibbs served as President and Chief Financial Officer of Yum! Restaurants International, Inc. (“YRI”) from May 2012 through December 2013.
Item 4. Mine Safety Disclosures. Not applicable. Executive Officers of the Registrant. The executive officers of the Company as of February 24, 2023, and their ages and current positions as of that date are as follows: David Gibbs , 59, is Chief Executive Officer of YUM a position he has held since January 2020.
Item 4. Mine Safety Disclosures. Not applicable. Executive Officers of the Registrant. The executive officers of the Company as of February 20, 2024, and their ages and current positions as of that date are as follows: David Gibbs , 60, is Chief Executive Officer of YUM a position he has held since January 2020.
He has served in this position since July 2020. Prior to that, he served as General Counsel and Corporate Secretary of YUM from July 2018 to June 2020 and he served as Vice President and Deputy General Counsel of YUM from November 2015 to June 2018. From September 2007 to October 2015 Mr.
Prior to that, he served as General Counsel and Corporate Secretary of YUM from July 2018 to June 2020 and he served as Vice President and Deputy General Counsel of YUM from November 2015 to June 2018. From September 2007 to October 2015 Mr. Catlett held various YUM positions including Vice President & Associate General Counsel.
(“YRI”) from May 2012 through December 24 2013. Mr. Gibbs served as Chief Financial Officer of YRI from January 2011 to April 2012. He was Chief Financial Officer of Pizza Hut U.S. from September 2005 to December 2010. Scott Catlett , 46, is Chief Legal and Franchise Officer and Corporate Secretary of YUM.
Mr. Gibbs served as Chief Financial Officer of YRI from January 2011 to April 2012. He was Chief Financial Officer of Pizza Hut U.S. from September 2005 to December 2010. Scott Catlett , 47, is Chief Legal and Franchise Officer and Corporate Secretary of YUM. He has served in this position since July 2020.
She has served as Chief Operating Officer since January 2021 and Chief People Officer since January 2016. She also served as Chief Transformation Officer from November 2016 to December 2020. From January 2015 to December 2015, she was President of Pizza Hut International. Prior to this position, Ms.
From January 2015 to December 2015, she was President of Pizza Hut International. Prior to this position, Ms. Skeans served as Chief People Officer of Pizza Hut Division from December 2013 to December 2014 and Chief People Officer of Pizza Hut U.S. from October 2011 to November 2013.
He has served as YUM’s Corporate Controller since February 2011 and as Senior Vice President, Finance since February 2017. Prior to serving as Corporate Controller, Mr. Russell served in various positions at the Vice President level in the YUM Finance Department, including Controller-Designate from November 2010 to February 2011 and Vice President, Assistant Controller from January 2008 to December 2010.
Russell served in various positions at the Vice President level in the YUM Finance Department, including Controller-Designate from November 2010 to February 2011 and Vice President, Assistant Controller from January 2008 to December 2010. 26 Sabir Sami, 56, is Chief Executive Officer of KFC Division, a position he has held since January 2022.
Finance team from September 2000 to June 2009. Christopher Turner , 48, is Chief Financial Officer of YUM, a position he has held since August 2019.
From July 2009 to September 2011, she served as Director of Human Resources for Pizza Hut U.S and was on the Pizza Hut U.S. Finance team from September 2000 to June 2009. Christopher Turner , 49, is Chief Financial Officer of YUM, a position he has held since August 2019.
Powell served in various positions at Kimberly-Clark from September 2007 to August 2021. Prior to joining Kimberly-Clark, he served in various positions at Bain & Company and Proctor & Gamble. David Russell , 53, is Senior Vice President, Finance and Corporate Controller of YUM.
Aaron Powell, 52, is Chief Executive Officer of Pizza Hut Division, a position he has held since September 2021. Before joining YUM, Mr. Powell served in various positions at Kimberly-Clark from September 2007 to August 2021. Prior to joining Kimberly-Clark, he served in various positions at Bain & Company and Proctor & Gamble.
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Catlett held various YUM positions including Vice President & Associate General Counsel. Mark King, 63, is Chief Executive Officer of Taco Bell Division, a position he has held since August 2019. Before joining YUM, Mr.
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Sean Tresvant , 53, is Chief Executive Officer of Taco Bell Division. He joined Taco Bell in January 2022 as the Global Chief Brand Officer. In February 2023, he was elevated to Global Chief Brand & Strategy Officer, and in January 2024 he became Chief Executive Officer.
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King served as President, adidas Group North America from June 2014 to June 2018 and as Chief Executive Officer of TaylorMade-adidas Golf from 2003 to 2014. Aaron Powell, 51, is Chief Executive Officer of Pizza Hut Division, a position he has held since September 2021. Before joining YUM, Mr.
Added
He is responsible for driving Taco Bell’s global growth strategies, franchise operations and overall performance. He is also Vice Chairman of the Taco Bell Foundation. Previously he spent 15 years at Nike, most recently as Chief Marketing Officer of the Jordan Brand.
Removed
Sabir Sami, 55, is Chief Executive Officer of KFC Division, a position he has held since January 2022. From January 2020 to December 2021 he served in a dual role as KFC Division Chief Operating Officer and Managing Director of KFC Asia.
Added
David Russell , 54, is Senior Vice President, Finance and Corporate Controller of YUM. He has served as YUM’s Corporate Controller since February 2011 and as Senior Vice President, Finance since February 2017. Prior to serving as Corporate Controller, Mr.
Removed
Skeans served as Chief People Officer of Pizza Hut Division from December 2013 to December 2014 and Chief People Officer of Pizza Hut U.S. from October 2011 to November 2013. From July 2009 to September 2011, she served as Director of Human Resources for Pizza Hut U.S and was on the Pizza Hut U.S.
Added
Sami served in various leadership roles at Procter & Gamble, the Coca-Cola Company and Reckitt Benckiser. Tracy Skeans, 51, is Chief Operating Officer and Chief People Officer of YUM. She has served as Chief Operating Officer since January 2021 and Chief People Officer since January 2016. She also served as Chief Transformation Officer from November 2016 to December 2020.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe new authorization took effect during the fourth quarter of 2022 upon the exhaustion of the authorization approved in May 2021 and $250 million in shares were repurchased under this authorization during the quarter ended December 31, 2022. 26 Stock Performance Graph This graph compares the cumulative total return of our Common Stock to the cumulative total return of the S&P 500 Index and the S&P 500 Consumer Discretionary Sector Index, a peer group that includes YUM, for the period from December 30, 2017 to December 31, 2022.
Biggest changeAs of December 31, 2023, we have remaining capacity to repurchase up to $1.7 billion of Common Stock under this authorization. 28 Stock Performance Graph This graph compares the cumulative total return of our Common Stock to the cumulative total return of the S&P 500 Index and the S&P 500 Consumer Discretionary Sector Index, a peer group that includes YUM, for the period from December 31, 2018 to December 29, 2023.
Item 5. Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information and Dividend Policy The Company’s Common Stock trades under the symbol YUM and is listed on the New York Stock Exchange (“NYSE”). As of February 17, 2023, there were 35,943 registered holders of record of the Company’s Common Stock.
Item 5. Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information and Dividend Policy The Company’s Common Stock trades under the symbol YUM and is listed on the New York Stock Exchange (“NYSE”). As of February 16, 2024, there were 34,276 registered holders of record of the Company’s Common Stock.
In 2022, the Company declared and paid four cash dividends of $0.57 per share. In February 2023, the Company’s Board of Directors declared a dividend of $0.605 per share to be distributed March 10, 2023 to shareholders of record at the close of business on February 22, 2023.
In 2023, the Company declared and paid four cash dividends of $0.605 per share. In January 2024, the Company’s Board of Directors declared a dividend of $0.67 per share to be distributed March 8, 2024, to shareholders of record at the close of business on February 21, 2024.
The graph assumes that the value of the investment in our Common Stock and each index was $100 at December 29, 2017, and that all cash dividends were reinvested. 12/29/2017 12/31/2018 12/31/2019 12/30/2020 12/31/2021 12/30/2022 YUM $ 100 $ 115 $ 128 $ 140 $ 182 $ 171 S&P 500 $ 100 $ 96 $ 126 $ 149 $ 191 $ 157 S&P Consumer Discretionary $ 100 $ 101 $ 129 $ 172 $ 214 $ 135 Source of total return data: Bloomberg
The graph assumes that the value of the investment in our Common Stock and each index was $100 at December 31, 2018, and that all cash dividends were reinvested. 12/31/2018 12/31/2019 12/30/2020 12/31/2021 12/30/2022 12/29/2023 YUM $ 100 $ 111 $ 122 $ 159 $ 150 $ 155 S&P 500 $ 100 $ 131 $ 156 $ 200 $ 164 $ 207 S&P Consumer Discretionary $ 100 $ 128 $ 171 $ 212 $ 134 $ 190 Source of total return data: Bloomberg
Shares repurchased under this authorization during the quarter totaled $236 million and this authorization was exhausted as of December 31, 2022. In September 2022, our Board of Directors authorized share repurchases of up to $2.0 billion (excluding applicable transaction fees) of our outstanding Common Stock through June 30, 2024.
Issuer Purchases of Equity Securities During the quarter ended December 31, 2023, we did not repurchase shares of our Common Stock. In September 2022, our Board of Directors authorized share repurchases of up to $2.0 billion (excluding applicable transaction fees) of our outstanding Common Stock through June 30, 2024.
Removed
Issuer Purchases of Equity Securities The following table provides information as of December 31, 2022, with respect to shares of Common Stock repurchased by the Company during the quarter then ended.
