1Introduction My name is Yinan Hong. I am your port.docx
Stock Pitch Analysis
1. Recommendation:
Buy
December
12th
,
2012
Yum!
Brands,
Inc.
(NYSE:
YUM)
Consumer
Discretionary
Company
Overview:
Yum!
Brand,
Inc,
in
terms
of
system
units,
boasts
to
be
one
of
the
largest
in
the
world.
With
its
38,000
restaurants
in
120
countries,
it
beats
McDonalds
by
approximately
4000
restaurants.
Strategically,
it
has
focused
its
attention
on
China
with
great
success
and
its
revenue
in
China
has
grown
at
a
compounded
rate
of
27%
for
the
last
5
years.
Stock
Performance
Highlights:
52
week
high:
74.75
52
week
low:
57.09
Beta:
0.49
Average
Daily
Volume
:
3.83
Million
Shares
Highlights:
Market
Cap
30.23
OS
Shares
451.81
Million
Book
Value
per
share
4.86
P/E
Ratio
19.68
Dividend
Yield
2.00%
Current
Price:
66.92
Target
Price:
88.7
Yummy?
• The
buy
recommendation
for
YUM
is
due
to
the
company’s
consistent
growth,
its
service
diversification,
and
its
presence
overseas.
Its
largest
presence
is
in
China,
and
YUM
has
strategically
assimilated
itself
into
their
food
culture.
• Same
store
sales
have
been
increasing
yearly
at
a
double
digit
rate
in
China.
China’s
1.3
billion
populations,
with
a
middle
class
citizen
equivalent
to
the
US
population,
will
ensure
that
this
will
be
kept
up
for
the
coming
years10
.
• What
makes
Yum
a
bigger
buy
is
that
their
dividend
and
earnings
grew
consistently
even
through
financial
downturns.
Thus
greatly
shows
how
well
managed
the
company
is.
whats
2. Economic
Outlook
As
we
are
moving
off
to
2013,
Yum
will
become
more
reliant
on
China’s
future
economy
growth.
The
industry’s
economic
outlook
for
the
next
two
years
in
China
is
looking
strong
and
positive.
America
also
have
positive
outlook
for
the
next
two
years,
and
its
consumers
are
showing
signs
of
recovery
from
its
economic
indicators
and
GDP
growth.
Overall
economic
data
in
China
and
America
is
showing
a
promising
future
for
both
economies.
Real
GDP:
The
RGDP
is
one
of
the
most
widely
used
indicators
to
determine
the
general
health
of
a
country’s
economy.
RGDP
is
important
to
the
investors
and
the
discretionary
sector
because
its
growth
is
positively
correlated
to
consumer’s
income
and
willingness
to
spend
on
nonessentials
products.
USA’s
GDP
has
shown
signs
of
recovery
ever
since
the
financial
crisis
in
2008.
It
shows
recovery
and
its
2012
RGDP
will
be
the
third
straight
year
with
positive
growth.
It
is
estimated
that
in
2013
and
2014,
the
annual
growth
would
be
2.4%
and
2.8%
respectively1
.
China’s
GDP
has
been
growing
at
a
rate
of
10.5%
for
the
past
5
years.
Their
2012
first
to
third
quarter
GDP
growth
is
already
at
5.4%
when
their
annual
growth
is
expected
to
be
at
7.7%.
It
is
estimated
that
their
2013
and
2014
GDP
growth
will
be
8.6%
and
8.4%
respectively.
By
consistently
having
the
RGDP
growth
rate
up,
China
will
also
be
able
to
keep
the
disposable
income,
employment,
and
consumer
confidence
up.
Consumer
Disposable
Income:
A
growing
household
disposable
income
per
capital
is
defined
as
the
income
that
households
can
utilize
after
tax.
It
is
very
vital
to
restaurants,
because
consumers
with
thicker
wallets
will
be
more
willing
to
eat
out.
Disposable
income
in
China
has
been
growing
at
an
average
ate
of
16%
for
the
past
five
years.
In
America,
the
2008
financial
crisis
has
done
little
to
deter
the
growth
of
household
income.
Disposable
income
only
decreased
by
a
total
of
-‐1.18%
in
2009
and
it
has
been
increasing
at
a
rate
of
2.97%
for
the
past
five
years2
.
In
2011,
disposable
income
has
the
highest
growth
for
the
past
3
years
for
both
USA
and
China3
.
