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13MAR201517272138
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
KFC Division
The KFC Division has 14,197 units, approximately 70% of which are located outside the U.S. The KFC Division has experienced significant unit
growth in emerging markets, which comprised approximately 40% of both the Division’s units and profits, respectively, as of the end of 2014.
Additionally, 91% of the KFC Division units were operated by franchisees and licensees as of the end of 2014. Our ongoing earnings growth
model for the KFC Division includes low-single-digit percentage net unit and same store sales growth. This combined with restaurant margin
improvement and leverage of our G&A structure is expected to drive annual Operating Profit growth of 10%.
% B/(W) % B/(W)
2014 2013
2014 2013 2012 Reported Ex FX Reported Ex FX
Company sales $ 2,320 $ 2,192 $ 2,212 6 9 (1) 1
Franchise and license fees and
income 873 844 802 4 7 5 8
Total revenues $ 3,193 $ 3,036 $ 3,014 5 8 1 3
Restaurant profit $ 308 $ 277 $ 298 12 14 (7) (5)
Restaurant margin % 13.3% 12.6% 13.5% 0.7 ppts. 0.7 ppts. (0.9) ppts. (0.9) ppts.
G&A expenses $ 383 $ 391 $ 400 2 — 2 1
Operating Profit $ 708 $ 649 $ 626 9 13 4 7
2014 2013
System Sales Growth, reported 2% —%
System Sales Growth, excluding FX 6% 3%
Same-Store Sales Growth % 3% 1%
% Increase
(Decrease)
Unit Count 2014 2013 2012 2014 2013
Franchise & License 12,874 12,647 12,446 2 2
Company-owned 1,323 1,257 1,166 5 8
14,197 13,904 13,612 2 2
2013 New Builds Closures Refranchised Acquired Other 2014
Franchise & License 12,647 553 (356) 39 (4) (5) 12,874
Company-owned 1,257 123 (22) (39) 4 — 1,323
Total 13,904 676 (378) — — (5) 14,197
2012 New Builds Closures Refranchised Acquired Other 2013
Franchise & License 12,446 558 (353) 58 (71) 9 12,647
Company-owned 1,166 101 (23) (58) 71 — 1,257
Total 13,612 659 (376) — — 9 13,904
Company Sales and Restaurant Profit
The changes in Company sales and Restaurant profit were as follows:
2014 vs. 2013
Store
Portfolio
Income / (Expense) 2013 Actions Other FX 2014
Company sales $ 2,192 $ 110 $ 79 $ (61) $ 2,320
Cost of sales (766) (43) (26) 26 (809)
Cost of labor (521) (25) (16) 10 (552)
Occupancy and other (628) (38) (3) 18 (651)
Restaurant profit $ 277 $ 4 $ 34 $ (7) $ 308
12.6% 13.3%
22 YUM! BRANDS, INC. - 2014 Form 10-K
Form 10-K