Removed
Fiscal Periods Total number of shares purchased (thousands) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (thousands) Approximate dollar value of shares that may yet be purchased under the plans or programs (millions) 10/1/22 - 10/31/22 2,037 $ 110.44 2,037 $ 2,011 11/1/22 - 11/30/22 935 $ 123.82 935 $ 1,895 12/1/22 - 12/31/22 1,124 $ 129.30 1,124 $ 1,750 Total 4,096 $ 118.67 4,096 In May 2021, our Board of Directors authorized share repurchases from July 1, 2021 through December 31, 2022, of up to $2.0 billion (excluding applicable transaction fees) of our outstanding Common Stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeNon-GAAP Items Non-GAAP Items, along with the reconciliation to the most comparable GAAP financial measure, are presented below. 2022 2021 2020 Core Operating Profit Growth % 6 18 (8) Core Operating Profit Growth %, excluding 53rd week N/A N/A (7) Diluted EPS Growth %, excluding Special Items 1 23 2 Effective Tax Rate excluding Special Items 20.8 % 21.4 % 15.9 % 2022 2021 2020 Company restaurant profit $ 327 $ 381 $ 304 Company restaurant margin % 15.8 % 18.1 % 16.8 % Year Detail of Special Items 2022 2021 2020 Refranchising gain (loss) (a) $ 6 $ 3 $ 8 Operating profit impact from decision to exit Russia (b) 44 — — Charges associated with resource optimization (See Note 5) (11) (9) (36) Impairment of Habit Burger Grill goodwill (See Note 5) — — (144) Unlocking Opportunity Initiative contribution (See Note 5) — — (50) COVID-19 relief contribution (See Note 5) — — (25) Other Special Items Income (Expense) (1) (3) (20) Special Items Income (Expense) - Operating Profit 38 (9) (267) Charges associated with resource optimization - Other pension (expense) income (see Note 5) — 1 (2) Interest expense, net (See Note 5) (28) (34) (34) Special Items Income (Expense) before Income Taxes 10 (42) (303) Tax (Expense) Benefit on Special Items (c) (3) 17 65 Tax Benefit - Intra-entity transfers and valuations of intellectual property (d) 82 251 28 Tax (Expense) - Income tax impacts from decision to exit Russia (e) (72) — — Special Items Income (Expense), net of tax $ 17 $ 226 $ (210) Average diluted shares outstanding 290 302 307 Special Items diluted EPS $ 0.06 $ 0.75 $ (0.68) (a) Due to their size and volatility, we have reflected as Special Items those refranchising gains and losses that were recorded in connection with our previously announced plans to have at least 98% franchise restaurant ownership by the end of 2018.
Biggest changeWhen determining applicable System sales growth percentages, the System sales excluding FX for the current year should be compared to the prior year System sales prior to adjustment for the prior year FX impact. 34 Non-GAAP Items Non-GAAP Items, along with the reconciliation to the most comparable GAAP financial measure, are presented below. 2023 2022 2021 Core Operating Profit Growth % 12 5 18 Diluted EPS Growth %, excluding Special Items 14 1 23 Effective Tax Rate excluding Special Items 20.6 % 20.9 % 21.4 % 2023 2022 2021 Company restaurant profit $ 368 $ 327 $ 381 Company restaurant margin % 17.2 % 15.8 % 18.1 % Year 2023 2022 2021 Reconciliation of GAAP Operating Profit to Core Operating Profit Consolidated GAAP Operating Profit $ 2,318 $ 2,187 $ 2,139 Detail of Special Items: (Gain) loss associated with market-wide refranchisings (a) 5 — 4 Operating (profit) loss impact from decision to exit Russia (b) 11 (44) — Charges associated with resource optimization (c) 21 11 9 Other Special Items (Income) Expense 2 — 3 Special Items (Income) Expense - Operating Profit 39 (33) 16 Negative (Positive) Foreign Currency Impact on Operating Profit 49 118 N/A Core Operating Profit $ 2,406 $ 2,272 $ 2,155 35 Special Items as shown above were recorded to the financial statement line items identified below: Year 2023 2022 2021 Consolidated Statement of Income Line Item General and administrative expenses $ 28 $ 19 $ 7 Franchise and property expenses 1 6 (1) Refranchising (gain) loss 5 — 4 Other (income) expense 5 (58) 6 Special Items (Income) Expense - Operating Profit $ 39 $ (33) $ 16 KFC Division GAAP Operating Profit $ 1,304 $ 1,198 $ 1,230 Negative (Positive) Foreign Currency Impact 41 98 N/A Core Operating Profit $ 1,345 $ 1,296 $ 1,230 Taco Bell Division GAAP Operating Profit $ 944 $ 850 $ 758 Negative (Positive) Foreign Currency Impact — 2 N/A Core Operating Profit $ 944 $ 852 $ 758 Pizza Hut Division GAAP Operating Profit $ 391 $ 387 $ 387 Negative (Positive) Foreign Currency Impact 8 18 N/A Core Operating Profit $ 399 $ 405 $ 387 Habit Burger Grill Division GAAP Operating Profit (Loss) $ (14) $ (24) $ 2 Negative (Positive) Foreign Currency Impact — — N/A Core Operating Profit (Loss) $ (14) $ (24) $ 2 Reconciliation of GAAP Net Income to Net Income excluding Special Items GAAP Net Income $ 1,597 $ 1,325 $ 1,575 Special Items (Income) Expense - Operating Profit 39 (33) 16 Special Items (Income) Expense - Interest Expense, net (d) — 28 34 Special Items (Income) Expense - Other Pension Income — — (1) Special Items Tax (Benefit) Expense (e) (161) (8) (270) Net Income excluding Special Items $ 1,475 $ 1,312 $ 1,354 Reconciliation of Diluted EPS to Diluted EPS excluding Special Items Diluted EPS $ 5.59 $ 4.57 $ 5.21 Less Special Items Diluted EPS 0.42 0.04 0.73 Diluted EPS excluding Special Items $ 5.17 $ 4.53 $ 4.48 Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate, excluding Special Items GAAP Effective Tax Rate 12.1 % 20.3 % 5.9 % Impact on Tax Rate as a result of Special Items (8.5) % (0.6) % (15.5) % Effective Tax Rate excluding Special Items 20.6 % 20.9 % 21.4 % 36 (a) Due to their size and volatility, we have reflected as Special Items those refranchising gains and losses that were recorded in connection with market-wide refranchisings.
Our Growth agenda is based on four key drivers: • Unrivaled Culture and Talent: Leverage our culture and people capability to fuel brand performance and franchise success • Unmatched Operating Capability: Recruit and equip the best restaurant operators in the world to deliver great customer experiences • Relevant, Easy and Distinctive Brands: Innovate and elevate iconic restaurant brands people trust and champion • Bold Restaurant Development: Drive market and franchise expansion with strong economics and value We intend to drive long-term growth and shareholder returns primarily through consistent same-store sales growth and new unit development across all of our Concepts.
Our Growth agenda is based on four key drivers: • Unrivaled Culture and Talent: Leverage our culture and people capability to fuel brand performance and franchise success • Unmatched Operating Capability: Recruit and equip the best restaurant operators in the world to deliver great customer experiences • Relevant, Easy and Distinctive Brands: Innovate and elevate iconic restaurant brands people trust and champion • Bold Restaurant Development: Drive market and franchise unit expansion with strong economics and value We intend to drive long-term growth and shareholder returns primarily through consistent same-store sales growth and new unit development across all of our Concepts.
In 2021 and 2020, when calculating respective same-store sales growth we also included in our prior year base the sales of stores that were added as a result of our acquisition of The Habit Restaurants, Inc. on March 18, 2020, and that were open for one year or more. • Gross unit openings reflects new openings by us and our franchisees.
In 2021, when calculating respective same-store sales growth we also included in our prior year base the sales of stores that were added as a result of our acquisition of The Habit Restaurants, Inc. on March 18, 2020, and that were open for one year or more. • Gross unit openings reflects new openings by us and our franchisees.
As of the beginning of the second quarter of 2022, as a result of our progress towards exiting Russia and our decision to reclass future net profits attributable to Russia subsequent to the date of invasion from the Division segments in which those profits were earned to Unallocated Other income (see Notes 3 and 19), we elected to remove all Russia units from our unit count as well as to begin excluding those units’ associated sales from our system sales totals.
As of the beginning of the second quarter of 2022, as a result of our progress towards exiting Russia and our decision to reclass future net profits attributable to Russia subsequent to the date of invasion of Ukraine from the Division segments in which those profits were earned to Unallocated Other income (see Notes 3 and 19), we elected to remove all Russia units from our unit count as well as to begin excluding those units’ associated sales from our system sales totals.
Rather, the Company believes that the presentation of these non-GAAP measurements provide additional information to investors to facilitate the comparison of past and present operations. 29 Special Items are not included in any of our Division segment results as the Company does not believe they are indicative of our ongoing operations due to their size and/or nature.
Rather, the Company believes that the presentation of these non-GAAP measurements provide additional information to investors to facilitate the comparison of past and present operations. Special Items are not included in any of our Division segment results as the Company does not believe they are indicative of our ongoing operations due to their size and/or nature.
Our chief operating decision maker does not consider the impact of Special Items when assessing segment performance. Company restaurant profit is defined as Company sales less Company restaurant expenses, both of which appear on the face of our Consolidated Statements of Income.
Our chief operating decision maker does not consider the impact of Special Items when assessing segment performance. 31 Company restaurant profit is defined as Company sales less Company restaurant expenses, both of which appear on the face of our Consolidated Statements of Income.
As of December 31, 2022, YUM consists of four operating segments: • The KFC Division which includes our worldwide operations of the KFC concept • The Taco Bell Division which includes our worldwide operations of the Taco Bell concept • The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept • The Habit Burger Grill Division which includes our worldwide operations of the Habit Burger Grill concept Through our Recipe for Good Growth we intend to unlock the growth potential of our Concepts and YUM, drive increased collaboration across our Concepts and geographies and consistently deliver better customer experiences, improved unit economics and higher rates of growth.
As of December 31, 2023, YUM consists of four operating segments: • The KFC Division which includes our worldwide operations of the KFC concept • The Taco Bell Division which includes our worldwide operations of the Taco Bell concept • The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept • The Habit Burger Grill Division which includes our worldwide operations of the Habit Burger Grill concept Through our Recipe for Good Growth we intend to unlock the growth potential of our Concepts and YUM, drive increased collaboration across our Concepts and geographies and consistently deliver better customer experiences, improved unit economics and higher rates of growth.
When we refranchise restaurants, we include goodwill in the carrying amount of the restaurants disposed of based on the relative fair values of the portion of the reporting unit disposed of in the refranchising versus the portion of the reporting unit 46 that will be retained.
When we refranchise restaurants, we include goodwill in the carrying amount of the restaurants disposed of based on the relative fair values of the portion of the reporting unit disposed of in the refranchising versus the portion of the reporting unit that will be retained.