-‐5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
2007
2008
2009
2010
2011
2012
2013
2014
China
USA
-‐10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
2007
2008
2009
2010
2011
China
USA
3. Unemployment:
Unemployment
is
another
economic
indicator
that
looks
into
the
health
of
the
economy.
A
high
unemployment
rate
would
be
detrimental
to
the
discretionary
sector,
because
consumer
would
be
discouraged
from
spending
on
nonessentials.
There
seems
to
be
a
misconception
that
unemployment
and
financial
downturns
will
work
favorably
for
Yum
due
to
it
providing
an
inferior
good.
In
America,
annual
average
unemployment
rate
spiked
from
5.5%
to
9%
in
2008
to
2009,
but
same
store
sales
dropped
by
5%.
Unemployment
did
not
help
increase
sales,
but
it
does
imply
that
fast
food
restaurants
have
a
more
inelastic
demand.
As
of
now,
unemployment
rate
has
greatly
declined
from
the
peak
of
10%
in
2009
to
a
7.9%2
.
China’s
Unemployment
rate
has
risen
from
a
4.2%
in
2007
to
a
current
rate
of
6.5%.
This
unemployment
doesn’t
seem
to
be
correlating
much
with
Yum’s
earnings,
because
from
2007
to
2011,
their
revenue
increased
by
a
total
of
164%3
.
Consumer
Confidence
Index:
The
consumer
confidence
index
reflects
how
the
average
consumers
are
viewing
the
economy.
The
more
confidence,
the
more
likely
consumers
expenditure
would
rise.
America’s
consumer
confidence
has
hit
rock
bottom
in
2009,
but
as
of
current
month,
it
has
climbed
to
a
3
year
high
of
73.7.
This
shows
that
the
economic
data
matches
up
with
the
general
sentiment
of
the
population.
General
households
are
feeling
more
secure
about
their
total
family
incomes
for
the
next
six
months,
which
encourage
them
to
spend
instead
of
save4.
Consumers
in
China
are
also
having
high
expectations
of
the
economy.
November’s
rate
reached
the
highest
in
2012
of
106.1,
showing
that
consumers
still
are
confident
about
the
source
of
their
income
and
thus
is
more
likely
to
keep
their
spending
up.
For
the
last
twelve
months,
the
average
was
101.455
.
Currency
Exchange:
Foreign
exchange
plays
an
influential
role
in
YUM’s
net
income.
Profits
will
always
be
converted
into
USD.
A
weakening
USD
against
a
strengthening
foreign
currency
will
be
favorable
to
the
net
income
and
revenue
of
YUM.
0.0
5.0
10.0
15.0
07
08
09
10
11
12
USA
(%)
4.
China’s
currency
has
been
declining
since
2005
in
which
international
diplomats
has
been
pressuring
China
for
being
a
currency
manipulator.
Due
to
international
pressure,
the
Yuan
has
grown
10%
in
value
relative
to
the
dollar
since
2010.
In
the
3rd
quarter
of
2012,
Yum
received
a
favorable
2%
increase
in
foreign
currency
conversion.
As
of
now,
the
Obama
administration
has
not
yet
labeled
China
as
a
currency
manipulator,
but
the
Treasury
still
thinks
that
the
Yuan
is
still
undervalued
when
compared
to
the
dollar.
Industry
and
Sector
Analysis
The
Discretionary
Food
Sector
America’s
discretionary
spending
accounts
for
two-‐thirds
of
the
US
GDP.
In
2011,
Americans
spent
48%
of
their
total
food
expenditure
per
capita
on
dining
out.
There
wasn’t
much
change
from
2007
to
2011,
since
there
was
only
a
0.134%
growth
in
dining
out
spending
in
their
total
food
expenditure.
Americans
have
already
set
a
consistent
allocation
of
income
on
eating
out6
.
In
China,
discretionary
spending
in
2010
only
accounts
for
33%
of
China’s
annual
household
income.
It
has
grown
from
the
24%
from
2000.
As
of
2009,
Chinese
people
spend
22%
of
their
total
food
expenditure
per
capita
on
dining
out.
It
grew
by
a
total
of
4%
ever
since
20039
.
McKinsey’s
model
expects
the
dining
out
expense
of
households
to
grow
at
a
rate
of
10.2%
for
the
next
decade7
.
