Pizza Hut 2015 Annual Report Download - page 110

YUM! BRANDS, INC.-2015 Form10-K2
Form 10-K
PART I
ITEM 1Business
PART I
ITEM 1 Business
YUM! Brands, Inc. (referred to herein as “YUM”, the “Registrant” or the
“Company”), was incorporated under the laws of the state of North Carolina
in 1997. The principal executive offices of YUM are located at 1441
Gardiner Lane, Louisville, Kentucky 40213, and the telephone number at
that location is [phone]. Our website address is http://yum.com.
YUM, together with its subsidiaries, is referred to in this Form 10-K annual
report (“Form 10-K”) as the Company. The terms “we,” “us” and “our” are
also used in the Form 10-K to refer to the Company. Throughout this Form
10-K, the terms “restaurants,” “stores” and “units” are used interchangeably.
While YUM! Brands, Inc., referred to as the Company, does not directly
own or operate any restaurants, throughout this document we may refer
to restaurants that are owned or operated by our subsidiaries as being
Company-owned.
Financial Information about Operating Segments and General Development of the Business
As of December 26, 2015, YUM consists of five operating segments:
•YUM China (“China” or “China Division”) which includes all operations
in mainland China
• YUM India (“India” or “India Division”) which includes all operations in
India, Bangladesh, Nepal and Sri Lanka
• The KFC Division which includes all operations of the KFC concept
outside of China Division and India Division
• The Pizza Hut Division which includes all operations of the Pizza Hut
concept outside of China Division and India Division
• The Taco Bell Division which includes all operations of the Taco Bell
concept outside of India Division
Effective January, 2016 the India Division was segmented by brand,
integrated into the global KFC, Pizza Hut and Taco Bell Divisions, and is
no longer a separate operating segment. While our consolidated results
will not be impacted, we will restate our historical segment information
during 2016 for consistent presentation.
Operating segment information for the years ended December 26, 2015,
December 27, 2014 and December 28, 2013 for the Company is included in
Part II, Item 7, Management’s Discussion and Analysis of Financial Condition
and Results of Operations (“MD&A”) and in the related Consolidated
Financial Statements in Part II, Item 8.
In October, 2015 we announced our intent to separate YUM’s China
business from YUM into an independent, publicly-traded company by
the end of 2016. See our MD&A in this Form 10-K for further information.
Narrative Description of Business
General
YUM has over 42,000 restaurants in more than 130 countries and territories.
Primarily through the three concepts of KFC, Pizza Hut and Taco Bell (the
“Concepts”), the Company develops, operates, franchises and licenses a
worldwide system of restaurants which prepare, package and sell a menu
of competitively priced food items. Units are operated by a Concept or
by independent franchisees or licensees under the terms of franchise or
license agreements. Franchisees can range in size from individuals owning
just one restaurant to large publicly-traded companies.
The China Division, based in Shanghai, China, comprises 7,176 units,
primarily Company-owned KFCs and Pizza Huts. In 2015, the China Division
recorded revenues of approximately $6.9 billion and Operating Profit of
$757 million. The Company owns a controlling interest in Little Sheep
Group Limited (“Little Sheep”), a casual dining concept headquartered in
Inner Mongolia, China. We also own non-controlling interests in Chinese
entities who operate in a manner similar to KFC franchisees and a meat
processing entity that supplies lamb to the Little Sheep business. The KFC
Division comprises 14,577 units, operating in 120 countries and territories
outside China and India and recorded revenues of approximately $2.9billion
and Operating Profit of $677 million in 2015. The Pizza Hut Division
comprises 13,728 units, operating in 90 countries and territories outside
China and India and recorded revenues of approximately $1.1billion and
Operating Profit of $289 million in 2015. The Taco Bell Division comprises
6,400 units, operating in 20 countries and territories outside of India and
recorded revenues of approximately $2.0 billion and Operating Profit of
$539 million in 2015. The India Division, based in Delhi, India, comprises
811 units, operating in 4 countries and recorded revenues of $115 million
and an Operating Loss of $19 million in 2015.