Our allocation strategy for capital expenditures includes: • Run-rate capital expenditures consisting of company restaurant repairs, maintenance and remodels, support of our digital and technology initiatives and project-specific capital expenditures, • Targeted new company unit development to spur additional growth that is largely funded through refranchising a comparable number of existing company units, and • Strategic investments that create incremental value for shareholders and franchisees.
Our allocation strategy for investing activities includes: • Run-rate capital expenditures consisting of company restaurant repairs, maintenance and remodels, support of our digital and technology initiatives and project-specific capital expenditures, • Targeted new company unit development to spur additional growth that is largely funded through refranchising a comparable number of existing company units, and • Strategic investments that create incremental value for shareholders and franchisees.
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. Of the over 55,000 restaurants, 98% are operated by franchisees.
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. Of the over 58,000 restaurants, 98% are operated by franchisees.
Fair value is an estimate of the price a willing buyer would pay for the intangible asset and is generally estimated by discounting the expected future after-tax cash flows associated with the intangible asset. Our most significant indefinite-lived intangible asset is our Habit Burger Grill brand asset with a book value of $96 million at December 31, 2022.
Fair value is an estimate of the price a willing buyer would pay for the intangible asset and is generally estimated by discounting the expected future after-tax cash flows associated with the intangible asset. Our most significant indefinite-lived intangible asset is our Habit Burger Grill brand asset with a book value of $96 million at December 31, 2023.
Brands, Inc. and its subsidiaries (collectively referred to herein as the “Company”, “YUM”, “we”, “us” or “our”) franchise or operate a system of over 55,000 restaurants in more than 155 countries and territories, primarily under the concepts of KFC, Taco Bell, Pizza Hut and The Habit Burger Grill (collectively, the “Concepts”).
Brands, Inc. and its subsidiaries (collectively referred to herein as the “Company”, “YUM”, “we”, “us” or “our”) franchise or operate a system of over 58,000 restaurants in more than 155 countries and territories, primarily under the concepts of KFC, Taco Bell, Pizza Hut and The Habit Burger Grill (collectively, the “Concepts”).
Throughout this MD&A, we commonly discuss the following performance metrics: 28 • Same-store sales growth is the estimated percentage change in system sales of all restaurants that have been open and in the YUM system for one year or more (except as noted below), including those temporarily closed.
Throughout this MD&A, we commonly discuss the following performance metrics: 30 • Same-store sales growth is the estimated percentage change in system sales of all restaurants that have been open and in the YUM system for one year or more (except as noted below), including those temporarily closed.
The net periodic benefit cost we will record in 2023 is also impacted by the discount rate, as well as the long-term rates of return on plan assets and mortality assumptions we selected at our measurement date.
The net periodic benefit cost we will record in 2024 is also impacted by the discount rate, as well as the long-term rates of return on plan assets and mortality assumptions we selected at our measurement date.
It is our intent to use these operating cash flows to continue to invest in growing our business and pay a competitive dividend, with any remaining excess then returned to shareholders through share repurchases.
It is our intent to use these operating cash flows to continue to invest in growing our business and pay a competitive dividend, with any remaining excess then returned to shareholders through debt paydowns and share repurchases.
As of our fourth quarter 2022 annual impairment testing date, the fair values of all of our indefinite-lived intangible assets were in excess of their respective carrying values and no impairment was recorded.
As of our fourth quarter 2023 annual impairment testing date, the fair values of all of our indefinite-lived intangible assets were in excess of their respective carrying values and no impairment was recorded.
The change was primarily driven by lower share repurchases and higher current year net borrowings. Liquidity and Capital Resources We have historically generated substantial cash flows from our extensive franchise operations, which require a limited YUM investment, and from the operations of our Company-owned stores.
The change was primarily driven by lower net borrowings, partially offset by lower current year share repurchases. Liquidity and Capital Resources We have historically generated substantial cash flows from our extensive franchise operations, which require a limited YUM investment, and from the operations of our Company-owned stores.
Our purchase obligations relate primarily to marketing, information technology and supply agreements. We have purchase obligations of approximately $425 million at December 31, 2022, with approximately $225 million due within the next 12 months. In addition to our contractual and other obligations, we seek to pay a competitive dividend and return excess cash to shareholders through share repurchases.
Our purchase obligations relate primarily to marketing, information technology and supply agreements. We have purchase obligations of approximately $425 million at December 31, 2023, with approximately $250 million due within the next 12 months. In addition to our contractual and other obligations, we seek to pay a competitive dividend and return excess cash to shareholders through share repurchases.
We believe that our ongoing cash from operations, cash on hand, which was approximately $375 million at December 31, 2022, and availability under our Revolving Facility will be sufficient to fund our cash requirements over the next twelve months. Our material cash requirements include the following contractual and other obligations.
We believe that our ongoing cash from operations, cash on hand, which was approximately $500 million at December 31, 2023, and availability under our Revolving Facility will be sufficient to fund our cash requirements over the next twelve months. Our material cash requirements include the following contractual and other obligations.
For our U.S. plans, we measured our PBOs using a discount rate of 5.60% at December 31, 2022.
For our U.S. plans, we measured our PBOs using a discount rate of 5.60% at December 31, 2023.
In addition to the results provided in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”), the Company provides the following non-GAAP measurements. • Diluted Earnings Per Share excluding Special Items (as defined below); • Effective Tax Rate excluding Special Items; • Core Operating Profit and Core Operating Profit excluding the impact of the 53rd week in 2019.
In addition to the results provided in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”), the Company provides the following non-GAAP measurements. • Diluted Earnings Per Share excluding Special Items (as defined below); • Effective Tax Rate excluding Special Items; • Core Operating Profit.
However, given our decision to exit Russia and our pledge to direct any future net profits attributable to Russia subsequent to the date of invasion to humanitarian efforts, we reclassed such resulting net profits from the Division segment results in which they were earned to Unallocated Other income.
However, given our decision to exit Russia and our pledge to direct any future net profits attributable to Russia subsequent to the date of invasion to humanitarian efforts, we reclassed such net operating profits or losses from the Division segment results in which they were earned to Unallocated Other income (expense).
A 50 basis-point increase in this discount rate would have decreased these U.S. plans’ PBOs by approximately $41 million at our measurement date. Conversely, a 50 basis-point decrease in this discount rate would have increased our U.S. plans’ PBOs by approximately $46 million at our measurement date.
A 50 basis-point increase in this discount rate would have decreased these U.S. plans’ PBOs by approximately $40 million at our measurement date. Conversely, a 50 basis-point decrease in this discount rate would have increased our U.S. plans’ PBOs by approximately $45 million at our measurement date.
Additionally, interest on the underpayment is estimated to be approximately $780 million through December 31, 2022. The proposed underpayment relates primarily to a series of reorganizations we undertook during that year in connection with the business realignment of our corporate and management reporting structure along brand lines.
Additionally, interest on the underpayment is estimated to be approximately $1.1 billion through December 31, 2023. The proposed underpayment relates primarily to a series of reorganizations we undertook during that year in connection with the business realignment of our corporate and management reporting structure along brand lines.
This quarterly dividend will be distributed March 10, 2023 to shareholders of record at the close of business on February 22, 2023, and will total approximately $170 million. In September 2022, our Board of Directors authorized share repurchases of up to $2 billion (excluding applicable transaction fees) of our outstanding Common Stock through June 30, 2024.
This quarterly dividend will be distributed March 8, 2024, to shareholders of record at the close of business on February 21, 2024, and will total approximately $190 million. In September 2022, our Board of Directors authorized share repurchases of up to $2 billion (excluding applicable transaction fees) of our outstanding Common Stock through June 30, 2024.
Our annual operating cash flows have been in excess of $1.3 billion in each of the past four years and we expect that to continue to be the case in 2023.
Our annual operating cash flows have been in excess of $1.3 billion in each of the past five years and we expect that to continue to be the case in 2024.
Others may consider the fair value of these future royalties as fair value disposed of and thus would conclude that a larger percentage of a reporting unit’s fair value is disposed of in a refranchising transaction. During 2022, refranchising activity completed by the Company was limited and the write-off of goodwill associated with these transactions was approximately $5 million.
Others may consider the fair value of these future royalties as fair value disposed of and thus would conclude that a larger percentage of a reporting unit’s fair value is disposed of in a refranchising transaction. During 2023, refranchising activity completed by the Company was limited and the write-off of goodwill associated with these transactions was less than $1 million.
We will recognize approximately $1 million of gain in net periodic benefit cost in 2023 versus $11 million of loss recognized in 2022. Income Taxes At December 31, 2022, we had valuation allowances of $458 million to reduce our $1,558 million of deferred tax assets to amounts that are more likely than not to be realized.
We will recognize approximately $1 million of loss in net periodic benefit cost in 2024 versus $1 million of gain recognized in 2023. Income Taxes At December 31, 2023, we had valuation allowances of $386 million to reduce our $1,758 million of deferred tax assets to amounts that are more likely than not to be realized.
Pension Plans Certain of our employees are covered under defined benefit pension plans. Our two most significant plans are in the U.S. and combined had a projected benefit obligation (“PBO”) of $755 million and a fair value of plan assets of $664 million at December 31, 2022.
Pension Plans Certain of our employees are covered under defined benefit pension plans. Our two most significant plans are in the U.S. and combined had a projected benefit obligation (“PBO”) of $778 million and a fair value of plan assets of $680 million at December 31, 2023.
We intend to support this growth and development through a capital and operating structure that: • Invests capital in a manner consistent with an asset light, franchisor model; • Allocates G&A in an efficient manner that provides leverage to operating profit growth while at the same time opportunistically investing in strategic growth initiatives; • Pays a competitive dividend and returns excess cash to shareholders through share repurchases; and • Targets a consolidated net leverage ratio that balances shareholder returns, cost of capital and flexibility against various risk factors.
We intend to support this growth and development through a capital and operating structure that: • Invests capital in a manner consistent with an asset light, franchisor model; • Allocates G&A in an efficient manner that provides leverage to operating profit growth while at the same time opportunistically investing in strategic growth initiatives; • Maximize shareholder return through a combination of paying a competitive dividend and returning excess free cash flow through debt paydowns and share repurchases; and • Targets a consolidated net leverage ratio that balances shareholder returns, cost of capital and flexibility against various risk factors.