As
of
2012
the
middle
class,
or
households
who
allocates
1/3
of
their
income
in
discretionary
spending,
has
grown
to
be
bigger
than
the
population
of
USA.
The
increase
percentage
of
dining
out
spending
and
the
rising
middle
class
will
provide
sustaining
environment
for
the
restaurant
industry
to
grow
in.
Food
Service
Industry:
Comparing
to
the
US
restaurant
industry,
China
has
a
more
hostile
environment.
In
USA,
the
top
100
restaurants
hold
about
45%
of
the
market
share,
but
only
9%
in
China.
Western
food
restaurants
only
account
for
1%
for
the
Chinese
restaurant
industry
and
only
8%
of
the
total
market
shares
are
chain
restaurants.
Even
with
such
small
market
share,
chain
restaurants
are
growing
at
faster
pace
than
independent
restaurants.
From
2006
to
2009,
chain
restaurant’s
revenue
grew
at
an
average
rate
of
21%,
while
independent
restaurants
only
grew
at
average
rate
of
15.25%8
.
Company
Specific
Analysis
Strategy:
Directly
from
its
annual
report,
Yum
has
4
main
strategies
and
judging
from
their
current
performance,
they
have
been
following
through
with
their
plan
with
efficiency.
5. Their
main
objective
of
“building
leading
x`brands
in
China
in
every
significant
category"
is
nothing
short
of
success.
As
of
November
29th
,
Yum
has
opened
800
restaurants
in
China
alone.
Operating
profit
grew
by
15%
in
the
3rd
quarter
of
2012
and
it
also
indicated
a
16%
growth
in
restaurant
unit
growth.
Its
second
strategy
of
building
strong
brands
by
having
an
aggressive
international
expansion
has
a
slow
start,
but
they
are
still
making
a
lot
of
progress.
In
the
3rd
quarter
of
2012,
It
had
a
net
profit
growth
of
10%
internationally,
and
also
a
same
store
sales
growth
of
2%.
Also,
India
is
now
Yum’s
second
leading
country
for
opening
new
restaurants.
They
opened
100
restaurants
in
2011
and
it
is
expected
that
another
100
will
be
opened
by
the
end
of
2012.
Their
third
strategy
is
to
tend
to
the
home
front
of
improving
brands
in
the
US
while
having
consistent
returns.
Although
total
revenue
in
USA
has
been
decreasing
on
an
average
of
-‐9.7%,
this
is
partly
due
to
Yum’s
plan
of
focusing
on
expansion
and
refranchising.
Refranchising
company
restaurants
will
decrease
their
total
revenue,
but
it
will
also
decrease
the
G&A
costs.
Even
with
declining
revenue,
same
store
sales
growth
and
operating
profit
growth
for
2012
is
expected
to
be
2%
and
5%
respectively.
The
fourth
strategy
is
to
help
push
the
company
into
having
a
long-‐
term
value
for
the
shareholders
and
franchisees.
Yum
has
been
consistent
in
creating
financial
value
for
their
stockholders
ever
since
it
first
paid
out
dividends.
It
has
grown
at
a
rate
of
5.3%
since
the
inception
of
dividends.
The
payout
ratio
of
2011
was
36.7%
which
is
on
track
with
the
management’s
goal
of
having
a
35-‐40%
payout
ratio.
Assimilating:
On
February
1st
,
2012
Yum
gained
93%
ownership
of
Little
Sheep.
Little
Sheep
is
a
Chinese
hotpot
restaurant
that
Yum
acquired
for
strategic
reasons.
It
hopes
to
develop
brands
that
will
fit
into
China
culturally.
After
the
assimilation,
it
is
expected
that
Little
Sheep
will
increase
the
total
revenue
by
5%.
Eastern
Dawn
is
another
brand
that
Yum
is
trying
to
develop
into
being
one
of
the
leading
quick
Chinese
service
restaurants.
S.W.O.T
Analysis
Strength:
One
of
Yum’s
biggest
advantages
is
its
diversity
and
the
flexibility
in
the
quick
service
restaurant
that
it
offers.
It
allows
them
to
have
expertise
in
different
kinds
of
cuisines.
Not
only
do
they
have
western
and
Mexican
food,
but
they
are
also
slowly
making
a
foothold
in
Asian
cuisines.
