Download TACO BELL/KFC - Byrne Company

TACO BELL/KFC
Absolute Net Lease
2,163 square feet on 33,227 square feet of land
20-year primary term
561 East 3rd Street at Covington Street
Jackson, Georgia
(Atlanta MSA)
DIRECT ALL INQUIRIES TO
RYAN M. BYRNE
and
[email protected]
BYRNE COMPANY
8525 Ferndale Road Suite 100 Dallas, Texas 75238
214.343.6996 www.byrnecompany.com
SEAN M. BYRNE
[email protected]
Georgia Broker of Record
Byrne
License 356483
TACO BELL/KFC
Jackson, Georgia
(Atlanta MSA)
TABLE OF CONTENTS
I
Investment Highlights
II
Aerial Photographs
Property Photographs
III
Property Information
IV
Sales Data
V
Lease Summary
VI
Survey
Location Maps
VII
Demographics
Information on Atlanta (MSA), Georgia
VIII
Information on KBP Foods (franchisee)
Information on Yum! Brands Inc.
X
Byrne Company Disclaimer
TREC Agency Disclosure
TACO BELL/KFC
Jackson, Georgia
(Atlanta MSA)
INVESTMENT HIGHLIGHTS
National representation
Major national retailers in the immediate area include McDonalds, CVS Pharmacy, Family Dollar, Piggly
Wiggly, Subway, Auto Zone, Advance Auto Parts, and Days Inn.
Absolute net
The Lease is absolute net with a 20-year primary lease term and ten years in extension options. Sixteen
years remain on the primary term, with ten percent (10%) rent escalations every five years. Next
escalation is March 2017.
Stability
The Franchisee is one of the largest Taco Bell/KFC franchises in the U.S. and operates nearly 250 quickserve restaurants in ten states.
International brands
Taco Bell Corp., a subsidiary of Yum! Brands, Inc., (NYSE: YUM), is the nation's leading Mexican-inspired
quick service restaurant. Taco Bell and its more than 350 franchise organizations have nearly 6,000
restaurants across the United States that proudly serve more than 40million customers every week.
KFC is the world’s most popular chicken restaurant chain, with over 17,000 restaurants in the United
States alone. KFC serves more than 12 million customers each day in over 115 countries and territories
around the world.
TACO BELL/KFC
Jackson, Georgia
(Atlanta MSA)
AERIAL PHOTO
TACO BELL/KFC
Jackson, Georgia
(Atlanta MSA)
PROPERTY PHOTOGRAPHS
Front view of Subject Property
For additional views of this property, please CLICK HERE
Side view of Subject Property looking Northwest
Property Photographs – Page Two
Side view of Subject Property looking Northeast
TACO BELL/KFC
Jackson, Georgia
(Atlanta MSA)
PROPERTY INFORMATION
PROPERTY
The Property offered for sale is a 33,227 square foot tract of land with 2,163 square
feet of improvements net leased to FQSR, LLC (franchisee) for the operation of a Taco
Bell & KFC restaurant. The 20-year lease term commenced February 2, 2012 and
expires February 29, 2032. Taco Bell/KFC has 10 additional years in lease extension
options (in 5-year increments), as set forth in the Lease Summary within this
presentation.
The lease is absolute net; Tenant pays for all real estate taxes, insurance, and
maintenance on the Property. Please refer to the Lease Summary for further details.
TACO BELL
Taco Bell Corp., a subsidiary of Yum! Brands, Inc., (NYSE: YUM), is the nation's
leading Mexican-inspired quick service restaurant. Taco Bell serves made to order and
customizable tacos, burritos, and specialties. Taco Bell and its more than 350 franchise
organizations have nearly 6,000 restaurants across the United States that proudly
serve more than 40 million customers every week.
KFC
Based in Louisville, Kentucky, KFC Corporation is the franchisor of the world's most
popular chicken restaurant chain, specializing in Original Recipe®, Extra Crispy™,
Kentucky Grilled Chicken® and Extra Crispy™ Strips with home-style sides, Hot
Wings™ and freshly made chicken sandwiches. KFC has been serving customers
complete, freshly prepared, family meals since Colonel Harland Sanders founded the
concept in 1952.
Famous for its Original Recipe® fried chicken, which is made with the same secret
blend of 11 herbs and spices Colonel Sanders perfected more than a half century ago,
it is estimated that, on average, more than 185 million people see a KFC commercial at
least once a week – that's more than half the U.S. population.
The KFC system serves more than 12 million customers each day in more than 115
countries and territories around the world. KFC operates more than 17,000 restaurants
in the Unites States and internationally. KFC's parent company is Yum! Brands, Inc.,
the world's largest restaurant company in terms of system restaurants, with more than
40,000 locations in more than 130 countries and territories and employing more than
one million associates. Yum! is ranked number 201 on the Fortune 500 List, with
revenues exceeding $13 billion in 2012.
Property Information – Page Two
FRANCHISEE
INFORMATION
The franchisee is FQSR, LLC d/b/a KBP Foods, LLC. KBP Foods is one of the largest
Taco Bell/KFC franchisees in the U.S. Originally named Zancanelli Management Corp.
with ties to the very first KFC franchisee, Zancanelli was bought out by KBP Foods in
2010. The company currently operates almost 250 KFC, Taco Bell, Pizza Hut, and
Long John Silver’s restaurants in 10 states including Georgia, Kansas, Missouri,
Florida, and Virginia. KBP Foods has been named one of the “Ten Fastest Growing
Restaurant Chains” and one of the “Top 100 Fastest Growing Businesses in North
America” by Chain Store Guide’s Database of Chain Operations. The company
expects to end the 2015 year with at least 278 store units.
MUNICIPAL ADDRESS
561 E. 3rd Street, Jackson, GA 30233
LOCATION
The Subject Property is located on East 3rd Street, just east of the signalized
intersection of East 3rd and Covington Streets, in Jackson, Georgia. East 3rd Street is
one of the primary arterials in Jackson. The city of Jackson is located southeast of
Atlanta, and is included in the Atlanta MSA.
LEGAL DESCRIPTION
All that tract or parcel of land lying and being in City of Jackson, Land Lot 89, 1st
District, Butts County, Georgia.
LAND AREA
Approximately 33,227 square feet
BUILDING AREA
2,163 square feet
0.763 acre
BUILDING CONSTRUCTION Steel-frame construction with stucco and concrete walls
CONSTRUCTION DATE
1992
PARKING LOT
18 regular and 1 handicapped parking spaces.
Asphalt paved parking area
ZONING
C – 1 – Downtown Commercial
ADDITIONAL KFC
OPPORTUNITY
At the time of this offering, for investors looking for a larger acquisition, Byrne
Company has additional KFC properties for sale. Contact Byrne Company for further
details.
KFC
Jackson, Georgia
(Atlanta MSA)
SALES DATA
PURCHASE PRICE
TERMS
$1,818,182.00
ALL CASH
-- or -Purchaser may obtain third party financing
* OPERATING INCOME
CURRENT
through February 28, 2017
Future
March 2017 rent increase
March 2022 rent increase
March 2027 rent increase
$100,000.00
$110,000.04
$121,000.08
$133,100.04
FREE & CLEAR RETURN
CURRENT
through February 2017
Future
March 2017 rent increase
March 2022 rent increase
March 2027 rent increase
6.05%
6.66%
7.32%
Average
Primary Term
6.38%
REMAINING YEARS ON PRIMARY LEASE TERM
Tenant has an additional 10 years in lease extension options.