Impact of Foreign Currency Translation on Operating Profit Changes in foreign currency exchange rates negatively impacted the translation of our foreign currency denominated Divisional Operating Profit by $118 million for the year ended December 31, 2022. This included a negative impact to our KFC Division Operating Profit of $98 million for the year ended December 31, 2022.
Impact of Foreign Currency Translation on Operating Profit Changes in foreign currency exchange rates negatively impacted the translation of our foreign currency denominated Divisional Operating Profit by $49 million for the year ended December 31, 2023. This included a negative impact to our KFC Division Operating Profit of $41 million for the year ended December 31, 2023.
A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon settlement. At December 31, 2022, we had $128 million of unrecognized tax benefits, $82 million of which would impact the effective tax rate if recognized.
A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon settlement. At December 31, 2023, we had $151 million of unrecognized tax benefits, $102 million of which would impact the effective income tax rate if recognized.
In 2023, we expect that company store investments will exceed refranchising proceeds by $55 to $65 million, primarily driven by our strategy to accelerate growth of Habit Burger Grill company units and continued investments in Taco Bell company restaurants.
In 2024, we expect that company store investments will exceed refranchising proceeds by $85 to $95 million, primarily driven by our strategy to accelerate growth of Habit Burger Grill company units and continued investments in Taco Bell company restaurants.
System sales reflect the results of all restaurants regardless of ownership, including Company-owned and franchise restaurants. Sales at franchise restaurants typically generate ongoing franchise and license fees for the Company at a rate of 3% to 6% of sales. Increasingly, customers are paying a fee to a third party to deliver or facilitate the ordering of our Concepts’ products.
Sales at franchise restaurants typically generate ongoing franchise and license fees for the Company at a rate of 3% to 6% of sales. Increasingly, customers are paying a fee to a third party to deliver or facilitate the ordering of our Concepts’ products.
In November 2022, YRIPL was notified that an administrative tribunal bench had been constituted to hear an appeal by DOE of certain findings of the January 2020 order, including claims that certain charges had been wrongly dropped and that an insufficient amount of penalty had been imposed. A hearing has been scheduled with the administrative tribunal on March 14, 2023.
In November 2022, YRIPL was notified that an administrative tribunal bench had been constituted to hear an appeal by DOE of certain findings of the January 2020 order, including claims that certain charges had been wrongly dropped and that an insufficient amount of penalty had been imposed.
The Company owned 6% of the Taco Bell units in the U.S. as of the end of 2022. % B/(W) % B/(W) 2022 2021 2022 2021 2020 Reported Ex FX Reported Ex FX System Sales $ 14,653 $ 13,280 $ 11,745 10 11 13 13 Same-Store Sales Growth (Decline) % 8 % 11 % (1) % N/A N/A N/A N/A Company sales $ 1,002 $ 944 $ 882 6 6 7 7 Franchise and property revenues 837 742 662 13 13 12 12 Franchise contributions for advertising and other services 598 552 487 8 8 14 14 Total revenues $ 2,437 $ 2,238 $ 2,031 9 9 10 10 Company restaurant profit $ 236 $ 225 $ 225 5 5 — — Company restaurant margin % 23.6 % 23.9 % 25.5 % (0.3) ppts.
The Company owned 7% of the Taco Bell units in the U.S. as of the end of 2023. % B/(W) % B/(W) 2023 2022 2023 2022 2021 Reported Ex FX Reported Ex FX System Sales $ 15,915 $ 14,653 $ 13,280 9 9 10 11 Same-Store Sales Growth (Decline) % 5 % 8 % 11 % N/A N/A N/A N/A Company sales $ 1,069 $ 1,002 $ 944 7 7 6 6 Franchise and property revenues 918 837 742 10 10 13 13 Franchise contributions for advertising and other services 654 598 552 9 9 8 8 Total revenues $ 2,641 $ 2,437 $ 2,238 8 8 9 9 Company restaurant profit $ 252 $ 236 $ 225 7 7 5 5 Company restaurant margin % 23.7 % 23.6 % 23.9 % 0.1 ppts. 0.1 ppts.
The Pizza Hut Division uses multiple distribution channels including delivery, dine-in and express (e.g. airports) and includes units operating under both the Pizza Hut and Telepizza brands. % B/(W) % B/(W) 2022 2021 2022 2021 2020 Reported Ex FX Reported Ex FX System Sales $ 12,853 $ 12,955 $ 11,955 (1) 3 8 6 Same-Store Sales Growth (Decline) % Even 7 % (6) % N/A N/A N/A N/A Company sales $ 21 $ 46 $ 76 (55) (55) (40) (42) Franchise and property revenues 607 597 552 2 5 8 6 Franchise contributions for advertising and other services 376 385 374 (2) (1) 3 2 Total revenues $ 1,004 $ 1,028 $ 1,002 (2) — 3 1 Company restaurant profit $ — $ 3 $ 3 NM NM (19) (24) Company restaurant margin % (2.2) % 6.8 % 5.1 % (9.0) ppts.
The Pizza Hut Division uses multiple distribution channels including delivery, dine-in and express (e.g. airports) and includes units operating under both the Pizza Hut and Telepizza brands. % B/(W) % B/(W) 2023 2022 2023 2022 2021 Reported Ex FX Reported Ex FX System Sales $ 13,315 $ 12,853 $ 12,955 4 5 (1) 3 Same-Store Sales Growth (Decline) % 2 Even 7 % N/A N/A N/A N/A Company sales $ 14 $ 21 $ 46 (33) (33) (55) (55) Franchise and property revenues 622 607 597 3 4 2 5 Franchise contributions for advertising and other services 383 376 385 2 2 (2) (1) Total revenues $ 1,019 $ 1,004 $ 1,028 1 2 (2) — Company restaurant profit $ — $ — $ 3 NM NM NM NM Company restaurant margin % 0.1 % (2.2) % 6.8 % 2.3 ppts. 2.3 ppts.
Additionally, 99% of the KFC Division units were operated by franchisees as of the end of 2022. % B/(W) % B/(W) 2022 2021 2022 2021 2020 Reported Ex FX Reported Ex FX System Sales $ 31,116 $ 31,365 $ 26,289 (1) 6 19 16 Same-Store Sales Growth (Decline) % 4 % 11 % (9) % N/A N/A N/A N/A Company sales $ 491 $ 596 $ 506 (18) (11) 18 12 Franchise and property revenues 1,645 1,557 1,295 6 12 20 17 Franchise contributions for advertising and other services 698 640 471 9 16 36 30 Total revenues $ 2,834 $ 2,793 $ 2,272 1 8 23 18 Company restaurant profit $ 65 $ 106 $ 67 (39) (33) 58 48 Company restaurant margin % 13.2 % 17.7 % 13.2 % (4.5) ppts.
Additionally, 99% of the KFC Division units were operated by franchisees as of the end of 2023. % B/(W) % B/(W) 2023 2022 2023 2022 2021 Reported Ex FX Reported Ex FX System Sales $ 33,863 $ 31,116 $ 31,365 9 12 (1) 6 Same-Store Sales Growth (Decline) % 7 % 4 % 11 % N/A N/A N/A N/A Company sales $ 484 $ 491 $ 596 (2) 2 (18) (11) Franchise and property revenues 1,698 1,645 1,557 3 6 6 12 Franchise contributions for advertising and other services 648 698 640 (7) (6) 9 16 Total revenues $ 2,830 $ 2,834 $ 2,793 — 2 1 8 Company restaurant profit $ 67 $ 65 $ 106 2 7 (39) (33) Company restaurant margin % 13.7 % 13.2 % 17.7 % 0.5 ppts. 0.6 ppts.
Contingencies As discussed in Note 20, as a result of an audit by the Internal Revenue Service (“IRS”) for fiscal years 2013 through 2015, in August 2022, we received a Revenue Agent’s Report (“RAR”) from the IRS asserting an underpayment of tax of $2.1 billion plus $418 million in penalties for the 2014 fiscal year.
This authorization does not obligate the Company to acquire any specific number of shares. 46 Contingencies As discussed in Note 20, as a result of an audit by the Internal Revenue Service (“IRS”) for fiscal years 2013 through 2015, in August 2022, we received a Revenue Agent’s Report (“RAR”) from the IRS asserting an underpayment of tax of $2.1 billion plus $418 million in penalties for the 2014 fiscal year.
To the extent operating cash flows plus other sources of cash do not cover our anticipated cash needs, we maintain a $1.25 billion Revolving Facility under our Credit Agreement (see Note 11) which had $279 million outstanding as of December 31, 2022.
To the extent operating cash flows plus other sources of cash do not cover our anticipated cash needs, we maintain a $1.25 billion Revolving Facility under our Credit Agreement (see Note 11) that was undrawn as of December 31, 2023.
G&A expenses $ 191 $ 174 $ 158 (9) (10) (11) (10) Franchise and property expenses 33 33 33 1 — (3) (3) Franchise advertising and other services expense 599 553 484 (8) (8) (14) (14) Operating Profit $ 850 $ 758 $ 696 12 12 9 9 % Increase (Decrease) Unit Count 2022 2021 2020 2022 2021 Franchise 7,754 7,329 6,952 6 5 Company-owned 464 462 475 — (3) Total 8,218 7,791 7,427 5 5 Company sales and Company restaurant margin % In 2022, the increase in Company sales was driven by same-store sales growth of 8% and unit growth partially offset by refranchising.
G&A expenses $ 204 $ 191 $ 174 (7) (7) (9) (10) Franchise and property expenses 32 33 33 4 4 1 — Franchise advertising and other services expense 644 599 553 (7) (7) (8) (8) Operating Profit $ 944 $ 850 $ 758 11 11 12 12 % Increase (Decrease) Unit Count 2023 2022 2021 2023 2022 Franchise 8,081 7,754 7,329 4 6 Company-owned 483 464 462 4 — Total 8,564 8,218 7,791 4 5 Company sales and Company restaurant margin % In 2023, the increase in Company sales was driven by company same-store sales growth of 5% and unit growth partially offset by refranchising.