This
allows
them
to
have
the
option
of
focusing
and
expanding
on
the
restaurant
chains
that
works
the
best
with
the
population
thus
making
it
easier
for
them
to
penetrate
into
foreign
markets.
6. Weakness:
Yum’s
revenue
and
stores
in
America
have
been
declining.
From
2007
to
2011,
Yum’s
revenue
and
number
of
restaurants
in
USA
declined
by
an
average
of
7.64%
and
80.6
stores
annually.
Also,
Yum
has
not
been
diversifying
its
revenue
source.
70%
of
its
revenue
is
from
China,
so
it
has
become
more
and
more
reliant
on
the
Chinese
economy.
Opportunity:
Yum
has
grabbed
the
opportunity
to
expand
its
market
share
in
the
restaurant
industry.
With
the
top
100
owning
only
1%
of
the
total
Chinese
restaurant
market
share,
there
is
still
plenty
of
space
for
them
to
expand.
Also,
Yum
will
have
plenty
of
places
for
Little
Sheep
to
expand,
since
they
only
have
approximately
450
restaurants
in
China.
Threat:
Yum
faces
the
threat
of
other
more
established
Chinese
restaurants
within
China.
With
5.9
other
million
restaurants
to
compete
with,
Yum
will
have
to
provide
food
that
fits
into
the
Chinese
culture.
In
America,
Yum
also
have
to
fight
market
shares
and
differentiate
their
products
from
similar
restaurants,
such
as
Del
Taco,
and
Dominos.
Also,
Yum’s
biggest
threat
is
still
McDonalds.
In
2010,
McDonald’s
market
share
in
the
quick
service
restaurant
industry
was
12.70%,
followed
by
Yum
with
9.7%
and
Wendy’s/Arby’s
at
6.6%.
Valuation
Analysis
Operating
Margins:
The
margins
of
Yum
were
relatively
consistent
when
divided
against
Sales.
From
2007
to
2011,
restaurant
expense
decreased
by
2.1%
and
this
was
due
to
Yum
expanding
to
China
and
having
a
lower
payroll
overseas.
However,
it
is
estimated
that
payroll
will
rise
to
a
22%,
since
the
Chinese
government
have
started
to
establish
more
labor
laws.
Revenue:
The
revenue
in
the
future
should
stay
strong
and
consistent,
since
it
will
take
a
long
time
for
Yum
to
reach
maturity
or
run
out
of
customers
in
China.
It
is
estimated
that
their
revenue
in
China
that
they
grows
at
a
pace
of
21%
for
the
next
5
years.
Their
2010-‐11
Sales
YOY
in
China
was
34%
and
2009-‐10
was
21%.
There
objectives
in
the
international
market
didn’t
have
as
much
impact
on
their
revenue,
even
though
they
are
now
focusing
in
India.
As
of
America,
their
revenue
has
been
declining
at
a
rate
of
9.7%
from
2007-‐11.
During
this
time
frame,
there
was
only
a
3%
increase
in
the
number
of
restaurants
in
America.
Beta:
The
beta
of
0.49
was
determined
by
doing
a
regression
analysis
between
the
last
24
monthly
price
movements
of
Yum
against
the
S&P500.
7. WACC:
Two
separate
cost
of
debt
were
determined
by
dividing
net
interest
by
net
debt
and
by
finding
the
current
yield
on
BBB
non-‐callable
bonds.
The
average
of
the
two
were
taken
and
came
out
to
be
4.48%
Two
separate
cost
of
equity
were
determined
by
the
Gordon
growth
model
and
the
CAPM
and
they
were
7.16%
and
5.5%
respectively.
However,
7.16%
was
chosen
to
be
more
on
the
conservative
side.
After
determining
the
weight,
the
WACC
came
out
to
be
6.68%
Risk
Free:
The
risk
free
rate
was
determined
by
using
the
30-‐year
Treasury
Bond
because
they
are
essentially
free
of
all
business
risks.
DCF:
The
intrinsic
value
of
$88.7
per
share
was
found.
This
is
32.5%
higher
than
the
current
stock
price.
The
main
reason
for
this
optimistic
outlook
is
because
of
their
potential
and
current
earning
power
in
China.
Even
though
they
have
an
total
annual
growth
of
5%
and
an
average
growth
of
15%
in
China,
a
more
conservative
long-‐term
growth
of
2.5%
was
chosen
for
Yum.