See Lease Summary for details.
* All taxes, insurance, and maintenance are the responsibility of Tenant.
5.50%
16 years
KFC
Jackson, Georgia
(Atlanta MSA)
LEASE SUMMARY
LEASE DATE
February 2, 2012
TENANT
FQSR, LLC, a Delaware limited liability company
FRANCHISOR
KFC Corporation, a Delaware corporation
PREMISES
561 E. 3rd Street
LEASE TERM
20 years
COMMENCEMENT
February 2, 2012
EXPIRATION
February 29, 2032
OPTION TO RENEW
Two (2) additional successive periods of five (5) years each
TERM EXPIRATION DATE IF FULLY EXTENDED
RENT
DESTRUCTION OF
PREMISES
TAXES, INSURANCE
& MAINTENANCE
February 28, 2042
1st – 5th lease years
Feb 2, 2012 – Feb 28, 2017
$100,000.00 per yr
$8,333.33 per mo
Commencing on the first day of the 6th lease year and on each 5-year anniversary date thereafter during the term,
Annual Rent shall increase by 10% over the immediately preceding year.
6th – 10th lease years
Mar 1, 2017 – Feb 28, 2022
$110,000.04 per yr
$9,166.67 per mo
11th – 15th lease years
Mar 1, 2022 – Feb 28, 2027
$121,000.08 per yr
$10,083.34 per mo
16th – 20th lease years
Mar 1, 2027 – Feb 29, 2032
$133,100.04 per yr
$11,091.67 per mo
Extension 1
Mar 1, 2032 – Feb 28, 2037
$146,410.08 per yr
$12,200.84 per mo
Extension 2
Mar 1, 2037 – Feb 28, 2042
$161,051.04 per yr
$13,420.92 per mo
Should the Premises or a material portion thereof be damaged or destroyed within the last 36 months of the original
term or of any extended or renewed term of this Lease, or should any changed in code or building regulations
prevent Tenant from restoring, repairing or rebuilding the Premises so it is reasonably usable as a YUM!-branded
quick service restaurant, either Landlord or Tenant shall have the right to terminate this lease effective upon the
date of such damage or destruction.
Payable by Tenant.
USE
Tenant shall use the Premises solely for the operation of a YUM!-branded quick service restaurant, unless
otherwise approved by Landlord. Tenant shall at all times maintain the Premises in material compliance with all
applicable regulations and requirements of all county, municipal, state, federal and other governmental authorities,
and instruments of record affecting the Premises which are now in force or which are enacted during the term of
this Lease.
NET LEASE
It is the intention of the parties hereto that this lease is and shall be treated as an absolute triple net lease, and
that any and all costs, expenses, or charges with respect to the Premises shall be the sole responsibility
of Tenant.
TACO BELL/KFC
Jackson, Georgia
(Atlanta MSA)
LOCATION MAP
SUBJECT
PROPERTY
TACO BELL/KFC
Jackson, Georgia
(Atlanta MSA)
LOCATION MAP
SUBJECT
PROPERTY
Demographic and Income Profile
KFC - Jackson GA
561 E 3rd St, Jackson, Georgia, 30233
Ring: 1 mile radius
Summary
Prepared by Esri
Latitude: 33.29451
Longitude: -83.96071
Census 2010
2015
2020
Population
3,479
3,427
3,386
Households
1,312
1,288
1,272
841
814
797
2.51
2.50
2.50
Families
Average Household Size
Owner Occupied Housing Units
592
537
533
Renter Occupied Housing Units
720
751
739
Median Age
38.6
39.9
41.0
Area
State
National
Population
Households
-0.24%
-0.25%
0.90%
0.93%
0.75%
0.77%
Families
Owner HHs
-0.42%
-0.15%
0.80%
0.90%
0.69%
0.70%
Trends: 2015 - 2020 Annual Rate
Median Household Income
1.70%
2.80%
2.66%
2015
Households by Income
2020
Number
Percent
Number
<$15,000
361
28.0%
354
27.8%
$15,000 - $24,999
172
13.4%
135
10.6%
$25,000 - $34,999
235
18.2%
207
16.3%
$35,000 - $49,999
146
11.3%
143
11.2%
$50,000 - $74,999
146
11.3%
144
11.3%
$75,000 - $99,999
94
7.3%
124
9.7%
$100,000 - $149,999
120
9.3%
148
11.6%
$150,000 - $199,999
6
0.5%
7
0.6%
$200,000+
8
0.6%
10
0.8%
Median Household Income
Average Household Income
Per Capita Income
$28,857
$42,233
$16,403
Census 2010
Population by Age
Percent
$31,398
$48,115
$18,638
2015
2020
Number
Percent
Number
Percent
Number
0-4
241
6.9%
225
6.6%
215
Percent
6.3%
5-9
238
6.8%
215
6.3%
205
6.1%
10 - 14
223
6.4%
216
6.3%
209
6.2%
15 - 19
226
6.5%
195
5.7%
204
6.0%
20 - 24
228
6.6%
227
6.6%
193
5.7%
25 - 34
431
12.4%
451
13.2%
424
12.5%
35 - 44
406
11.7%
375
10.9%
378
11.2%
45 - 54
459
13.2%
429
12.5%
400
11.8%
55 - 64
375
10.8%
405
11.8%
422
12.5%
65 - 74
279
8.0%
301
8.8%
333
9.8%
75 - 84
221
6.4%
231
6.7%
242
7.1%
151
4.3%
158
4.6%
161
4.8%
Number
Percent
Number
Percent
Number
Percent
White Alone
1,911
54.9%
1,837
53.6%
1,779
52.5%
Black Alone
1,423
40.9%
1,428
41.7%
1,424
42.0%
7
0.2%
9
0.3%
10
0.3%
29
0.8%
37
1.1%
46
1.4%
0
0.0%
0
0.0%
0
0.0%
Some Other Race Alone
35
1.0%
43
1.3%
53
1.6%
Two or More Races
73
2.1%
72
2.1%
75
2.2%
Hispanic Origin (Any Race)
97
2.8%
121
3.5%
150
4.4%
85+
Census 2010
Race and Ethnicity
American Indian Alone
Asian Alone
Pacific Islander Alone
2015
2020
Data Note: Income is expressed in current dollars.
Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2015 and 2020.
January 07, 2016
©2015 Esri
Page 1 of 6
Demographic and Income Profile
KFC - Jackson GA
561 E 3rd St, Jackson, Georgia, 30233
Ring: 1 mile radius
Prepared by Esri
Latitude: 33.29451
Longitude: -83.96071
Annual Rate (in percent)
Trends 2015-2020
2.5
2
1.5
1
0.5
Area
State
USA
0
Population
Households
Families
Owner HHs
Median HH Income
Population by Age
12
Percent
10
8
6
4
2015
2020
2
0
0-4
5-9
10-14
15-19
20-24
25-34
2015 Household Income
35-44
45-54
55-64
65-74
75-84
85+
2015 Population by Race
50
$15K - $24K
13.4%
<$15K
28.0%
45
40
$200K+
0.6%
$25K - $34K
18.2%
$150K - $199K
0.5%
$100K - $149K
9.3%
$35K - $49K
11.3%
$75K - $99K
7.3%
$50K - $74K
11.3%
Percent
35
30
25
20
15
10
5
0
White
Black
Am. Ind.
