Pizza Hut 2015 Annual Report Download - page 131

YUM! BRANDS, INC.-2015 Form10-K 23
Form 10-K
PART II
ITEM7Management’s Discussion and Analysis of Financial Condition and Results of Operations
In 2015, the increase in Company sales and Restaurant profit associated with store portfolio actions were driven by international net new unit growth
partially offset by refranchising. Significant other factors impacting Company sales and/or Restaurant profit were company same-store sales growth of 3%.
In 2014, the increase in Company sales associated with store portfolio actions was driven by international net new unit growth and the impact of
the acquisition of restaurants in Turkey from an existing franchisee in April2013, partially offset by refranchising. Significant other factors impacting
Company sales and/or Restaurant profit were Company same-store sales growth of 4%, which was partially offset by higher restaurant operating costs
in international markets.
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 growth in international
net new units, franchise and license same-store sales growth of 3% and refranchising.
In 2014, the increase in Franchise and license fees and income, excluding the impact of foreign currency translation, was driven by growth in international
net new units and franchise and license same-store sales growth of 2%.
G&A Expenses
In 2015, the increase in G&A expenses, excluding the impact of foreign currency translation, was driven by higher incentive compensation, increased
headcount in international markets and higher pension costs, including lapping the favorable resolution of a pension issue in the UK during 2014.
In 2014, G&A expenses, excluding the impact of foreign currency translation, were even with prior year as the impact of higher headcount in strategic
international markets, higher incentive compensation costs and the impact of the acquisition of restaurants in Turkey from an existing franchisee in
April 2013 was offset by lower pension costs in 2014 including the favorable resolution of a pension issue in the UK.
Operating Profit
In 2015, the increase in Operating Profit, excluding the impact of foreign currency translation, was driven by same-store sales growth and international
net new units, partially offset by higher G&A expenses.
In 2014, the increase in Operating Profit, excluding the impact of foreign currency translation, was driven by growth in same-store sales and international
net new units, partially offset by higher restaurant operating costs in international markets.
Pizza Hut Division
The Pizza Hut Division has 13,728 units, approximately 60% of which are located in the U.S. The Pizza Hut Division operates as one brand that uses
multiple distribution channels including delivery, dine-in and express (e.g. airports). Emerging markets comprised approximately 20% of both units and
profits for the Division as of the end of 2015. Additionally, 94% of the Pizza Hut Division units were operated by franchisees and licensees as of the end
of 2015. For 2015, Pizza Hut targeted at least 400 net new units, mid-single-digit same-store sales growth and 10% Operating Profit growth.
% B/(W) % B/(W)
2015 2014
2015 2014 2013 Reported Ex FX Reported Ex FX
Company sales $ 609 $ 607 $ 609 — 3 — (1)
Franchise and license fees and income 536 541 538 (1) 3 1 2
Total revenues $ 1,145 $ 1,148 $ 1,147 — 3 — 1
Restaurant profit $ 59 $ 50 $ 71 19 16 (30) (32)
Restaurant margin % 9.7% 8.2% 11.7% 1.5 ppts. 1.0 ppts. (3.5) ppts. (3.7) ppts.
G&A expenses $ 266 $ 246 $ 224 (8) (13) (10) (11)
Operating Profit $ 289 $ 295 $ 339 (2) 1 (13) (13)
2015 2014
System Sales Growth, reported (2)% —%
System Sales Growth, excluding FX 2% 1%
Same-Store Sales Growth (Decline) % 1% (1)%
% Increase
(Decrease)
Unit Count 2015 2014 2013 2015 2014
Franchise & License 12,969 12,814 12,601 1 2
Company-owned 759 788 732 (4) 8
13,728 13,602 13,333 1 2