References
Cited:
1
GDP
per
Capita
(current
US$)."
Data.
World
Bank,
n.d.
Web.
3
Dec.
2012
.<http://data.worldbank.org/indicator/NY.GDP.PCAP.CD>
2
"Databases,
Tables
&
Calculators
by
Subject."
U.S.
Bureau
of
Labor
Statistics.
U.S.
Bureau
of
Labor
Statistics,
n.d.
Web.
15
Dec.
2012.:
<http://www.bls.gov/data/#unemployment>
3
"National
Bureau
of
Statistics
of
Chinaã ã Statistical
Data."
National
Bureau
of
Statistics
of
Chinaã ã Statistical
Data.
N.p.,
n.d.
Web.
3
Dec.
2012.<http://www.stats.gov.cn/english/statisticaldata/>
4
"United
States
Consumer
Confidence."
United
States
Consumer
Confidence.
N.p.,
n.d.
Web.
3
Dec.
2012.
<http://www.tradingeconomics.com/united-‐states/consumer-‐
confidence>
5
"China
Consumer
Confidence."
China
Consumer
Confidence.
N.p.,
n.d.
Web.
3
Dec.
2012.
<http://www.tradingeconomics.com/china/consumer-‐confidence>
6
"USDA
ERS
-‐
Food
Expenditures."
USDA
ERS
-‐
Food
Expenditures.
N.p.,
n.d.
Web.
3
Dec.
2012.
<http://www.ers.usda.gov/data-‐products/food-‐
expenditures.aspx#26636>
7
McKinsey
Research
Report
<http://www.mckinseychina.com/wp-‐
content/uploads/2012/03/mckinsey-‐meet-‐the-‐2020-‐consumer.pdf>
8
Alix
Partners
Research
Report
<http://www.alixpartners.com/en/LinkClick.aspx?fileticket
=pkSbIqKMcpI%3D&tabid=899>
9
Discretionary
Sector
and
Food
<http://www.fool.com/investing/general/2012/09/14/consumer
-‐
discretionary-‐sector-‐101.aspx>
10
Years,
NEW
YORK
(CNNMoney)
-‐-‐
As
China's
Economy
Has
Exploded
over
the
Last
30.
"China's
Middle-‐class
Boom."
CNNMoney.
Cable
News
Network,
26
June
2012.
Web.
3
Dec.
2012.
<http://money.cnn.com/2012/06/26/news/economy/china-‐middle-‐
class/index.htm>
Financial
Models
Created
with
the
help
of:
Benninga,
Simon,
and
Oded
H.
Sarig.
Corporate
Finance:
A
Valuation
Approach.
New
York:
McGraw-‐Hill,
1997.
Print.
Rosenbaum,
Joshua,
and
Joshua
Pearl.
Investment
Banking:
Valuation,
Leveraged
Buyouts,
and
Mergers
&
Acquisitions.
Hoboken,
NJ:
John
Wiley
&
Sons,
2009.
Print.
8.
9. Revenue
2005
2006
2007
2008
2009
2010
2011
Sales
8225
8365
9100
9843
9413
9783
10893
Franchise/license
fees/income
1124
1196
1335
1461
1423
1560
1733
Total
Revenue
9349
9561
10435
11304
10836
11343
12626
Cost/Expense
Food
and
paper
2584
2549
2824
3239
3003
3091
3633
Payroll
and
employee
benefits
2171
2142
2305
2370
2154
2172
2418
Occupancy
and
other
expense
2315
2403
2644
2856
2777
2857
3089
Restaurant
expense
7070
7094
7773
8465
7934
8120
9140
General
and
administrative
expenses
1158
1187
1293
1342
1221
1277
1372
Franchise
and
license
expenses
33
35
59
99
118
110
