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Terry Smith·YUM BRANDS INC
YUM

Yum Brands — Income Statement, Cash Flows & Balance Sheet

AI Overview

Is Yum! Brands profitable?

Revenue is growing solidly, driven by a big jump in directly operated restaurant sales.

202320242025Change (2024→2025)
Total revenues$7,076M$7,549M$8,214M+$665M (+8.8%)
Company sales$2,142M$2,552M$2,945M+$393M (+15.4%)
Franchise & property revenues$3,247M$3,295M$3,473M+$178M (+5.4%)

Revenue grew at a healthy clip, with the biggest jump coming from company-operated restaurants — largely because Yum! acquired hundreds of Taco Bell and KFC locations from franchisees during the year rather than organic same-store growth.

Operating profit improved, but a higher tax bill kept net income gains modest.

20242025Change
Operating profit$2,403M$2,574M+$171M (+7.1%)
Income tax provision$414M$518M+$104M (+25.1%)
Effective tax rate21.8%24.9%+3.1 pts
Net income$1,486M$1,559M+$73M (+4.9%)

Operating profit grew nicely, but a higher effective tax rate — driven partly by the newly enacted "One Big Beautiful Bill Act" and one-time items tied to a Pizza Hut intellectual property reorganisation — absorbed much of that gain, leaving net income only modestly ahead.

Where does Yum! Brands' revenue come from?

Taco Bell and KFC are the profit engines; Pizza Hut is shrinking and under strategic review.

Division2024 Operating Profit2025 Operating ProfitChange
KFC$1,363M$1,503M+$140M (+10.3%)
Taco Bell$1,049M$1,129M+$80M (+7.6%)
Pizza Hut$373M$340M-$33M (-8.8%)
Habit Burger & Grill$0M-$13Mdeteriorating

KFC and Taco Bell together account for nearly all divisional profit, and both grew solidly. Pizza Hut moved in the wrong direction — Yum! has formally launched a strategic options review (potentially including a sale) and booked roughly $41M in related one-time charges in 2025. Habit Burger & Grill slipped back into a loss.

Does Yum! Brands generate cash?

Yum! is a strong cash generator, though big acquisition spending more than offset free cash flow.

202320242025Change (2024→2025)
Operating cash flow$1,603M$1,689M$2,010M+$321M
Capital spending (capex)$285M$257M$371M+$114M
Free cash flow (GAAP operating - capex)$1,318M$1,432M$1,639M+$207M
Franchise acquisitions$0M$208M$782M+$574M
Dividends paid$678M$752M$789M+$37M
Share repurchases$50M$441M$552M+$111M

Free cash flow (operating cash minus capex) hit a new high, reflecting the asset-light franchise model's earning power. However, Yum! spent heavily buying back restaurant locations from franchisees, and returned over $1.3 billion to shareholders via dividends and buybacks — funding the gap with new borrowings.

How strong is Yum! Brands' balance sheet?

Yum! carries a very large debt load by design, funded by its highly predictable franchise royalty stream.

20242025Change
Long-term debt$11,306M$11,872M+$566M
Cash & equivalents$616M$709M+$93M
Net debt (approx.)~$10,690M~$11,163M+$473M
Total shareholders' deficit-$7,648M-$7,325Mimproving

Yum! intentionally runs with substantial debt — a common structure for franchise businesses with stable, royalty-like cash flows. The shareholders' deficit (meaning total liabilities exceed total assets on paper) is not a sign of distress here; it reflects years of share buybacks funded by borrowing. Debt covenant compliance was confirmed as of year-end, and the company refinanced a key tranche of Taco Bell securitisation notes in 2025, pushing near-term maturities out. One notable tail risk: the IRS is claiming approximately $2.1 billion in unpaid taxes (plus penalties and ~$2.1 billion in accrued interest) related to a 2014 corporate reorganisation — Yum! is contesting this in Tax Court and has recorded no reserve for it.