Asian
Pacific
Other
Two+
2015 Percent Hispanic Origin: 3.5%
Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2015 and 2020.
January 07, 2016
©2015 Esri
Page 2 of 6
Demographic and Income Profile
KFC - Jackson GA
561 E 3rd St, Jackson, Georgia, 30233
Ring: 3 mile radius
Summary
Prepared by Esri
Latitude: 33.29451
Longitude: -83.96071
Census 2010
2015
2020
Population
7,480
7,411
7,354
Households
2,773
2,752
2,736
Families
1,903
1,868
1,844
Average Household Size
2.58
2.57
2.56
Owner Occupied Housing Units
1,549
1,446
1,444
Renter Occupied Housing Units
1,224
1,306
1,291
37.8
38.9
40.1
Area
State
National
Population
Households
-0.15%
-0.12%
0.90%
0.93%
0.75%
0.77%
Families
Owner HHs
-0.26%
-0.03%
0.80%
0.90%
0.69%
0.70%
Median Age
Trends: 2015 - 2020 Annual Rate
Median Household Income
2.83%
2.80%
2.66%
2015
Households by Income
2020
Number
Percent
Number
Percent
<$15,000
618
22.5%
598
21.9%
$15,000 - $24,999
331
12.0%
256
9.4%
$25,000 - $34,999
441
16.0%
392
14.3%
$35,000 - $49,999
321
11.7%
318
11.6%
$50,000 - $74,999
414
15.0%
408
14.9%
$75,000 - $99,999
268
9.7%
351
12.8%
$100,000 - $149,999
324
11.8%
370
13.5%
$150,000 - $199,999
19
0.7%
24
0.9%
$200,000+
14
0.5%
18
0.7%
Median Household Income
Average Household Income
Per Capita Income
$34,543
$48,337
$18,137
Census 2010
Population by Age
$39,715
$54,630
$20,497
2015
2020
Number
Percent
Number
Percent
Number
0-4
505
6.8%
474
6.4%
458
Percent
6.2%
5-9
526
7.0%
474
6.4%
451
6.1%
10 - 14
517
6.9%
490
6.6%
476
6.5%
15 - 19
506
6.8%
451
6.1%
468
6.4%
20 - 24
475
6.3%
481
6.5%
417
5.7%
25 - 34
947
12.7%
1,002
13.5%
916
12.5%
35 - 44
912
12.2%
865
11.7%
882
12.0%
45 - 54
1,040
13.9%
969
13.1%
899
12.2%
55 - 64
822
11.0%
891
12.0%
964
13.1%
65 - 74
592
7.9%
659
8.9%
715
9.7%
75 - 84
393
5.3%
408
5.5%
458
6.2%
246
3.3%
248
3.3%
251
3.4%
Number
Percent
Number
Percent
Number
Percent
White Alone
4,451
59.5%
4,315
58.2%
4,203
57.2%
Black Alone
2,763
36.9%
2,798
37.7%
2,810
38.2%
American Indian Alone
13
0.2%
17
0.2%
19
0.3%
Asian Alone
52
0.7%
67
0.9%
85
1.2%
0
0.0%
0
0.0%
0
0.0%
58
0.8%
71
1.0%
86
1.2%
Two or More Races
143
1.9%
144
1.9%
150
2.0%
Hispanic Origin (Any Race)
202
2.7%
255
3.4%
318
4.3%
85+
Census 2010
Race and Ethnicity
Pacific Islander Alone
Some Other Race Alone
2015
2020
Data Note: Income is expressed in current dollars.
Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2015 and 2020.
January 07, 2016
©2015 Esri
Page 3 of 6
Demographic and Income Profile
KFC - Jackson GA
561 E 3rd St, Jackson, Georgia, 30233
Ring: 3 mile radius
Prepared by Esri
Latitude: 33.29451
Longitude: -83.96071
Annual Rate (in percent)
Trends 2015-2020
2.5
2
1.5
1
Area
State
USA
0.5
0
Population
Households
Families
Owner HHs
Median HH Income
Population by Age
12
Percent
10
8
6
4
2015
2020
2
0
0-4
5-9
10-14
15-19
20-24
25-34
2015 Household Income
35-44
75-84
85+
50
<$15K
22.5%
45
$100K - $149K
11.8%
$75K - $99K
9.7%
Percent
40
$150K - $199K
0.7%
$50K - $74K
15.1%
65-74
55
$200K+
0.5%
$35K - $49K
11.7%
55-64
2015 Population by Race
$15K - $24K
12.0%
$25K - $34K
16.0%
45-54
35
30
25
20
15
10
5
0
White
Black
Am. Ind.
Asian
Pacific
Other
Two+
2015 Percent Hispanic Origin: 3.4%
Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2015 and 2020.
January 07, 2016
©2015 Esri
Page 4 of 6
Demographic and Income Profile
KFC - Jackson GA
561 E 3rd St, Jackson, Georgia, 30233
Ring: 5 mile radius
Summary
Prepared by Esri
Latitude: 33.29451
Longitude: -83.96071
Census 2010
2015
2020
12,176
12,061
11,967
Households
4,439
4,399
4,368
Families
3,173
3,112
3,070
Population
Average Household Size
2.64
2.62
2.62
Owner Occupied Housing Units
2,891
2,724
2,705
Renter Occupied Housing Units
1,548
1,675
1,663
38.4
39.6
41.2
Area
State
National
Population
Households
-0.16%
-0.14%
0.90%
0.93%
0.75%
0.77%
Families
Owner HHs
-0.27%
-0.14%
0.80%
0.90%
0.69%
0.70%
Median Age
Trends: 2015 - 2020 Annual Rate
Median Household Income
3.71%
2.80%
2.66%
2015
Households by Income
2020
Number
Percent
Number
<$15,000
790
18.0%
755
17.3%
$15,000 - $24,999
576
13.1%
439
10.1%
$25,000 - $34,999
651
14.8%
573
13.1%
$35,000 - $49,999
492
11.2%
480
11.0%
$50,000 - $74,999
706
16.0%
670
15.3%
$75,000 - $99,999
554
12.6%
701
16.0%
$100,000 - $149,999
581
13.2%
689
15.8%
$150,000 - $199,999
29
0.7%
35
0.8%
$200,000+
22
0.5%
26
0.6%
Median Household Income
Average Household Income
Per Capita Income
$39,604
$52,186
$19,277
Census 2010
Population by Age
Percent
$47,506
$59,070
$21,799
2015
2020
Number
Percent
Number
Percent
Number
0-4
802
6.6%
749
6.2%
704
Percent
5.9%
5-9
821
6.7%
771
6.4%
725
6.1%
10 - 14
813
6.7%
770
6.4%
786
6.6%
15 - 19
830
6.8%
700
5.8%
740
6.2%
20 - 24
753
6.2%
766
6.4%
640
5.3%
25 - 34
1,535
12.6%
1,602
13.3%
1,442
12.0%
35 - 44
1,559
12.8%
1,465
12.1%
1,481
12.4%
45 - 54
1,778
14.6%
1,655
13.7%
1,524
12.7%
55 - 64
1,472
12.1%
1,571
13.0%
1,648
13.8%
65 - 74
976
8.0%
1,145
9.5%
1,267
10.6%
75 - 84
544
4.5%
572
4.7%
705
5.9%
291
2.4%
295
2.4%
305
2.5%
Number
Percent
Number
Percent
Number
Percent
White Alone
7,748
63.6%
7,518
62.3%
7,337
61.3%
Black Alone
4,068
33.4%
4,141
34.3%
4,173
34.9%
American Indian Alone
25
0.2%
32
0.3%
36
0.3%
Asian Alone
65
0.5%
85
0.7%
107
0.9%
1
0.0%
1
0.0%
1
0.0%
73
0.6%
90
0.7%
111
0.9%
Two or More Races
196
1.6%
195
1.6%
202
1.7%
Hispanic Origin (Any Race)
285
2.3%
361
3.0%
449
3.8%
85+
Census 2010
Race and Ethnicity
Pacific Islander Alone
Some Other Race Alone
2015
2020
Data Note: Income is expressed in current dollars.
Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2015 and 2020.
January 07, 2016
©2015 Esri
Page 5 of 6
Demographic and Income Profile
KFC - Jackson GA
561 E 3rd St, Jackson, Georgia, 30233
Ring: 5 mile radius
Prepared by Esri
Latitude: 33.29451
Longitude: -83.96071
Trends 2015-2020
Annual Rate (in percent)
3.5
3
2.5
2
1.5
1
Area
State
USA
0.5
0
Population
Households
Families
Owner HHs
Median HH Income
Population by Age
12
Percent
10
8
6
4
2015
2020
2
0
0-4
5-9
10-14
15-19
20-24
25-34
2015 Household Income
35-44
45-54
55-64
65-74
75-84
85+
2015 Population by Race
60
$15K - $24K
13.1%
$25K - $34K
14.8%
55
50
<$15K
18.0%
45
$200K+
0.5%
$150K - $199K
0.7%
$35K - $49K
11.2%
$100K - $149K
13.2%
$50K - $74K
16.0%
$75K - $99K
12.6%
Percent
40
35
30
25
20
15
10
5
0
White
Black
Am. Ind.
Asian
Pacific
Other
Two+
2015 Percent Hispanic Origin: 3.0%
Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2015 and 2020.
January 07, 2016
©2015 Esri
Page 6 of 6
Subject
Property
KBP acquires 24 KFC units
Page 1 of 1
print | close
KBP acquires 24 KFC units
Lisa Jennings
Tue, 2015-06-30 16:44
Franchisee plans to expand with acquisitions
KBP Foods LLC, one of the nation’s largest KFC franchisees, added 24 more locations to its portfolio as part of
an ongoing plan to grow by acquisition, the company said Tuesday.
The agreement brings KBP’s unit count to 247 locations. All of the restaurants are KFC units, with a large
portion of dual-branded locations among them. The newly acquired restaurants are located in Kansas, Missouri
and Florida.
Overland Park, Kan.-based KBP said the acquisition is the first deal since the company was recapitalized in a
management buyout of its private-equity owners in April.
Related
KFC launches brand overhaul
KFC sues 3 companies in China over alleged rumors
More restaurant finance news
Terms of the deal were not disclosed. The 24 units were sold by D-Carr Investments and related entities, and all
are base KFC units, with some as co-branded locations, including five KFC/Taco Bell locations, four KFC/Long
John Silver’s units, and one KFC/Pizza Hut Express restaurant, said Monica Reinert, KBP director of
communications.
Barry Dubin, KBP chief development officer, said in a statement that growing by acquisition has been successful.
“With our recent recapitalization, we are continuing to seek out opportunities for KBP to add 50 to 60 new units
a year over the next five years,” Dubin said.
Reinert said the company is in talks for another acquisition this year, although it will likely be outside Yum!
Brands Inc.
KBP first invested in KFC as the Louisville, Ky.-based company refranchised, Reinert said. With that
refranchising effort now complete, KBP will look to expand with other brands, but the company is not yet ready
to reveal the direction it’s headed, she said.
Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout
Source URL: http://nrn.com/corporate-news/kbp-acquires-24-kfc-units
http://nrn.com/print/corporate-news/kbp-acquires-24-kfc-units
9/2/2015
KBP Foods completes management buyout
Page 1 of 2
print | close
KBP Foods completes management buyout
Jonathan Maze
Tue, 2015-04-28 16:01
KBP Foods Inc., recently completed a management-led buyout of its private equity owners, Boyne Capital, in a deal
that will enable the company to double the number of senior managers with ownership in the business.
“For us it’s great,” Michael Kulp, CEO of the Overland Park, Kan-based KFC and Taco Bell franchisee, said this week.
“We’re bringing key members of our management team involved in the equity side of the business. That helps create
wealth for their futures and for their families.”
Yet, just because management has bought out private equity doesn’t mean the company is about to slow its remarkable
growth.
Related
Bennigan’s CEO buys out franchisor
Good Times proposes $21M buyout of Bad Daddy's
More restaurant franchising news
KBP has quadrupled in size in
i the four years under Boyne’s ownership, and now has 223 locations in the Midwest and
Southeast. Most of those locations are KFC units, but the company also owns Taco Bell and Long John Silver’s
locations.
d expects to end the year with at least 278 units, Kulp said. He
KBP already has deals in place for 54 locations, and
expects growth to continue for the next few years.
“Our goal is to double the size of the business in five years,” Kulp said.
If the company continues buying 50 units a year for the next five years, he said, it would have about 550 locations and
$600 million in revenue.
With those growth projections and a strong recent track record, KBP did not have trouble finding potential investors
for its buyout. Many private-equity firms and other investors are eager to fund large, growing franchisees. The
operator initially had a dozen investors interested in the deal.
That enabled KBP to be choosy about its investors. The company chose three investors, who each offered a small
amount, to provide the franchisee with the ability to enable future growth.
The investors are all Small Business Investment Companies — professionally managed investment funds that work
with the U.S. Small Business Administration to fund small businesses.
The deal illustrates a growing trend in the franchise business. At a time when private equity has been pumping dollars
into large-scale franchisees, a few management teams at large operators have been looking for alternatives. For
instance, the Ontario Teachers’ Pension Plan invested $300 million in Flynn Restaurant Group last year.
Such investors have longer time horizons, and they don’t charge management fees like many private-equity funds do.
http://nrn.com/print/corporate-news/kbp-foods-completes-management-buyout?page=1
9/2/2015
KBP Foods completes management buyout
Page 2 of 2
In KBP’s situation, the investors were only looking for minority investments, enabling management to regain control
of the company.
In addition, the low cost of debt enabled management to borrow at low rates to fund the deal.
“It was the perfect storm, with the capital markets being right, our success at growing and the stability of the business,”
Kulp said. “We were able to go out and find partners in a minority capacity and take over majority control of the
business.”