145
Closures
and
impairment(income)
expenses
62
59
35
43
103
47
135
Refranchising
(gain)
loss
-‐43
-‐24
-‐11
-‐5
-‐26
63
72
Other
(income)
expense
-‐80
-‐51
-‐71
-‐157
-‐104
-‐43
-‐53
Total
costs
and
expenses,
net
8196
8299
9078
9787
9246
9574
10811
Operating
Profit
1153
1262
1357
1517
1590
1769
1815
Interest
expense
127
154
166
226
194
175
156
Income
Before
Income
taxes
1026
1108
1191
1291
1396
1694
1659
Income
tax
provision
264
284
282
319
313
416
324
Net
Income
including
non-‐controlling
interest
909
972
1083
1178
1335
Net
Income
non-‐controlling
interest
-‐
8
12
20
16
Net
Income
762
824
909
964
1071
1178
1319
Shares
Outstanding
556
530
499
459
469
469
460
Basic
Earnings
Per
Common
Share
1.33
1.51
1.74
2.03
2.28
2.44
2.81
Share
based
compensation
18
19
16
12
12
12
Diluted
Earnings
Per
Common
Share
1.28
1.46
1.68
1.96
2.22
2.38
2.74
Dividends
Declared
Per
Common
Share
0.223
0.43
0.45
0.72
0.8
0.92
1.07
Dividend
123
144
273
322
362
412
481
Dividend
payout
ratio
16.14%
17.48%
30.03%
33.40%
33.80%
34.97%
36.47%
10. Revenue
2005
2006
2007
2008
2009
2010
2011
Sales
2.92%
1.70%
8.79%
8.16%
-‐4.37%
3.93%
11.35%
Franchise/license
fees/income
10.30%
6.41%
11.62%
9.44%
-‐2.60%
9.63%
11.09%
Total
Revenue
3.75%
2.27%
9.14%
8.33%
-‐4.14%
4.68%
11.31%
Cost/Expense
Food
and
paper
27.64%
26.66%
27.06%
28.65%
27.71%
27.25%
28.77%
Payroll
and
employee
benefits
23.22%
22.40%
22.09%
20.97%
19.88%
19.15%
19.15%
Occupancy
and
other
expense
24.76%
25.13%
25.34%
25.27%
25.63%
25.19%
24.47%
Restaurant
expense
75.62%
74.20%
74.49%
74.88%
73.22%
71.59%
72.39%
General
and
administrative
expenses
12.39%
12.42%
12.39%
11.87%
11.27%
11.26%
10.87%
Franchise
and
license
expenses
0.35%
0.37%
0.57%
0.88%
1.09%
0.97%
1.15%
Closures
and
impairment(income)
expenses
0.66%
0.62%
0.34%
0.38%
0.95%
0.41%
1.07%
Refranchising
(gain)
loss
-‐0.46%
-‐0.25%
-‐0.11%
-‐0.04%
-‐0.24%
0.56%
0.57%
Other
(income)
expense
-‐0.86%
-‐0.53%
-‐0.68%
-‐1.39%
-‐0.96%
-‐0.38%
-‐0.42%
Total
costs
and
expenses,
net
87.67%
86.80%
87.00%
86.58%
85.33%
84.40%
85.62%
Operating
Profit
12.33%
13.20%
13.00%
13.42%
14.67%
15.60%
14.38%
Interest
expense
1.36%
1.61%
1.59%
2.00%
1.79%
1.54%
1.24%
Income
Before
Income
taxes
10.97%
11.59%
11.41%
11.42%
12.88%
14.93%
13.14%
Income
tax
provision
25.73%
25.63%
23.68%
24.71%
22.42%
24.56%
19.53%
Net
Income
including
non-‐controlling
interest
0.00%
0.00%
8.71%
8.60%
9.99%
10.39%
10.57%
Net
Income
non-‐controlling
interest
0.00%
0.00%
-‐
0.07%
0.11%
0.18%
0.13%
Net
Income
8.15%
8.62%
8.71%
8.53%
9.88%
10.39%
10.45%
11.