The Company owned 85% of the Habit Burger Grill units in the U.S. as of December 31, 2022. % B/(W) % B/(W) 2022 2021 2022 2021 2020 Reported Ex FX Reported Ex FX System Sales $ 661 $ 588 $ 370 12 12 59 59 Same-Store Sales Growth (Decline) % (1) % 16 % N/A N/A N/A N/A N/A Total revenues $ 567 $ 525 $ 347 8 8 51 51 Operating Profit (Loss) $ (24) $ 2 $ (22) NM NM 111 111 % Increase (Decrease) Unit Count 2022 2021 2020 2022 2021 Franchise 63 42 34 50 24 Company-owned 286 276 253 4 9 Total 349 318 287 10 11 Corporate & Unallocated % B/(W) (Expense)/Income 2022 2021 2020 2022 2021 Corporate and unallocated G&A $ (297) $ (260) $ (312) (14) 17 Unallocated Franchise and property expenses (6) 1 (4) NM 115 Unallocated Refranchising gain (loss) (See Note 5) 27 35 34 (22) 2 Unallocated Other income (expense) 52 (14) (146) NM NM Investment income (expense), net (See Note 5) 11 86 74 (88) 16 Other pension income (expense) (See Note 15) (9) (7) (14) (26) 48 Interest expense, net (527) (544) (543) 3 — Income tax provision (See Note 18) (337) (99) (116) (242) 15 Effective tax rate (See Note 18) 20.3 % 5.9 % 11.4 % (14.4) ppts. 5.5 ppts.
The Company owned 84% of the Habit Burger Grill units in the U.S. as of December 31, 2023. % B/(W) % B/(W) 2023 2022 2023 2022 2021 Reported Ex FX Reported Ex FX System Sales $ 696 $ 661 $ 588 6 6 12 12 Same-Store Sales Growth (Decline) % (3) % (1) % 16 % N/A N/A N/A N/A Total revenues $ 586 $ 567 $ 525 3 3 8 8 Operating Profit (Loss) $ (14) $ (24) $ 2 42 42 NM NM % Increase (Decrease) Unit Count 2023 2022 2021 2023 2022 Franchise 71 63 42 13 50 Company-owned 307 286 276 7 4 Total 378 349 318 8 10 Corporate & Unallocated % B/(W) (Expense)/Income 2023 2022 2021 2023 2022 Corporate and unallocated G&A $ (326) $ (297) $ (260) (10) (14) Unallocated Franchise and property income (expense) (1) (6) 1 NM NM Unallocated Refranchising gain (loss) (See Note 5) 29 27 35 NM NM Unallocated Other income (expense) (9) 52 (14) NM NM Investment income (expense), net (See Note 5) 7 11 86 NM NM Other pension income (expense) (See Note 15) 6 (9) (7) NM NM Interest expense, net (513) (527) (544) 3 3 Income tax provision (See Note 18) (221) (337) (99) 35 (242) Effective tax rate (See Note 18) 12.1 % 20.3 % 5.9 % 8.2 ppts.
This authorization took effect during the fourth quarter of 2022 upon the exhaustion of a prior authorization approved in May 2021. As of December 31, 2022, we have remaining capacity to repurchase up to $1.75 billion of Common Stock under the September 2022 authorization. This authorization does not obligate the Company to acquire any specific number of shares.
This authorization took effect during the fourth quarter of 2022 upon the exhaustion of a prior authorization approved in May 2021. As of December 31, 2023, we have remaining capacity to repurchase up to $1.7 billion of Common Stock under the September 2022 authorization.
G&A expenses $ 390 $ 377 $ 346 (3) (6) (9) (7) Franchise and property expenses 69 74 91 7 (3) 18 20 Franchise advertising and other services expense 684 627 465 (9) (15) (35) (29) Operating Profit $ 1,198 $ 1,230 $ 922 (3) 5 33 29 % Increase (Decrease) Unit Count 2022 2021 2020 2022 2021 Franchise 27,541 26,643 24,710 3 8 Company-owned 219 291 290 (25) — Total 27,760 26,934 25,000 3 8 Company sales and Company restaurant margin % In 2022, the decrease in Company sales, excluding the impacts of foreign currency translation, was driven by the suspension of operations of our 70 company-owned KFC restaurants in Russia, partially offset by Company same-store sales growth of 1%.
G&A expenses $ 383 $ 390 $ 377 2 2 (3) (6) Franchise and property expenses 72 69 74 (5) (6) 7 (3) Franchise advertising and other services expense 648 684 627 5 4 (9) (15) Operating Profit $ 1,304 $ 1,198 $ 1,230 9 12 (3) 5 40 % Increase (Decrease) Unit Count 2023 2022 2021 2023 2022 Franchise 29,680 27,541 26,643 8 3 Company-owned 220 219 291 — (25) Total 29,900 27,760 26,934 8 3 Company sales and Company restaurant margin % In 2023, the increase in Company sales, excluding the impact of foreign currency translation, was driven by Company same-store sales growth of 5%, partially offset by the suspension of operations of our 70 company owned KFC restaurants in Russia.
Additionally, we have incurred certain expenses related to the transfer of the businesses and other costs related to our exit from Russia which we have recorded within Corporate and unallocated.
Additionally, we incurred certain expenses related to the dispositions of the businesses and other one-time costs related to our exit from Russia which we recorded within Corporate and unallocated G&A and Unallocated Franchise and property expenses.
Reconciliation of GAAP Operating Profit to Company Restaurant Profit 2022 KFC Division Taco Bell Division Pizza Hut Division Habit Burger Grill Division Corporate and Unallocated Consolidated GAAP Operating Profit (Loss) $ 1,198 $ 850 $ 387 $ (24) $ (224) $ 2,187 Less: Franchise and property revenues 1,645 837 607 7 — 3,096 Franchise contributions for advertising and other services 698 598 376 2 — 1,674 Add: General and administrative expenses 390 191 211 51 297 1,140 Franchise and property expenses 69 33 13 2 6 123 Franchise advertising and other services expense 684 599 382 2 — 1,667 Refranchising (gain) loss — — — — (27) (27) Other (income) expense 67 (2) (10) 4 (52) 7 Company restaurant profit $ 65 $ 236 $ — $ 26 — $ 327 Company sales $ 491 $ 1,002 $ 21 $ 558 — $ 2,072 Company restaurant margin % 13.2 % 23.6 % (2.2) % 4.7 % N/A 15.8 % 2021 KFC Division Taco Bell Division Pizza Hut Division Habit Burger Grill Division Corporate and Unallocated Consolidated GAAP Operating Profit (Loss) $ 1,230 $ 758 $ 387 $ 2 $ (238) $ 2,139 Less: Franchise and property revenues 1,557 742 597 4 — 2,900 Franchise contributions for advertising and other services 640 552 385 1 — 1,578 Add: General and administrative expenses 377 174 201 48 260 1,060 Franchise and property expenses 74 33 11 — (1) 117 Franchise advertising and other services expense 627 553 395 1 — 1,576 Refranchising (gain) loss — — — — (35) (35) Other (income) expense (5) 1 (9) 1 14 2 Company restaurant profit $ 106 $ 225 $ 3 $ 47 $ — $ 381 Company sales $ 596 $ 944 $ 46 $ 520 $ — $ 2,106 Company restaurant margin % 17.7 % 23.9 % 6.8 % 9.0 % N/A 18.1 % 36 2020 KFC Division Taco Bell Division Pizza Hut Division Habit Burger Grill Division Corporate and Unallocated Consolidated GAAP Operating Profit (Loss) $ 922 $ 696 $ 335 $ (22) $ (428) $ 1,503 Less: Franchise and property revenues 1,295 662 552 1 — 2,510 Franchise contributions for advertising and other services 471 487 374 — — 1,332 Add: General and administrative expenses 346 158 215 33 312 1,064 Franchise and property expenses 91 33 17 — 4 145 Franchise advertising and other services expense 465 484 365 — — 1,314 Refranchising (gain) loss — — — — (34) (34) Other (income) expense 9 3 (3) (1) 146 154 Company restaurant profit $ 67 $ 225 $ 3 $ 9 $ — $ 304 Company sales $ 506 $ 882 $ 76 $ 346 $ — $ 1,810 Company restaurant margin % 13.2 % 25.5 % 5.1 % 2.6 % N/A 16.8 % Items Impacting Reported Results and/or Reasonably Likely to Impact Future Results The following items impacted reported results in 2022 and/or 2021 and/or are reasonably likely to impact future results.
Reconciliation of GAAP Operating Profit to Company Restaurant Profit 2023 KFC Division Taco Bell Division Pizza Hut Division Habit Burger Grill Division Corporate and Unallocated Consolidated GAAP Operating Profit (Loss) $ 1,304 $ 944 $ 391 $ (14) $ (307) $ 2,318 Less: Franchise and property revenues 1,698 918 622 9 — 3,247 Franchise contributions for advertising and other services 648 654 383 2 — 1,687 Add: General and administrative expenses 383 204 221 59 326 1,193 Franchise and property expenses 72 32 15 3 1 123 Franchise advertising and other services expense 648 644 389 2 — 1,683 Refranchising (gain) loss — — — — (29) (29) Other (income) expense 6 — (11) 10 9 14 Company restaurant profit $ 67 $ 252 $ — $ 49 — $ 368 Company sales $ 484 $ 1,069 $ 14 $ 575 — $ 2,142 Company restaurant margin % 13.7 % 23.7 % 0.1 % 8.5 % N/A 17.2 % 38 2022 KFC Division Taco Bell Division Pizza Hut Division Habit Burger Grill Division Corporate and Unallocated Consolidated GAAP Operating Profit (Loss) $ 1,198 $ 850 $ 387 $ (24) $ (224) $ 2,187 Less: Franchise and property revenues 1,645 837 607 7 — 3,096 Franchise contributions for advertising and other services 698 598 376 2 — 1,674 Add: General and administrative expenses 390 191 211 51 297 1,140 Franchise and property expenses 69 33 13 2 6 123 Franchise advertising and other services expense 684 599 382 2 — 1,667 Refranchising (gain) loss — — — — (27) (27) Other (income) expense 67 (2) (10) 4 (52) 7 Company restaurant profit $ 65 $ 236 $ — $ 26 $ — $ 327 Company sales $ 491 $ 1,002 $ 21 $ 558 $ — $ 2,072 Company restaurant margin % 13.2 % 23.6 % (2.2) % 4.7 % N/A 15.8 % 2021 KFC Division Taco Bell Division Pizza Hut Division Habit Burger Grill Division Corporate and Unallocated Consolidated GAAP Operating Profit (Loss) $ 1,230 $ 758 $ 387 $ 2 $ (238) $ 2,139 Less: Franchise and property revenues 1,557 742 597 4 — 2,900 Franchise contributions for advertising and other services 640 552 385 1 — 1,578 Add: General and administrative expenses 377 174 201 48 260 1,060 Franchise and property expenses 74 33 11 — (1) 117 Franchise advertising and other services expense 627 553 395 1 — 1,576 Refranchising (gain) loss — — — — (35) (35) Other (income) expense (5) 1 (9) 1 14 2 Company restaurant profit $ 106 $ 225 $ 3 $ 47 $ — $ 381 Company sales $ 596 $ 944 $ 46 $ 520 $ — $ 2,106 Company restaurant margin % 17.7 % 23.9 % 6.8 % 9.0 % N/A 18.1 % Items Impacting Reported Results and/or Reasonably Likely to Impact Future Results The following items impacted reported results in 2023 and/or 2022 and/or are reasonably likely to impact future results.