The company expects to be able to grow in part because 150 of its units are in the KFC system, which has largely
avoided the consolidation wave that hit many franchised systems in recent years. KFC has a large number of legacy
operators that may look to sell in future years, which could provide a springboard for KBP’s continued growth.
“It’s a brand that’s ripe for some consolidation,” Kulp said.
"A big three years"
(Continued from page 1)
Kulp joined KBP in 2000, when it was known as Zancanelli Management Corp. and had just 12 KFC locations in
western Colorado. The company grew to 65 units by late 2009, when the original owners looked to sell their interest in
the company. The next year, Boyne bought a controlling interest and Kulp remained.
KBP then began acquiring KFC units. The chain’s sales struggled in the aftermath of the recession, and prices for many
locations were relatively low.
“There aren’t a lot of big, institutional, sophisticated operators in the system,” Kulp said. “It’s a challenging system to
operate. It takes a grassroots, on-the-ground, hands-on restaurant approach to be good inside the business.”
Kulp said many locations have gone too long without investment in assets and infrastructure. The company looks for
acquisitions in which sales are strong, but where it only needs to make a few changes to improve profitability.
“We’re seeing deals where we’re paying what the seller feels is a fair multiple,” Kulp said.
But with reinvestment in assets, infrastructure and people using the company’s financial model, profits improve and
the sale price looks better.
Currently, KFC has a lot of momentum. The chain’s same-store sales have improved in recent quarters, including a
7-percent increase in the first quarter this year. In February, the franchisor pledged to invest $185 million in the brand
over the next three years.
“It’s going to be a big three years,” Kulp said.
He noted that the addition of more advertising dollars behind the brand could radically change its image with the
consumer.
“This is my 14th year I’ve been involved with the brand,” Kulp said. “There’ve been some good years and some not-sogood years. KFC can be a difficult brand to operate. But when the brand is done right, there is a ton of opportunities for
growth.”
Contact Jonathan Maze at [email protected].
Follow him on Twitter: @jonathanmaze
Source URL: http://nrn.com/corporate-news/kbp-foods-completes-management-buyout
http://nrn.com/print/corporate-news/kbp-foods-completes-management-buyout?page=1
9/2/2015
KBP Foods CEO knows how to feed a fast-food beast - Kansas City Business Journal
Page 1 of 2
From the Kansas City Business Journal
:http://www.bizjournals.com/kansascity/news/2015/04/06/kbp-foods-fast-food-franchiseegrowth.html
KC-area fast-food exec knows how to feed the
beast
Apr 6, 2015, 1:40pm CDT Updated: Apr 6, 2015, 2:43pm CDT
Rob Roberts
Reporter- Kansas City Business Journal
Email | Twitter | LinkedIn | Google+
Michael Kulp is enjoying life in the fast-food lane.
As CEO of Overland Park-based KBP Foods LLC, Kulp leads one of the nation's 10 fastest-growing restaurant
chains. Created with the 1999 purchase of five KFC restaurants in Colorado, the quick-service franchisee has
grown to 227 KFC, Taco Bell and Long John Silver's locations in 10 states.
In just the past four years, KBP Foods has quadrupled its holdings, Kulp said, and there's no slowing the fastfood juggernaut down now.
See Also
• Profits to go: Fast-food giant's holding firm makes investor millions
"Our five-year proforma takes our business to around $600 million in revenue, which is right at double what
we'll end this year at," Kulp said. "We'll open 50 to 60 new units a year over the next five years, which is what
we've done the past four years.
"We're fully capitalized, locked and loaded, and ready to do that."
KBP Foods was originally named Zancanelli Management Corp. by founders Gary Zancanelli and his son Gary
Jr., who had worked for Harman Management Corp., the very first Kentucky Fried Chicken franchisee. Kulp
began working with the Zancanellis shortly after they purchased their first five KFCs. And when the father and
son wanted to cash out in 2010, Kulp brought in several equity investors to help him buy the founders' shares.
Kulp renamed with business KPB Foods, with the "K" standing for Kulp; the "B" for Boyne Capital Partners LLC,
the company's largest equity investor; and the "P" for Partners. But through a new recapitalization completed
in March, KBP Foods bought out its previous equity providers, who on average netted a healthy cash-on-cash
return of "just north of 6x," Kulp said.
On the flip side, KPB brought in three new institutional investors in smaller capacities and allowed seven more
senior managers of the company to buy in, increasing its total number of key employees with equity holdings
to 15.
The recapitalization also allowed Kulp to regain control of the firm's holding company board, which he now
serves as chairman, and left enough powder dry for future acquisitions.
http://www.bizjournals.com/kansascity/news/2015/04/06/kbp-foods-fast-food-franchisee-growth.ht... 9/2/2015
KBP Foods CEO knows how to feed a fast-food beast - Kansas City Business Journal
Page 2 of 2
"We've got about $60 million (in acquisitions) teed up that we'll be closing on before year-end," Kulp said.
KBP's buying strategy begins with sticking to its three franchise brands, which were originally owned by Yum!
Brands, though Long John Silver's has since been spun off.
"Originally, there wasn't a lot of strategy; Yum! Brands was what (the Zancanellis) were familiar with," Kulp
said. "And when Yum! started divesting a significant number of (company-owned) restaurants several years
ago, we had already built up a strong record of performance, so they came to us with a lot of initial
divestitures. For example, the 21-store Kansas City acquisition that brought us to Overland Park was a Yum!
corporate divestiture."
Six years later, in 2009, Yum! offered KPB another large group of restaurants, in Florida.
"Those were really our two large clumps of growth," Kulp said, "and then we built franchise markets around
them through smaller acquisitions. We've never left that (KFC, Taco Bell and Long John Silver's) space
because we know it and we've been successful with it."
KBP prefers to buy existing restaurants rather than opening new ones, Kulp said, "because you can buy four
or five restaurants for the price of building one."
As for its selection strategy, KBP likes to buy dense clusters of restaurants with high revenue but low
profitability.
"The reason we look for (low profitability) is that, in our business, you buy based on multiples of existing cash
flow," he said. "So I can come to you and offer a very fair market multiple. But by the the time I've integrated
the business, I've paid a third of that on an effective basis. Over the past 150 stores we've done, we've paid
something like 5x (cash flow), but we've integrated them to 1.7x."
KBP is able to improve new store performance quickly through a highly regimented management system "that
allow us to spell out what happens every 15 minutes in our restaurants," Kulp said.
The company's management structure is another part of KBP's secret sauce, he said.
Most quick-service chains sandwich two or three levels of middle management between the store and vice
president levels, Kulp explained. "We make every one of our vice presidents an equity holder, which gives us
the ability to attract top talent to those positions," he said, "and then we put those guys two levels away from
the restaurant. So in our infrastructure, it goes from restaurant to an area manager, who reports directly to a
vice president that has a stake and lives in his restaurants."
KBP's headquarters location also helps the company find top talent, Kulp said.
Over the past couple of years, he said, the company has hired a CFO who was previously CFO for Lockton
Cos. for 13 years and a human resources director who was the top HR executive for U.S. Bank.