2011
2012
2013
2014
2015
2016
2017
Franchise/license
fees
1733
1846
1968
2101
2245
2401
2570
Total
Revenue
12626
13568
14768
16031
17556
19166
21052
Cost/Expense
Food
and
paper
3633
3752
4084
4433
4855
5300
5822
Payroll
and
employee
benefits
2418
2985
3249
3527
3862
4217
4631
Occupancy
and
other
expense
3089
3356
3652
3965
4342
4740
5206
Restaurant
expense
9140
10093
10986
11925
13060
14257
15660
General
and
administrative
expenses
1372
1591
1731
1879
2058
2247
2468
Franchise
and
license
expenses
145
90
98
106
116
127
139
Closures
and
impairment(income)
expenses
135
75
82
89
98
107
117
Refranchising
(gain)
loss
72
-‐20
-‐22
-‐23
-‐26
-‐28
-‐31
Other
(income)
expense
-‐53
-‐66
-‐72
-‐78
-‐86
-‐93
-‐103
Total
costs
and
expenses,
net
10811
11763
12803
13898
15220
16616
18251
Operating
Profit
1815
1805
1965
2133
2336
2550
2801
Interest
expense
156
229
249
270
296
323
355
Income
Before
Income
taxes
1659
1577
1716
1863
2040
2228
2447
Income
tax
provision
324
378
411
446
489
533
586
Net
Income
including
non-‐controlling
interest
1335
1199
1305
1417
1551
1694
1860
Net
Income
non-‐controlling
interest
16
16
18
19
21
23
26
Net
Income
1319
1183
1287
1397
1530
1670
1835
Outstanding
Shares
460
460
447
4353
424
412
401
Share
based
compensation
12
13
13
14
14
15
16
Dividend
501
448
494
543
602
666
733
Dividend
payout
ratio
37.4%
37.8%
38%
38.9%
39%
39.8%
40%
Retained
earning
2052
2786
3580
4434
5361
6365
7466
12.
2011
2012
2013
2014
2015
2016
2017
Sales
86.3%
86.4%
86.7%
86.9%
87.2%
87.5%
87.8%
Franchise/license
fees/income
13.7%
13.6%
13.3%
13.1%
12.8%
12.5%
12.2%
Total
Revenue
Cost/Expense
Food
and
paper
28.8%
27.7%
27.7%
27.7%
27.7%
27.7%
27.7%
Payroll
and
employee
benefits
19.2%
22.0%
22.0%
22.0%
22.0%
22.0%
22.0%
Occupancy
and
other
expense
24.5%
24.7%
24.7%
24.7%
24.7%
24.7%
24.7%
Restaurant
expense
72.4%
74.4%
74.4%
74.4%
74.4%
74.4%
74.4%
General
and
administrative
expenses
10.9%
11.7%
11.7%
11.7%
11.7%
11.7%
11.7%
Franchise
and
license
expenses
1.1%
0.7%
0.7%
0.7%
0.7%
0.7%
0.7%
Closures
and
impairment(income)
expenses
1.1%
0.6%
0.6%
0.6%
0.6%
0.6%
0.6%
Refranchising
(gain)
loss
0.6%
-‐0.1%
-‐0.1%
-‐0.1%
-‐0.1%
-‐0.1%
-‐0.1%
Other
(income)
expense
-‐0.4%
-‐0.5%
-‐0.5%
-‐0.5%
-‐0.5%
-‐0.5%
-‐0.5%
Total
costs
and
expenses,
net
85.6%
86.7%
86.7%
86.7%
86.7%
86.7%
86.7%
Operating
Profit
14.4%
13.3%
13.3%
13.3%
13.3%
13.3%
13.3%
Interest
expense
1.2%
1.7%
1.7%
1.7%
1.7%
1.7%
1.7%
Income
Before
Income
taxes
13.1%
11.6%
11.6%
11.6%
11.6%
11.6%
11.6%
Income
tax
provision
2.6%
2.8%
2.8%
2.8%
2.8%
2.8%
2.8%
Net
Income
including
non-‐controlling
interest
10.6%
8.8%
8.8%
8.8%
8.8%
8.8%
8.8%
Net
Income
non-‐controlling
interest
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
Net
Income
10.4%
8.7%
8.7%
8.7%
8.7%
8.7%
8.7%
13.
