YUM! Brands, Inc., through its subsidiaries, develops, operates, and franchises quick service restaurants. The company operates in three segments: the KFC Division, the Pizza Hut Division, and the Taco Bell Division. Its restaurants prepare, package, and sell a menu of food items. As of February 21, 2017, it operated approximately 43,500 restaurants in 135 countries and territories primarily under the KFC, Pizza Hut, and Taco Bell brands, which specialize in chicken, pizza, and Mexican-style food categories. The company was formerly known as TRICON Global Restaurants, Inc. and changed its name to YUM! Brands, Inc. in May 2002. YUM! Brands, Inc. was founded in 1997 and is headquartered in Louisville, Kentucky.
Business Analysis of Yum Brands
The Restaurants Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Yum Brands compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Yum Brands to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Yum Brands with an interactive chart.
- Revenue Growth: Yum Brands reported a revenue growth of -1.1% year-on-year during 2016. Fast Food Restaurants Industry grew at -0.6% in the same period
- COGS share of Revenues: As a percentage of revenue, Yum Brands spent 55.0% of its total revenues on COGS. Fast Food Restaurants industry average (COGS share of revenue) in the same period was 63.7%
- R&D share of Revenues: Yum Brands R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, Yum Brands spent 18.2% of its total revenues on Sales, Marketing, and General Administration (SG&A). Fast Food Restaurants industry average SG&A spending in the same period was 11.7%
- Inventory share of Revenues: As a percentage of revenue, Yum Brands spent 0.6% of its total revenues on Inventories. Fast Food Restaurants industry average Inventory spending in the same period was 0.6%
- Accounts Payable share of Revenues: As a percentage of revenue, Yum Brands invested 17.8% of its total revenues on Accounts Payable (A/P) Fast Food Restaurants industry average Accounts Payable investment in the same period was 4.7%
- Accounts Receivable share of Revenues: As a percentage of revenue, Yum Brands invested 5.8% of its total revenues on Accounts Receivable (A/R). Fast Food Restaurants industry average Accounts Receivable investment in the same period was 4.9%
- PP&E share of Revenues: As a percentage of revenue, Yum Brands invested 33.9% of its total revenues on Property, Plants, and Equipments (PP&E). Fast Food Restaurants industry average PPE investment in the same period was 53.5%
- Intangibles share of Revenues: As a percentage of revenue, Yum Brands invested 10.9% of its total revenues on Intangibles. Fast Food Restaurants industry average Intangibles investment in the same period was 35.4%
- Net Margins: Yum Brands Net Margins in the year 2016 were 25.4%. Fast Food Restaurants industry average Net Margins in the same period were 14.2%
Sector and Industry Association of Yum Brands
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries.
Yum Brands is associated with Restaurants Sector and Fast Food Restaurants Industry.
Restaurants sector is comprised of the following industries: Fast Food Restaurants; Fast-Casual Restaurants; Casual Dining Restaurants; Fine Dining Restaurants. The definitions for each of the industries is as follows:
- Fast Food Restaurants industry includes fast food restaurants. Fast food restaurants are typically chains like McDonalds and Burger King. Fast food restaurants are also known in the restaurant industry as QSRs or quick-service restaurants.
- Fast-Casual Restaurants industry include restaurants that do not offer full table service, but offer a higher quality of food with fewer frozen or processed ingredients than other fast food restaurants. It is an intermediate concept between fast food and casual dining. The category is exemplified by chains such as Noodles & Company, El Pollo Loco Holdings, Inc., and Chipotle Mexican Grill, Inc.
- Casual Dining Restaurants industry includes restaurants that offer table side service, non-disposable dishes at a moderate price. Menu in these restaurants ranges from Italian to seafood to Mexican food.
- Fine Dining Restaurants industry includes restaurants that are full service restaurants with specific dedicated meal courses. Décor of these restaurants features higher-quality materials.
Industry Ranking of Yum Brands
With $6.4 billion revenues, Yum Brands ranked number 3 of all the companies in the US Fast Food Restaurants industry. There were a total of 21 public companies in the US Fast Food Restaurants industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Fast Food Restaurants industry by revenues during 2016 were:
- McDonald's ($24.6 billion)
- Yum China Holdings ($6.9 billion)
- Yum Brands ($6.4 billion)
- Restaurant Brands International ($4.1 billion)
- Panera Bread ($2.8 billion)
- Domino's Pizza ($2.5 billion)
- Papa John's International ($1.7 billion)
- Jack In The Box ($1.6 billion)
- Wendy's ($1.4 billion)
- Red Robin Gourmet Burgers ($1.3 billion)
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.