"If we were in Chicago or New York or Atlanta, individuals like that would never sniff a business like this," Kulp
said. "They'd be looking at Coca-Cola or businesses like that for career progression — not a $250 million to
$300 million fast-food franchisee."
A total of 15 people now work in KBP's Overland Park office. But it takes many more than that to feed a
ravenous fast-foot beast. From store level through C-level, Kulp said, the company now employs nearly 5,000.
Rob reports on real estate and development.
http://www.bizjournals.com/kansascity/news/2015/04/06/kbp-foods-fast-food-franchisee-growth.ht... 9/2/2015
Stock Report | January 16, 2016 | NYS Symbol: YUM | YUM is in the S&P 500
YUM! Brands Inc.
★★★★★
S&P Capital IQ
HOLD
Recommendation
S&P Capital IQ Equity Analyst T. Amobi, CPA, CFA
Price
12-Mo. Target Price
$67.09 (as of Jan 15, 2016 4:00 PM ET) $75.00
Report Currency
USD
Investment Style
Large-Cap Growth
UPDATE: PLEASE SEE THE ANALYST'S LATEST RESEARCH NOTE IN THE COMPANY NEWS SECTION
GICS Sector Consumer Discretionary
Sub-Industry Restaurants
Summary This company operates, franchises or licenses the largest number of fast food
restaurants in the world, with more than 41,000 units in over 125 countries, including the
KFC, Pizza Hut and Taco Bell chains.
Key Stock Statistics (Source S&P Capital IQ, Vickers, company reports)
52-Wk Range
$95.90– 66.35
Trailing 12-Month EPS
$2.09
Trailing 12-Month P/E
32.1
$10K Invested 5 Yrs Ago
$15,539
S&P Oper. EPS 2015E
S&P Oper. EPS 2016E
P/E on S&P Oper. EPS 2015E
Common Shares Outstg. (M)
3.32
3.90
20.2
431.2
Market Capitalization(B)
Yield (%)
Dividend Rate/Share
Institutional Ownership (%)
Price Performance
10-Week Mov. Avg.
12-Mo. Target Price
Relative Strength
GAAP Earnings vs. Previous Year
Up
Down
Volume
No Change
Above Avg.
STARS
Below Avg.
Share Price
80
60
50
Volume(Mil.)
0.79
11
A+
75
63
30
20
10
0
4
3
3
1
FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FM
2012
2013
2014
LOW
MEDIUM
HIGH
YUM competes primarily in the fast food industry,
in which its concepts possess a very strong brand
name presence domestically, and in certain
foreign markets. However, operating margins can
vary widely due to fluctuations in food costs.
Further, YUM's profits can be affected by
changing currency exchange rates given its large
and fast-growing international business.
100
2011
Beta
S&P 3-Yr. Proj. EPS CAGR(%)
S&P Quality Ranking
Analyst's Risk Assessment
30-Week Mov. Avg.
5 3
$28.930
2.74
$1.84
78
2015
Revenue/Earnings Data
Revenue (Million U.S. $)
1Q
2Q
2015
2,622
3,105
2014
2,724
3,204
2013
2,535
2,904
2012
2,743
3,168
2011
2,425
2,816
2010
2,345
2,574
3Q
3,427
3,354
3,466
3,569
3,274
2,862
4Q
-3,997
4,179
4,153
4,111
3,562
Year
-13,279
13,084
13,633
12,626
11,343
0.95
0.89
0.33
1.00
0.80
0.74
E0.83
-0.20
0.70
0.72
0.75
0.56
E3.32
2.32
2.36
3.38
2.74
2.38
Past performance is not an indication of future performance and should not be relied upon as such.
Analysis prepared by Equity Analyst T. Amobi, CPA, CFA on Oct 07, 2015 04:31 PM, when the stock traded at $67.97.
Highlights
➤
➤
➤
We expect revenues to edge up 1.5% in 2015,
on international unit growth (new restaurant
openings) and low- to mid-single digit samestore sales growth led by the Taco Bell and KFC
divisions, versus relatively stagnant growth at
Pizza Hut and a notable decline in China (51% of
2014 sales). We see the strongest gains from international emerging markets (ex-China), versus relatively modest to moderate to stagnant
growth in international developed markets and
the US. YUM plans to open more than 1,400 new
international units in 2015, not including 700
planned in China, and additional units in India.
Sales will likely rise 8.5% in 2016.
Improved same-store sales should aid restaurant margins, while overall results should also
benefit from a partial recovery in China, with
the additional benefit of productivity and efficiency improvements, partly offset by some foreign currency headwinds. Refinancing activity
in 2014 should reduce 2015 interest costs.
We forecast EPS of $3.32 for 2015 and $3.90 in
2016, versus a normalized $3.09 in 2014. In early
October, YUM saw its 2015 EPS "well below" its
previous goal of at least 10% growth.
Investment Rationale/Risk
➤
➤
➤
After relatively mixed results for the first nine
months of 2015 and management's downwardly
revised full year EPS growth target, our nearterm outlook is still tempered by some lingering
impact of the supplier food handling issue in
China, where we nonetheless see a significant
potential for long-term growth. Elsewhere, we
see continued traction for Taco Bell, and to
some extent the KFC division as well, while also
encouraged by some recent signs of some stabilizatio at Pizza Hut.
Risks to our recommendation and target price
include protracted turnaround challenges in
China, intensifying cost pressures (energy, food
and labor costs), a sharp pullback in global
consumer spending and potentially severe foreign currency headwinds.
In May, activist hedge fund Third Point disclosed its stake in YUM. Our 12-month target
price of $75, which implies a relatively ample P/
E of 19.2x our 2016 EPS estimate, a notable discount to restaurant peers, and versus the
10-year historic average of 24.0x. The stock recently offered an implied yield of 2.6%, after a
12% dividend hike in October.
Earnings Per Share (U.S. $)
2015
0.81
0.53
2014
0.87
0.73
2013
0.72
0.61
2012
0.96
0.69
2011
0.54
0.65
2010
0.50
0.59
Fiscal year ended Dec. 31. Next earnings report expected: Early
February. EPS Estimates based on S&P Capital IQ Operating
Earnings; historical GAAP earnings are as reported in Company
reports.
Dividend Data
Amount
($)
0.410
0.410
0.460
0.460
Date
Decl.
Ex-Div.
Date
Stk. of
Record
Mar 25
May 1
Oct 6
Nov 19
Apr 8
Jul 15
Oct 14
Jan 13
Apr 10
Jul 17
Oct 16
Jan 15
Payment
Date
May 1
Aug 7
Nov 6
Feb 5
'15
'15
'15
'16
Dividends have been paid since 2004. Source: Company reports.
Past performance is not an indication of future performance and
should not be relied upon as such.
Please read the Required Disclosures and Analyst Certification on the last page of this report.
Redistribution or reproduction is prohibited without written permission.
This document is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek
independent financial advice regarding the suitability and/or appropriateness of making an investment or implementing the investment strategies discussed in this document and should understand that statements regarding future prospects may not be realized.
Investors should note that income from such investments, if any, may fluctuate and that the value of such investments may rise or fall. Accordingly, investors may receive back less than they originally invested. Investors should seek advice concerning any
impact this investment may have on their personal tax position from their own tax advisor. Please note the publication date of this document. It may contain specific information that is no longer current and should not be used to make an investment decision.