2006
2007
2008
2009
2010
2011
Cash
and
Equivalent
319
789
216
353
1426
1198
Receivables
220
225
229
259
256
286
Inventories
93
128
143
122
189
273
Other
current
assets
138
142
172
314
269
338
Deferred
income
taxes
57
125
81
81
61
112
Advertising
cooperative
assets
74
72
110
99
112
114
Total
Current
Asset
901
1481
951
1228
2313
2321
Property
Plants
Equipment’s
3631
3849
3710
3899
3830
4042
Good
will
662
672
605
640
659
681
Intangible
assets
347
333
335
462
475
299
Investments
in
unconsolidated
affiliates
138
153
65
144
154
167
restricted
cash
-‐
-‐
-‐
300
other
assets
369
464
561
544
519
475
Deferred
income
taxes
320
290
300
251
366
549
Total
Assets
6368
7242
6527
7148
8316
8834
Current
Liabilities
Accounts
payable
and
other
current
liabilities
1386
1650
1473
1413
1602
1874
Income
taxes
payable
37
52
114
82
61
142
Short-‐term
borrowing
227
288
25
59
673
320
Advertising
cooperative
liabilities
74
72
110
99
112
114
Total
current
liabilities
1724
2062
1722
1653
2448
2450
Long
Term
Debt
2045
2924
3564
3207
2915
2997
Other
liabilities
and
deferred
credits
1147
1117
1335
1174
1284
1471
Total
Liabilities
4916
6103
6621
6034
6647
6918
Shareholder's
Equity
Common
Stock
-‐
253
86
18
Retained
Earning
1608
1119
303
996
1717
2052
Accumulated
comprehensive
loss
-‐156
20
-‐418
-‐224
-‐227
-‐247
Total
1452
1139
-‐108
1025
1576
1823
Non-‐controlling
interest
14
89
93
93
Total
Shareholder's
Equity
-‐94
1114
1669
1916
Total
Liabilities
and
Shareholder's
Equity
6368
7242
6527
7148
8316
8834
14. 2006
2007
2008
2009
2010
2011
Cash
and
Equivalent
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Receivables
2.3%
2.2%
2.0%
2.4%
2.3%
2.3%
Inventories
1.0%
1.2%
1.3%
1.1%
1.7%
2.2%
Other
current
assets
1.4%
1.4%
1.5%
2.9%
2.4%
2.7%
Deferred
income
taxes
0.6%
1.2%
0.7%
0.7%
0.5%
0.9%
Advertising
cooperative
assets
0.8%
0.7%
1.0%
0.9%
1.0%
0.9%
Total
Current
Asset
9.4%
14.2%
8.4%
11.3%
20.4%
18.4%
Property
Plants
Equipment’s
38.0%
36.9%
32.8%
36.0%
33.8%
32.0%
Good
will
6.9%
6.4%
5.4%
5.9%
5.8%
5.4%
Intangible
assets
3.6%
3.2%
3.0%
4.3%
4.2%
2.4%
Investments
in
unconsolidated
affiliates
1.4%
1.5%
0.6%
1.3%
1.4%
1.3%
restricted
cash
0.0%
0.0%
0.0%
0.0%
0.0%
2.4%
other
assets
3.9%
4.4%
5.0%
5.0%
4.6%
3.8%
Deferred
income
taxes
3.3%
2.8%
2.7%
2.3%
3.2%
4.3%
Total
Assets
66.6%
69.4%
57.7%
66.0%
73.3%
70.0%
Current
Liabilities
Accounts
payable
and
other
current
liabilities
14.5%
15.8%
13.0%
13.0%
14.1%
14.8%
Income
taxes
payable
0.4%
0.5%
1.0%
0.8%
0.5%
1.1%
Short-‐term
borrowing
2.4%
2.8%
0.2%
0.5%
5.9%
2.5%
Advertising
cooperative
liabilities
0.8%
0.7%
1.0%
0.9%
1.0%
0.9%
Total
current
liabilities
18.0%
19.8%
15.2%
15.3%
21.6%
19.4%
Long
Term
Debt
21.4%
28.0%
31.5%
29.6%
25.7%
23.7%
Other
liabilities
and
deferred
credits
12.0%
10.7%
11.8%
10.8%
11.3%
11.7%
Total
Liabilities
51.4%
58.5%
58.6%
55.7%
58.6%
54.8%
Shareholder's
Equity
Common
Stock
0.0%
0.0%
0.0%
2.3%
0.8%
0.1%
Retained
Earning
16.8%
10.7%
2.7%
9.2%
15.1%
16.3%
Accumulated
other
comprehensive
loss
-‐1.6%
0.2%
-‐3.7%
-‐2.1%
-‐2.0%
-‐2.0%
Total
15.2%
10.9%
-‐1.0%
9.5%
13.9%
14.4%
Non-‐controlling
interest
0.0%
0.0%
0.1%
0.8%
0.8%
0.7%
Total
Shareholder's
Equity
0.0%
0.0%
-‐0.8%
10.3%
14.7%
15.2%
Total
Liabilities
and
Shareholder's
Equity
66.6%
69.4%
57.7%
66.0%
73.3%
70.0%