Additionally, every 100 basis point variation in actual return on plan assets versus our expected return of 6.25% will impact our unrecognized pre-tax actuarial net loss by approximately $8 million. 47 An increase in actuarial loss due to changes in plan assets, primarily due to 2022 asset returns, has contributed to an unrecognized pre-tax actuarial net loss of $70 million included in Accumulated other comprehensive income for these U.S. plans at December 31, 2022.
Additionally, every 100 basis point variation in actual return on plan assets versus our expected return of 6.35% will impact our unrecognized pre-tax actuarial net loss by approximately $8 million. We have an unrecognized pre-tax actuarial net loss of $84 million included in Accumulated other comprehensive income for these U.S. plans at December 31, 2023.
We ended 2022 with a consolidated net leverage ratio of 5.0x EBITDA. We continually reassess our optimal leverage ratio to maximize shareholder returns. We target a capital structure which we believe provides an attractive balance between optimized interest rates, duration and flexibility with diversified sources of liquidity and maturities spread over multiple years.
We continually reassess our optimal leverage ratio to maximize shareholder returns. We target a capital structure which we believe provides an attractive balance between optimized interest rates, duration and flexibility with diversified sources of liquidity and maturities spread over multiple years. We currently have credit ratings of BB (Standard & Poor’s)/Ba2 (Moody’s).
Debt Obligations and Interest Payments As of December 31, 2022, approximately 94%, including the impact of interest rate swaps, of our $11.6 billion of total debt outstanding, excluding the Revolving Facility balance, finance leases and debt issuance costs and discounts, is fixed with an effective overall interest rate of approximately 4.4%.
Debt Obligations and Interest Payments As of December 31, 2023, approximately 94%, including the impact of interest rate swaps, of our $11.2 billion of total debt outstanding, excluding finance leases and debt issuance costs and discounts, is fixed with an effective overall interest rate of approximately 4.6%. We ended 2023 with a consolidated net leverage ratio of 4.2x EBITDA .
We are awaiting the IRS Examination Division’s Rebuttal to our Protest. When that Rebuttal is filed, we intend to pursue independent review by the IRS Office of Appeals. Also, as discussed in Note 20, on January 29, 2020, we received an order from the Special Director of the Directorate of Enforcement (“DOE”) in India imposing a penalty on Yum!
We have received the IRS Examination Division’s Rebuttal to our Protest and the case has been accepted by the IRS Office of Appeals. Also, as discussed in Note 20, on January 29, 2020, we received an order from the Special Director of the Directorate of Enforcement (“DOE”) in India imposing a penalty on Yum!
The fair values of all our reporting units with goodwill balances were in excess of their respective carrying values as of our fourth quarter 2022 goodwill testing date.
The fair values of all our reporting units with goodwill balances were in excess of their respective carrying values as of our fourth quarter 2023 goodwill testing date, with all but the Habit Burger Grill reporting unit having fair values that were substantially in excess of their respective carrying values.
For discussion of our results of operations for 2021 compared to 2020, refer to the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 23, 2022. 2022 financial highlights: % Change System Sales, ex FX Same-Store Sales Units GAAP Operating Profit Core Operating Profit KFC Division +6 +4 +3 (3) +5 Taco Bell Division +11 +8 +5 +12 +12 Pizza Hut Division +3 Even +4 Even +4 Worldwide +6 +4 +4 +2 +6 Additionally: • As of the beginning of the second quarter, we elected to remove 1,165 Russia units from our unit count and begin excluding their associated sales from our total system sales.
For discussion of our results of operations for 2022 compared to 2021, refer to the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 27, 2023. 2023 financial highlights: % Change System Sales, ex FX Same-Store Sales Units GAAP Operating Profit Core Operating Profit 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 Additionally: • Foreign currency translation unfavorably impacted Divisional Operating Profit by $49 million for the year ended December 31, 2023.
As a result, concurrent with the initial public offering we began recording changes in fair value in Investment (income) expense, net in our Consolidated Statements of Income and recognized pre-tax investment income of $11 million and $87 million, in the years ended December 31, 2022 and 2021, respectively. 38 KFC Division The KFC Division has 27,760 units, 86% of which are located outside the U.S.
As a result, concurrent with the initial public offering we began recording changes in fair value in Investment (income) expense, net in our Consolidated Statements of Income and recognized pre-tax investment income of $8 million and $11 million in the years ended December 31, 2023 and 2022, respectively.
In 2022, the decrease in Company restaurant margin percentage was driven by commodity and wage inflation partially offset by same-store sales growth. Franchise and property revenues In 2022, the increase in Franchise and property revenues was driven by franchise same-store sales growth of 8% and unit growth.
In 2023, the increase in Company restaurant margin percentage was driven by same-store sales growth partially offset by higher labor costs, commodity inflation and increases in other restaurant operating costs. Franchise and property revenues In 2023, the increase in Franchise and property revenues was driven by franchise same-store sales growth of 6% and unit growth.
A 100 basis point change in our expected long-term rate of return on plan assets assumption would impact our 2023 U.S. net periodic benefit cost by approximately $8 million.
We believe this rate is appropriate given the composition of our plan assets and historical market returns thereon. A 100 basis point change in our expected long-term rate of return on plan assets assumption would impact our 2024 U.S. net periodic benefit cost by approximately $8 million.
Results of Operations Summary All comparisons within this summary are versus the same period a year ago. Comparisons versus 2019, unless otherwise stated, include the impact of a 53rd week in 2019.
Results of Operations Summary All comparisons within this summary are versus the same period a year ago.
The stay order remains in effect, and the next hearing in the Delhi High Court is scheduled for May 16, 2023. We deny liability and intend to continue vigorously defending this matter. See the Lease Guarantees section of Note 20 for discussion of our off-balance sheet arrangements.
We deny liability and intend to continue vigorously defending this matter. See the Lease Guarantees section of Note 20 for discussion of our off-balance sheet arrangements.
As it relates to our Habit Burger Grill reporting unit, which includes a goodwill balance of $66 million as of the end of 2022, the assumptions that are most impactful to our fair value estimate include future average unit volumes (“AUVs”) and restaurant unit counts.
As it relates to our Habit Burger Grill reporting unit, which includes a goodwill balance of $66 million as of the end of 2023, the assumptions that are most impactful to our fair value estimate include margin improvement, sales growth from net new units and same-store sales growth.
Our expected long-term rate of return on U.S. plan assets, for purposes of determining 2023 pension expense, at December 31, 2022, was 6.25%, net of administrative and investment fees paid from plan assets. We believe this rate is appropriate given the composition of our plan assets and historical market returns thereon.
Our estimated long-term rate of return on U.S. plan assets is based upon the weighted-average of historical and expected future returns for each asset category. Our expected long-term rate of return on U.S. plan assets, for purposes of determining 2024 pension expense, at December 31, 2023, was 6.35%, net of administrative and investment fees paid from plan assets.
(a) See Note 4 for the number of shares used in this calculation. 31 Performance Metrics % Increase (Decrease) Unit Count 2022 2021 2020 2022 2021 Franchise 54,371 52,373 49,255 4 6 Company-owned 990 1,051 1,098 (6) (4) Total 55,361 53,424 50,353 4 6 2022 2021 2020 Same-Store Sales Growth (Decline) % 4 10 (6) System Sales Growth (Decline) %, reported 2 16 (4) System Sales Growth (Decline) %, excluding FX 6 13 (4) System Sales Growth (Decline) %, excluding FX and 53rd week N/A N/A (3) Our system sales breakdown by Company and franchise sales was as follows: Year 2022 2021 2020 Consolidated Company sales (a) $ 2,072 $ 2,106 $ 1,810 Franchise sales 57,211 56,082 48,549 System sales 59,283 58,188 50,359 Foreign Currency Impact on System sales (b) (2,653) 1,277 N/A System sales, excluding FX $ 61,936 $ 56,911 $ 50,359 KFC Division Company sales (a) $ 491 $ 596 $ 506 Franchise sales 30,625 30,769 25,783 System sales 31,116 31,365 26,289 Foreign Currency Impact on System sales (b) (2,102) 1,000 N/A System sales, excluding FX $ 33,218 $ 30,365 $ 26,289 Taco Bell Division Company sales (a) $ 1,002 $ 944 $ 882 Franchise sales 13,651 12,336 10,863 System sales 14,653 13,280 11,745 Foreign Currency Impact on System sales (b) (52) 17 N/A System sales, excluding FX $ 14,705 $ 13,263 $ 11,745 Pizza Hut Division Company sales (a) $ 21 $ 46 $ 76 Franchise sales 12,832 12,909 11,879 System sales 12,853 12,955 11,955 Foreign Currency Impact on System sales (b) (499) 260 N/A System sales, excluding FX $ 13,352 $ 12,695 $ 11,955 Habit Burger Grill Division (c) Company sales (a) $ 558 $ 520 $ 346 Franchise sales 103 68 24 System sales 661 588 370 Foreign Currency Impact on System sales (b) — — N/A System sales, excluding FX $ 661 $ 588 $ 370 32 (a) Company sales represents sales from our Company-operated stores as presented on our Consolidated Statements of Income.
