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YUM! BRANDS, INC.-2015 Form10-K 21
Form 10-K
PART II
ITEM7Management’s Discussion and Analysis of Financial Condition and Results of Operations
Company Sales and Restaurant Profit
The changes in Company sales and Restaurant profit were as follows:
Income / (Expense)
2015 vs. 2014
2014
Store Portfolio
Actions Other FX 2015
Company sales $ 6,821 $ 363 $ (262) $ (133) $ 6,789
Cost of sales (2,207) (102) 108 42 (2,159)
Cost of labor (1,407) (70) 63 28 (1,386)
Occupancy and other (2,198) (108) 97 42 (2,167)
Restaurant Profit $ 1,009 $ 83 $ 6 $ (21) $ 1,077
Income / (Expense)
2014 vs. 2013
2013
Store Portfolio
Actions Other FX 2014
Company sales $ 6,800 $ 358 $ (322) $ (15) $ 6,821
Cost of sales (2,258) (104) 151 4 (2,207)
Cost of labor (1,360) (75) 26 2 (1,407)
Occupancy and other (2,132) (124) 52 6 (2,198)
Restaurant Profit $ 1,050 $ 55 $ (93) $ (3) $ 1,009
In 2015, the increase in Company sales and Restaurant profit associated with store portfolio actions was driven by net new unit growth partially offset
by the impact of refranchising. Significant other factors impacting Company sales and/or Restaurant profit were labor efficiencies and lower utilities,
partially offset by wage inflation of 8%, company same-store sales declines of 4% and commodity inflation of 1%. See the Summary at the beginning
of this section for discussion of China sales.
In 2014, the increase in Company sales and Restaurant profit associated with store portfolio actions was driven by net new unit growth. Significant other
factors impacting Company sales and/or Restaurant profit were wage rate inflation of 9% and same-store sales declines of 5% which led to inefficiencies
in Cost of sales, partially offset by labor efficiencies and lower advertising expense.
Franchise and License Fees and Income
In 2015, the increase in Franchise and license fees and income, excluding the impact of foreign currency translation, was driven by the impact
of refranchising and net new unit growth, partially offset by franchise and license same-store sales declines of 2%.
In 2014, the increase in Franchise and license fees and income, excluding the impact of foreign currency translation, was driven by the impact
of refranchising, partially offset by franchise and license same-store sales declines of 4%.
G&A Expenses
In 2015 and 2014, the increase in G&A expenses, excluding the impact of foreign currency translation, was driven by higher compensation costs due
to wage inflation and higher headcount.
Operating Profit
In 2015, the increase in Operating Profit, excluding the impact of foreign currency translation, was driven by net new unit growth and lower restaurant
operating costs, partially offset by same-store sales declines, decreased Other income due to lower insurance recoveries related to the 2012 poultry
supply incident and higher closure and impairment expenses. See the Summary at the beginning of this section for discussion of China sales.
In 2014, the decrease in Operating Profit, excluding the impact of foreign currency translation, was driven by same-store sales declines, higher restaurant
operating costs and higher G&A expenses, partially offset by net new unit growth and increased Other income due to an insurance recovery related to
the 2012 poultry supply incident.