Unless otherwise indicated, there is no intention to update this document.
Stock Report | January 16, 2016 | NYS Symbol: YUM
YUM! Brands Inc.
Business Summary October 07, 2015
CORPORATE PROFILE. Yum! Brands (YUM) has the world's largest quick service restaurant (QSR) system,
with over 41,000 restaurants, including licensee units, in more than 125 countries and territories. The company operates and franchises restaurants under the KFC, Pizza Hut and Taco Bell concepts. In February
2012, YUM acquired a controlling interest in Little Sheep, a leading casual dining concept in China.
Starting with 2014, YUM's business consists of five reporting segments: YUM China (the China division),
and YUM Restaurants India (the India division). The KFC and Pizza Hut division include all their respective
concept operations outside of the China and India divisions. The Taco Bell division includes all operations
of the Taco Bell concept outside of the India division.
The China division, which is comprised of about 6,715 restaurants in mainland China, generated revenues
of $6.9 billion and operating profit of $713 million in 2014. Meanwhile, the India division has 833 units, and
recorded revenues of approximately $141 million, and an operating loss of $9 million.
KFC (originally Kentucky Fried Chicken) is the leader in the U.S. chicken QSR segment, according to NPD
Group CREST. As of year-end 2014, KFC had 14,197 stores operating outside China and India. It recorded
revenues of about $3.2 billion, and operating profit of $708 million in 2014.
Pizza Hut is the largest restaurant chain specializing in ready-to-eat pizza products, with about a 16% market share of the U.S. pizza QSR segment. As of year-end 2014, Pizza Hut had 13,602 units outside China and
India. It reported $1.1 billion in revenues, and $295 million in operating profit in 2014..
Taco Bell is the leader in the U.S. Mexican food QSR segment. As of year-end 2014, there were 6,199 Taco
Bell units outside China and India. It recorded $1.9 billion in revenues, and operating profit of $480 million in
2014.
CORPORATE STRATEGY. YUM sees greater growth opportunity outside the U.S., particularly in China,
which has a population of 1.3 billion and a rapidly growing economy. The company plans to increase the
number of units in China at a double-digit rate with same-store sales growth of at least 5%. For YRI, YUM's
long-term targets are unit growth of 3%-4% and same-store sales growth of at least 2%.
For its U.S. business, YUM plans to grow its operating profit at a rate of 5% per year by improving its brand
position through differentiated products. The company is also focused on returning substantial cash flows
to its shareholders via dividends and share repurchases. YUM is targeting an annual dividend payout ratio
of 35% to 40% of net income, and has increased the quarterly dividend at a double-digit rate each year
since inception in 2004.
IMPORTANT DEVELOPMENTS. In July 2014, an undercover report was televised in China showing improper food handling practices by a local food supplier in China. As a result, many customers shied away for
YUM's locations. The company terminated its relationship with the supplier globally, with minimal inrestaurant disruption. Even though the violator was a small supplier, sales at KFC and Pizza Hut were disproportionately impacted. Since then, China Division has experienced a significant, negative impact to
sales and profits at both KFC and Pizza Hut.
FINANCIAL TRENDS. We think the company remains committed to repurchasing shares and paying dividends to shareholders. At year-end 2014, the company had shares repurchases authorization to buyback
up to $1.1 billion of common stock.
Corporate Information
Investor Contact
S. Schmitt (888-298-6986)
Office
1441 Gardiner Lane, Louisville, KY 40213.
Telephone
502-874-8300.
Fax
502-874-8323.
Email
[email protected]
Website
http://www.yum.com
Officers
CEO
G. Creed
Vice Chrmn
J.S. Su
CFO
P.J. Grismer
COO
R.G. Eaton
Board Members
M. J. Cavanagh
G. Creed
M. Ferragamo
J. S. Linen
T. C. Nelson
E. B. Stock
R. D. Walter
B. C. Cornell
D. W. Dorman
M. M. Graddick-Weir
K. A. Meister
T. M. Ryan
J. S. Su
Domicile
North Carolina
Auditor
KPMG
Founded
1997
Employees
537,000
Stockholders
58,368
Redistribution or reproduction is prohibited without written permission.
SVP, Secy & General
Counsel
C.L. Campbell
Stock Report | January 16, 2016 | NYS Symbol: YUM
YUM! Brands Inc.
Quantitative Evaluations
S&P Capital IQ
Fair Value
Rank
Fair Value
Calculation
Expanded Ratio Analysis
1+
1
3
4
5
HIGHEST
Based on S&P Capital IQ's proprietary quantitative model, stocks
are ranked from most overvalued (1) to most undervalued (5).
$54.10
Investability
Quotient
Percentile
Analysis of the stock's current worth, based on S&P Capital IQ's
proprietary quantitative model suggests that YUM is overvalued by
$12.99 or 19.4%.
99
LOWEST = 1
LOW
BEARISH
AVERAGE
2014
2.49
11.87
23.13
31.40
453.0
2013
2.66
12.67
22.47
31.95
461.0
2012
2.30
10.94
14.64
19.67
473.0
2011
2.25
10.82
17.11
21.52
481.0
Figures based on calendar year-end price
Key Growth Rates and Averages
UNFAVORABLE
NEUTRAL
Past Growth Rate (%)
Sales
Net Income
1 Year
3 Years
5 Years
9 Years
1.49
-3.67
1.11
-10.08
4.44
-0.23
4.39
5.41
7.91
62.11
56.61
9.32
57.81
NA
9.72
58.40
68.48
9.38
66.50
102.99
HIGH
Since January, 2016, the technical indicators for YUM have been
BEARISH.
Insider Activity
Price/Sales
Price/EBITDA
Price/Pretax Income
P/E Ratio
Avg. Diluted Shares Outstg (M)
HIGHEST = 100
YUM scored higher than 99% of all companies for which an S&P
Capital IQ Report is available.
Volatility
Technical
Evaluation
2
LOWEST
Ratio Analysis (Annual Avg.)