Performance Metrics % Increase (Decrease) Unit Count 2023 2022 2021 2023 2022 Franchise 57,691 54,371 52,373 6 4 Company-owned 1,017 990 1,051 3 (6) Total 58,708 55,361 53,424 6 4 2023 2022 2021 Same-Store Sales Growth (Decline) % 6 4 10 System Sales Growth (Decline) %, reported 8 2 16 System Sales Growth (Decline) %, excluding FX 10 6 13 33 Our system sales breakdown by Company and franchise sales was as follows: Year 2023 2022 2021 Consolidated Company sales (a) $ 2,142 $ 2,072 $ 2,106 Franchise sales 61,647 57,211 56,082 System sales 63,789 59,283 58,188 Negative (Positive) Foreign Currency Impact (b) 1,169 2,653 N/A System sales, excluding FX $ 64,958 $ 61,936 $ 58,188 KFC Division Company sales (a) $ 484 $ 491 $ 596 Franchise sales 33,379 30,625 30,769 System sales 33,863 31,116 31,365 Negative (Positive) Foreign Currency Impact (b) 965 2,102 N/A System sales, excluding FX $ 34,828 $ 33,218 $ 31,365 Taco Bell Division Company sales (a) $ 1,069 $ 1,002 $ 944 Franchise sales 14,846 13,651 12,336 System sales 15,915 14,653 13,280 Negative (Positive) Foreign Currency Impact (b) (3) 52 N/A System sales, excluding FX $ 15,912 $ 14,705 $ 13,280 Pizza Hut Division Company sales (a) $ 14 $ 21 $ 46 Franchise sales 13,301 12,832 12,909 System sales 13,315 12,853 12,955 Negative (Positive) Foreign Currency Impact (b) 207 499 N/A System sales, excluding FX $ 13,522 $ 13,352 $ 12,955 Habit Burger Grill Division Company sales (a) $ 575 $ 558 $ 520 Franchise sales 121 103 68 System sales 696 661 588 Negative (Positive) Foreign Currency Impact (b) — — N/A System sales, excluding FX $ 696 $ 661 $ 588 (a) Company sales represents sales from our Company-operated stores as presented on our Consolidated Statements of Income.
The discount rate incorporates rates of returns for historical refranchising market transactions and is commensurate with the risks and uncertainty inherent in the forecasted cash flows. We evaluate indefinite-lived intangible assets for impairment on an annual basis as of the beginning of our fourth quarter or more often if an event occurs or circumstances change that indicates impairment might exist.
We evaluate indefinite-lived intangible assets for impairment on an annual basis as of the beginning of our fourth quarter or more often if an event occurs or circumstances change that indicates impairment might exist.
Additionally, same-store sales growth is reflective of the strength of our Brands, the effectiveness of our operational and advertising initiatives and local economic and consumer trends.
We believe same-store sales growth is useful to investors because our results are heavily dependent on the results of our Concepts' existing store base. Additionally, same-store sales growth is reflective of the strength of our Brands, the effectiveness of our operational and advertising initiatives and local economic and consumer trends.
In July 2021, we concentrated management responsibility for European (excluding the UK) KFC franchise development, support operations and management oversight in Switzerland (the “KC Europe Reorganization”). Concurrent with this change in management responsibility, we completed intra-entity transfers of certain KFC IP rights from subsidiaries in the UK to subsidiaries in Switzerland.
Concurrent with this change in management responsibility, we completed intra-entity transfers of certain KFC IP rights from subsidiaries in the UK to subsidiaries in Switzerland, and later, additional European IP rights from subsidiaries in the U.S. to subsidiaries in Switzerland.
G&A In 2022, the increase in G&A, excluding the impacts of foreign currency translation, was driven by higher headcount and salaries and higher travel related expenses, partially offset by lower professional fees and lower expenses related to our annual incentive compensation programs. 41 Operating Profit In 2022, the increase in Operating Profit, excluding the impacts of foreign currency translation, was driven by unit growth.
G&A In 2023, the increase in G&A, excluding the impacts of foreign currency translation, was driven by higher headcount and salaries, higher professional fees and higher travel related expenses.
Our GAAP operating results presented herein reflect revenues from and expenses to support the Russian operations for Pizza Hut, prior to the date of transfer, and KFC, for the entirety of the year ended December 31, 2022, within their historical financial statement line items and operating segments.
In the second quarter of 2023, we completed our exit from the Russia market by selling the KFC business in Russia. Our GAAP operating results presented herein reflect revenues from and expenses to support the Russian operations for KFC and Pizza Hut prior to the dates of sale or transfer, within their historical financial statement line items and operating segments.
On August 16, 2021, Devyani executed an initial public offering and subsequently the fair value of this investment became readily determinable.
The minority interest was received in lieu of cash proceeds upon the refranchising of approximately 60 KFC restaurants in India. On August 16, 2021, Devyani executed an initial public offering and subsequently the fair value of this investment became readily determinable.
Corporate and unallocated G&A In 2022, the increase in Corporate and Unallocated G&A expenses was driven by higher headcount and salaries including personnel associated with our 2021 investments in digital and technology companies and expenses related to the divestiture of our Russia businesses, partially offset by lower current year expenses due to our annual incentive compensation programs.
G&A In 2023, the increase in G&A was driven by higher digital and technology expenses and higher headcount and salaries, partially offset by lower expenses related to our annual incentive compensation programs.
During the years ended December 31, 2022, 2021 and 2020, we recorded net refranchising gains of $6 million, $3 million and $8 million, respectively, that have been reflected as Special Items. 33 Additionally, during the years ended December 31, 2022, 2021 and 2020, we recorded net refranchising gains of $21 million, $32 million and $26 million, respectively, that have not been reflected as Special Items.
During the years ended December 31, 2023 and 2021, we recorded net refranchising losses of $5 million and $4 million, respectively, that have been reflected as Special Items.
Appropriate adjustments are made to the fair value determinations if such franchise agreement is determined to not be at prevailing market rates.
The fair value of the reporting unit retained is based on the price a willing buyer would pay for the reporting unit retained and includes the value of franchise agreements. Appropriate adjustments are made to the fair value determinations if such franchise agreement is determined to not be at prevailing market rates.
We have credit ratings of BB (Standard & Poor’s)/Ba2 (Moody’s) with a balance sheet consistent with highly-levered peer restaurant franchise companies. 43 The following table summarizes the future maturities of our outstanding long-term debt, excluding finance leases and debt issuance costs and discounts, as of December 31, 2022. 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2037 2043 Total Securitization Notes $ 39 $ 39 $ 39 $ 944 $ 875 $ 582 $ 565 $ 7 $ 682 $ 3,772 Credit Agreement 34 48 53 662 15 1,398 2,210 Revolving Facility 279 279 Subsidiary Senior Unsecured Notes 750 750 YUM Senior Unsecured Notes 325 800 1,050 $ 2,100 $ 325 $ 275 4,875 Total $ 398 $ 87 $ 92 $ 1,885 $ 1,640 $ 1,980 $ 565 $ 807 $ 1,732 $ 2,100 $ 325 $ 275 $ 11,886 Interest payments on the outstanding long-term debt in the table above total approximately $3.6 billion, with approximately $500 million due within the next twelve months on the outstanding amounts on a nominal basis.
The following table summarizes the future maturities of our outstanding long-term debt, excluding finance leases and debt issuance costs and discounts, as of December 31, 2023. 2024 2025 2026 2027 2028 2029 2030 2031 2032 2037 2043 Total Securitization Notes $ 938 $ 884 $ 595 $ 589 $ 737 $ 3,743 Credit Agreement $ 48 $ 53 661 15 1,399 2,176 Subsidiary Senior Unsecured Notes 750 750 YUM Senior Unsecured Notes $ 800 1,050 $ 2,100 $ 325 $ 275 4,550 Total $ 48 $ 53 $ 1,599 $ 1,649 $ 1,994 $ 589 $ 800 $ 1,787 $ 2,100 $ 325 $ 275 $ 11,219 Interest payments on the outstanding long-term debt in the table above total approximately $3.1 billion, with approximately $500 million due within the next twelve months on the outstanding amounts on a nominal basis.
G&A expenses $ 211 $ 201 $ 215 (5) (7) 6 7 Franchise and property expenses 13 11 17 (23) (25) 37 38 Franchise advertising and other services expense 382 395 365 3 2 (8) (7) Operating Profit $ 387 $ 387 $ 335 Even 4 16 13 % Increase (Decrease) Unit Count 2022 2021 2020 2022 2021 Franchise 19,013 18,359 17,559 4 5 Company-owned 21 22 80 (5) (73) Total 19,034 18,381 17,639 4 4 Company sales In 2022, the decrease in Company sales, excluding the impacts of foreign currency translation, was driven by the refranchising of stores in the United Kingdom.
G&A expenses $ 221 $ 211 $ 201 (5) (5) (5) (7) Franchise and property expenses 15 13 11 (16) (15) (23) (25) Franchise advertising and other services expense 389 382 395 (2) (2) 3 2 Operating Profit $ 391 $ 387 $ 387 1 3 Even 4 % Increase (Decrease) Unit Count 2023 2022 2021 2023 2022 Franchise 19,859 19,013 18,359 4 4 Company-owned 7 21 22 (67) (5) Total 19,866 19,034 18,381 4 4 Franchise and property revenues In 2023, the increase in Franchise and property revenues, excluding the impacts of foreign currency translation, was driven by unit growth and franchise same-store sales growth of 2%, partially offset by lapping the prior year recognition of franchise fees related to unexercised development rights arising from a master franchise agreement.
The after-tax cash flows incorporate reasonable sales growth and margin improvement assumptions that would be used by a franchisee in the determination of a purchase price for the 45 restaurant. Estimates of future cash flows are highly subjective judgments and can be significantly impacted by changes in the business or economic conditions.
The after-tax cash flows incorporate reasonable sales growth and margin improvement assumptions as well as expectations as to the useful lives of the restaurant assets that would be used by a franchisee in the determination of a purchase price for the restaurant.
(b) The foreign currency impact on System sales is presented in relation only to the immediately preceding year presented. When determining applicable System sales growth percentages, the System sales excluding FX for the current year should be compared to the prior year System sales prior to adjustment for the prior year FX impact.
(b) The foreign currency impact on System sales is presented in relation only to the immediately preceding year presented.
We also suspended all operations of our 70 company-owned KFC restaurants in Russia and began finalizing an agreement to suspend all Pizza Hut operations in Russia, in partnership with our master franchisee. Further, we pledged to redirect any future net profits attributable to Russia subsequent to the date of invasion to humanitarian efforts.
(b) In the first quarter of 2022, as a result of the Russian invasion of Ukraine, we suspended all investment and restaurant development in Russia. We also suspended all operations of our 70 company-owned KFC restaurants in Russia and began finalizing an agreement to suspend all Pizza Hut operations in Russia, in partnership with our master franchisee.
Worldwide GAAP Results Amount % B/(W) 2022 2021 2020 2022 2021 Company sales $ 2,072 $ 2,106 $ 1,810 (2) 16 Franchise and property revenues 3,096 2,900 2,510 7 16 Franchise contributions for advertising and other services 1,674 1,578 1,332 6 18 Total revenues 6,842 6,584 5,652 4 16 Company restaurant expenses $ 1,745 $ 1,725 $ 1,506 (1) (15) G&A expenses 1,140 1,060 1,064 (8) — Franchise and property expenses 123 117 145 (4) 18 Franchise advertising and other services expense 1,667 1,576 1,314 (6) (20) Refranchising (gain) loss (27) (35) (34) (22) 2 Other (income) expense 7 2 154 NM NM Total costs and expenses, net 4,655 4,445 4,149 (5) (7) Operating Profit 2,187 2,139 1,503 2 42 Investment (income) expense, net (11) (86) (74) (88) 16 Other pension (income) expense 9 7 14 (26) 48 Interest expense, net 527 544 543 3 — Income before income taxes 1,662 1,674 1,020 (1) 64 Income tax provision 337 99 116 (242) 15 Net Income $ 1,325 $ 1,575 $ 904 (16) 74 Diluted EPS (a) $ 4.57 $ 5.21 $ 2.94 (12) 77 Effective tax rate 20.3 % 5.9 % 11.4 % (14.4) ppts. 5.5 ppts.
This included a negative impact to our KFC Division Operating Profit of $41 million for the year ended December 31, 2023. 2023 2022 % Change GAAP EPS $5.59 $4.57 +23 Special Items EPS $0.42 $0.04 NM EPS Excluding Special Items $5.17 $4.53 +14 • Gross unit openings for the year were 4,754 units resulting in 3,349 net new units. 32 Worldwide GAAP Results Amount % B/(W) 2023 2022 2021 2023 2022 Company sales $ 2,142 $ 2,072 $ 2,106 3 (2) Franchise and property revenues 3,247 3,096 2,900 5 7 Franchise contributions for advertising and other services 1,687 1,674 1,578 1 6 Total revenues 7,076 6,842 6,584 3 4 Company restaurant expenses $ 1,774 $ 1,745 $ 1,725 (2) (1) G&A expenses 1,193 1,140 1,060 (5) (8) Franchise and property expenses 123 123 117 (1) (4) Franchise advertising and other services expense 1,683 1,667 1,576 (1) (6) Refranchising (gain) loss (29) (27) (35) NM NM Other (income) expense 14 7 2 NM NM Total costs and expenses, net 4,758 4,655 4,445 (2) (5) Operating Profit 2,318 2,187 2,139 6 2 Investment (income) expense, net (7) (11) (86) NM NM Other pension (income) expense (6) 9 7 NM NM Interest expense, net 513 527 544 3 3 Income before income taxes 1,818 1,662 1,674 9 (1) Income tax provision 221 337 99 35 (242) Net Income $ 1,597 $ 1,325 $ 1,575 21 (16) Diluted EPS (a) $ 5.59 $ 4.57 $ 5.21 23 (12) Effective tax rate 12.1 % 20.3 % 5.9 % 8.2 ppts.
Historically, these anticipated bids have been reasonably accurate estimations of the proceeds ultimately received. The after-tax cash flows used in determining the anticipated bids incorporate reasonable assumptions we believe a franchisee would make such as sales growth and margin improvement as well as expectations as to the useful lives of the restaurant assets.
Historically, these anticipated bids have been reasonably accurate estimations of the proceeds ultimately received. The after-tax cash flows used in determining the anticipated bids incorporate similar assumptions to those of a restaurant level assessment.
Franchise and property revenues In 2022, the increase in Franchise and property revenues, excluding the impacts of foreign currency translation, was driven by franchise same-store sales growth of 4% and unit growth.
Franchise and property revenues In 2023, the increase in Franchise and property revenues, excluding the impact of foreign currency translation, was driven by franchise same-store sales growth of 7% and unit growth, partially offset by a 5% negative impact from the sale of our KFC Russia business.
Pizza Hut Division The Pizza Hut Division has 19,034 units, 66% of which are located outside the U.S. Over 99% of the Pizza Hut Division units were operated by franchisees as of the end of 2022.
Over 99% of the Pizza Hut Division units were operated by franchisees as of the end of 2023.
We evaluate recoverability based on the restaurant’s forecasted undiscounted cash flows, which incorporate our best estimate of sales growth and margin improvement based upon our plans for the unit and actual results at comparable restaurants. For restaurant assets that are deemed to not be recoverable, we write-down the impaired restaurant to its estimated fair value.
We use two consecutive years of operating losses as our primary indicator of potential impairment for our annual impairment testing of these restaurant 47 assets. We evaluate recoverability based on the restaurant’s forecasted undiscounted cash flows, which incorporate our best estimate of sales growth and margin improvement based upon our plans for the unit and actual results at comparable restaurants.
Critical Accounting Policies and Estimates Our reported results are impacted by the application of certain accounting policies that require us to make subjective or complex judgments. These judgments involve estimations of the effect of matters that are inherently uncertain and may significantly impact our quarterly or annual results of operations or financial condition.
These judgments involve estimations of the effect of matters that are inherently uncertain and may significantly impact our quarterly or annual results of operations or financial condition. Changes in the estimates and judgments could significantly affect our results of operations and financial condition and cash flows in future years.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. The Company is exposed to financial market risks associated with interest rates, foreign currency exchange rates and commodity prices.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. The Company is exposed to financial market risks associated with interest rates, foreign currency exchange rates, commodity prices and the value of our equity investment in Devyani International Limited.
Operating in international markets exposes the Company to movements in foreign currency exchange rates. The Company’s primary exposures result from our operations in Asia-Pacific, Europe and the Americas. For the fiscal year ended December 31, 2022, Operating Profit would have decreased approximately $150 million if all foreign currencies had uniformly weakened 10% relative to the U.S. dollar.
Operating in international markets exposes the Company to movements in foreign currency exchange rates. The Company’s primary exposures result from our operations in Asia-Pacific, Europe and the Americas. For the fiscal year ended December 31, 2023, Operating Profit would have decreased approximately $150 million if all foreign currencies had uniformly weakened 10% relative to the U.S. dollar.
The notional amount and maturity dates of these contracts match those of the underlying receivables or payables such that our foreign currency exchange risk related to these instruments is minimized. The Company’s foreign currency net asset exposure (defined as foreign currency assets less foreign currency liabilities) totaled approximately $1.1 billion as of December 31, 2022.
The notional amount and maturity dates of these contracts match those of the underlying receivables or payables such that our foreign currency exchange risk related to these instruments is minimized. The Company’s foreign currency net asset exposure (defined as foreign currency assets less foreign currency liabilities) totaled approximately $1 billion as of December 31, 2023.
Our policies prohibit the use of derivative instruments for trading purposes, and we have processes in place to monitor and control their use. 48 Interest Rate Risk We have a market risk exposure to changes in interest rates, principally in the U.S.
Our policies prohibit the use of derivative instruments for trading purposes, and we have processes in place to monitor and control their use. 50 Interest Rate Risk We have a market risk exposure to changes in interest rates, principally in the U.S.
At December 31, 2022, a hypothetical 100 basis-point decrease in short-term interest rates would decrease the asset associated with the fair value of our interest rate swaps by approximately $30 million. Fair value was determined based on the present value of expected future cash flows considering the risks involved and using discount rates appropriate for the durations.
At December 31, 2023, a hypothetical 100 basis-point decrease in short-term interest rates would decrease the asset associated with the fair value of our interest rate swaps by approximately $17 million. Fair value was determined based on the present value of expected future cash flows considering the risks involved and using discount rates appropriate for the durations.
The effects of changes in market prices for equity securities are unpredictable, which could cause significant fluctuations in our quarterly and annual results. 49
The effects of changes in market prices for equity securities are unpredictable, which could cause significant fluctuations in our quarterly and annual results. 51
We have attempted to minimize the interest rate risk from variable-rate debt through the use of interest rate swaps that, as of December 31, 2022, result in a fixed interest rate on $1.5 billion of our variable-rate debt. As a result, approximately 94% of this $11.6 billion of outstanding debt at December 31, 2022, is effectively fixed-rate debt.
We have attempted to minimize the interest rate risk from variable-rate debt through the use of interest rate swaps that, as of December 31, 2023, result in a fixed interest rate on $1.5 billion of our variable-rate debt. As a result, approximately 94% of this $11.2 billion of outstanding debt at December 31, 2023, is effectively fixed-rate debt.
At December 31, 2022, a hypothetical 100 basis-point increase in short-term interest rates would result, over the following twelve-month period after consideration of the aforementioned interest rate swaps and excluding the Revolving Facility balance, in an increase of approximately $7 million in Interest expense, net within our Consolidated Statement of Income.
At December 31, 2023, a hypothetical 100 basis-point increase in short-term interest rates would result, over the following twelve-month period after consideration of the aforementioned interest rate swaps, in an increase of approximately $7 million in Interest expense, net within our Consolidated Statement of Income.
As of December 31, 2022, the National Stock Exchange of India Limited composite closing sales price of Devyani was Indian Rupee 180.75.
As of December 31, 2023, the National Stock Exchange of India Limited composite closing sales price of Devyani was Indian Rupee 193.75.
The fair value of our cumulative fixed-rate debt of $8.5 billion as of December 31, 2022, would decrease approximately $455 million as a result of the same hypothetical 100 basis-point increase.
The fair value of our cumulative fixed-rate debt of $8.6 billion as of December 31, 2023, would decrease approximately $430 million as a result of the same hypothetical 100 basis-point increase.
Our outstanding total debt, excluding the Revolving Facility balance, finance leases and debt issuance costs and discounts, of $11.6 billion includes 81% fixed-rate debt and 19% variable-rate debt.
Our outstanding total debt, excluding finance leases and debt issuance costs and discounts, of $11.2 billion includes 81% fixed-rate debt and 19% variable-rate debt.

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