Net Margin (%)
% LT Debt to Capitalization
Return on Equity (%)
FAVORABLE
For further clarification on the terms used in this report, please visit www.spcapitaliq.com/stockreportguide
Company Financials Fiscal Year Ended Dec. 31
Per Share Data (U.S. $)
Tangible Book Value
Cash Flow
Earnings
S&P Capital IQ Core Earnings
Dividends
Payout Ratio
Prices:High
Prices:Low
P/E Ratio:High
P/E Ratio:Low
2014
1.22
3.95
2.32
NA
1.52
66%
83.58
65.81
36
28
2013
1.44
3.93
2.36
2.70
1.38
58%
78.68
59.68
33
25
2012
0.95
4.74
3.38
3.19
1.19
35%
74.75
58.40
22
17
2011
1.83
4.05
2.74
2.76
1.04
38%
59.79
46.27
22
17
2010
0.94
3.59
2.38
2.40
0.88
37%
52.47
32.49
22
14
2009
NM
3.42
2.22
2.16
0.78
35%
36.96
23.37
17
11
2008
NM
3.10
1.96
1.76
0.68
35%
41.73
21.50
21
11
2007
0.27
2.67
1.68
1.69
0.52
31%
40.60
27.51
24
16
2006
0.81
2.46
1.46
1.51
0.26
18%
31.84
22.11
22
15
2005
1.04
2.07
1.28
1.26
0.22
17%
26.90
22.37
21
18
13,279
2,781
739
130
1,427
28.5%
1,051
NA
13,084
2,751
721
152
1,551
31.4%
1,091
1,248
13,633
2,872
645
169
2,145
25.0%
1,597
1,505
12,626
2,624
628
156
1,659
19.5%
1,319
1,330
11,343
2,435
589
175
1,594
26.1%
1,158
1,170
10,836
2,185
580
212
1,396
22.4%
1,071
1,041
11,279
1,971
560
253
1,280
24.7%
964
863
10,416
1,808
533
199
1,191
23.7%
909
913
9,561
1,724
479
154
1,108
25.6%
824
849
9,349
1,538
469
127
1,026
25.7%
762
754
Balance Sheet & Other Financial Data (Million U.S. $)
Cash
578
Current Assets
1,646
Total Assets
8,345
Current Liabilities
2,411
Long Term Debt
3,077
Common Equity
1,547
Total Capital
4,954
Capital Expenditures
1,033
Cash Flow
1,790
Current Ratio
0.7
% Long Term Debt of Capitalization
62.1
% Net Income of Revenue
7.9
% Return on Assets
12.3
% Return on Equity
56.6
573
1,691
8,695
2,265
2,918
2,166
5,257
1,049
1,812
0.8
55.5
8.3
12.3
50.5
776
1,909
9,011
2,188
2,932
2,154
5,254
1,099
2,242
0.9
55.8
11.7
NA
NA
1,198
2,321
8,834
2,450
2,997
1,823
5,326
940
1,947
1.0
56.3
10.4
15.4
77.8
1,426
2,313
8,316
2,448
2,915
1,576
4,677
796
1,747
0.9
62.3
10.2
15.0
89.0
353
1,208
7,148
1,653
3,207
1,025
4,321
797
1,651
0.7
74.2
9.9
15.7
NM
164
951
6,506
1,722
3,564
-112
3,509
935
1,524
0.6
101.6
8.6
14.0
NM
789
1,481
7,242
2,062
2,924
1,139
4,063
742
1,442
0.7
71.9
8.7
13.4
70.6
319
901
6,353
1,724
2,045
1,437
3,482
614
1,303
0.5
58.7
8.6
13.6
57.1
158
837
5,698
1,605
1,649
1,449
3,098
609
1,231
0.5
53.2
8.2
13.4
50.1
Income Statement Analysis (Million U.S. $)
Revenue
Operating Income
Depreciation
Interest Expense
Pretax Income
Effective Tax Rate
Net Income
S&P Capital IQ Core Earnings
Data as originally reported in Company reports.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under
Review.
Redistribution or reproduction is prohibited without written permission.
Stock Report | January 16, 2016 | NYS Symbol: YUM
YUM! Brands Inc.
Sub-Industry Outlook
Industry Performance
Our fundamental outlook for the restaurants
sub-industry is positive. We project low single digit
same-store sales growth in 2015. We think the U.S.
economy will expand at a moderate pace. Nonfarm
payroll employment has been rising, attaining the
200,000 per month that we think is needed to keep
up with the population increase. Consumers have
been cautious, and have been trading down or
dining out less often, in particular during the
weekdays. We project slower traffic for casual
dining restaurants, while we think fast food and
fast-casual dining restaurants will be less affected.
GICS Sector: Consumer Discretionary
Sub-Industry: Restaurants
margins, as restaurants absorbed most of the higher
input costs due to a weak economy. We think the
impact of higher input costs will lessen in the next
few quarters, as commodity price inflation has
slowed down recently. Still, we think restaurants
will have difficulty raising their prices. We also see
higher labor costs from minimum wage legislation,
and regional labor shortages, and higher healthcare
costs due to Obamacare.
Based on S&P 1500 Indexes
Five-Year market price performance through
Jan 16, 2016
S&P 1500
Year to date through August 14, the S&P
Restaurants Index rose 16.3%, versus a 1.7% higher
S&P 1500 Index. In 2014, the sub-industry index rose
4.3%, versus a 10.9% increase for the S&P 1500.
Sub-Industry
160%
% Change
For the full-service restaurant segment, we project
same-store sales growth of lower single-digits for
the year. We think traffic will rise up to 1.0% as more
people dine out. We also think they will likely
purchase lower-priced menu items instead of
higher-priced fare. However, we believe this will be
more than offset by overall higher prices. Thus, we
expect the average ticket price to increase slightly.
We believe this segment of the restaurant industry
will benefit less from faster growth in emerging
countries. In our coverage universe, full-service
restaurant companies have a higher percentage of
their restaurants located in the U.S.
Sector
210%
--Tuna N. Amobi, CFA, CPA
110%
60%
10%
-40%
For the quick-service restaurant segment, we
expect same-store sales to rise 2%-3% for the year,
as we believe consumers will trade down from
eating out at full-service outfits. We see incremental
growth, as some quick-service restaurants are
adding breakfast food to their menus. We see
further growth opportunities in international
markets, in particular China, with Yum! Brands,
McDonald's and Starbucks opening more stores in
that country.
-90%
2010
2011
2012
2013
2014
2015
NOTE: All Sector & Sub-Industry information is based on the
Global Industry Classification Standard (GICS)
Past performance is not an indication of future performance
and should not be relied upon as such.
The restaurant industry has been hit by higher food
costs in the past year, resulting in lower operating
Sub-Industry : Restaurants Peer Group*: Fast-food - Larger
Peer Group
Stock
Symbol
Stk.Mkt.
Cap.
(Mil. $)
Recent
Stock
Price($)
Yum Brands
YUM
28,930
Biglari Holdings
Domino's Pizza
Jack in the Box
McDonald's Corp
Papa John's Intl
Starbucks Corp
BH
DPZ
JACK
MCD
PZZA
SBUX
424
5,692
3,176
105,762
1,879
86,118
52
Week
High/Low($)
67.09
95.90/66.35
336.06
104.16
72.00
115.18
48.16
58.00
459.43/321.00
119.73/96.76
99.99/63.94
120.23/87.50
79.40/47.49
64.00/40.16
Beta
Yield
(%)
P/E
Ratio
Fair
Value
Calc.($)
0.79
2.7
32
54.10
A+
99
7.9
62.1
1.07
0.97
0.64
0.36
0.47
0.77
Nil
1.2
1.7
3.1
1.5
1.4
2
33
25
25
27
32
NA
69.50
73.60
89.00
50.20
52.60
BB+
B
A
B+
B+
25
94
90
99
92
99
3.6
8.2
7.3
17.3
4.6
14.4
25.2
500.1
94.6
53.9
68.2
28.7
NA-Not Available NM-Not Meaningful NR-Not Rated. *For Peer Groups with more than 15 companies or stocks, selection of issues is based on market capitalization.
Redistribution or reproduction is prohibited without written permission.
S&P Return on
Quality IQ
Revenue
Ranking %ile
(%)
LTD to
Cap
(%)
BYRNE COMPANY
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