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Items Affecting Comparability of Net Income and Cash Flows | 12 Months Ended
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Dec. 31, 2023
Items Affecting Comparability Of Net Income And Cash Flows Disclosure [Abstract] |
Items Affecting Comparability of Net Income and Cash Flows | Items Affecting Comparability of Net Income and Cash Flows Extra Week in 2024 Fiscal year 2024 included 53 weeks for our U.S. businesses and for our international subsidiaries that reported on a period calendar. The 53rd week added $96 million to Total revenues, $36 million to Operating Profit and $25 million to Net Income in our Consolidated Statement of Income for the year ended December 31, 2024. Refranchising (Gain) Loss The Refranchising (gain) loss by our Divisional reportable segments is presented below. Given the size and volatility of refranchising initiatives, our chief operating decision maker (“CODM”) does not consider the impact of Refranchising (gain) loss when assessing Divisional segment performance. As such, we do not allocate such gains and losses to our Divisional segments for performance reporting purposes. During the years ended December 31, 2024, 2023 and 2022, we refranchised 1, 15 and 22 restaurants, respectively, and we sold certain restaurant assets (primarily land) associated with existing franchise restaurants to the franchisee. We received $49 million, $60 million and $73 million in pre-tax cash refranchising proceeds in 2024, 2023 and 2022, respectively, as a result of the sales of these restaurants and restaurant assets. A summary of Refranchising (gain) loss is as follows:
|  | Refranchising (gain) loss |  |  |  |  |
|  | 2024 |  | 2023 |  | 2022 |  |  |  |  |
KFC Division |  | $ | 1 |  |  | $ | 2 |  |  | $ | (3) |  |  |  |  |  |
Taco Bell Division |  | (32) |  |  | (33) |  |  | (13) |  |  |  |  |  |
Pizza Hut Division |  | (2) |  |  | 2 |  |  | (1) |  |  |  |  |  |
Habit Burger & Grill Division |  | (1) |  |  | — |  |  | (10) |  |  |  |  |  |
Worldwide |  | $ | (34) |  |  | $ | (29) |  |  | $ | (27) |  |  |  |  |  |
German Acquisition and Turkey Termination On January 8, 2025, we terminated our franchise agreements with franchisee IS Gida A.S. (IS Gida), the owner and operator of KFC and Pizza Hut restaurants in Turkey and a subsidiary of IS Holding A.S. (IS Holding), after failure by IS Gida to meet our standards. The termination affects 284 KFC restaurants and 254 Pizza Hut restaurants in Turkey. We also re-acquired the master franchise rights in Germany for KFC and Pizza Hut from the owner of IS Holding in December 2024. There is no impact in Germany from the termination in Turkey. We recorded charges of $37 million to Unallocated Other (income) expense, $18 million to Unallocated Franchise and property revenues and $6 million to Corporate and unallocated General and administrative expenses consisting primarily of transaction costs associated with the German acquisition and termination-related costs associated with the Turkey business in the year ended December 31, 2024. The amount of consideration paid related to the German acquisition was not significant. Resource Optimization During the third quarter of 2020, we initiated a resource optimization program that has allowed us to reallocate significant resources to accelerate our digital, technology and innovation capabilities to deliver a modern, world-class team member and customer experience and improve unit economics. During 2024, we expanded the program to identify further opportunities to optimize the company’s spending and identify additional, critical areas in which to potentially reallocate resources, both with a goal to enable the acceleration of the Company’s growth rate. Costs incurred to date related to the program primarily include severance associated with positions that have been eliminated or relocated and consultant fees. As a result of this program, we recorded charges of $79 million, $21 million and $11 million in the years ended December 31, 2024, 2023 and 2022, respectively. These charges were primarily recorded as General and administrative expenses. Due to their scope and size, these costs were not allocated to any of our segment operating results for performance reporting purposes. Investment in Devyani During the quarter ended March 31, 2024, we sold our approximate 5% minority investment in Devyani International Limited ("Devyani"), a franchise entity that operates KFC and Pizza Hut restaurants in India, for pre-tax proceeds of $104 million. Changes in the fair value of our ownership interest in Devyani prior to the date of sale resulted in pre-tax investment losses of $20 million in the year ended December 31, 2024 and pre-tax investment income of $8 million and $11 million in the years ended December 31, 2023 and 2022, respectively (see Note 14). Refinancing of Credit Agreement and Long-term Debt Redemptions On April 26, 2024, certain subsidiaries of the Company completed a refinancing of our Credit Agreement. See Note 11 for further discussion of the Credit Agreement refinancing. On February 23, 2022, the Company issued a notice of redemption for April 1, 2022, for $600 million aggregate principal amount of 7.75% YUM Senior Unsecured Notes due in 2025. The redemption amount was equal to 103.875% of the $600 million aggregate principal amount redeemed, reflecting a $23 million call premium, plus accrued and unpaid interest to the date of redemption. We recognized the call premium and the write-off of $5 million of unamortized debt issuance costs associated with the notes within Interest expense, net. Income Tax Matters Our effective tax rates in the years ended 2024, 2023 and 2022 have been significantly impacted by upfront recognition of and subsequent adjustments to amounts associated with recently completed intra-entity transfers of intellectual property ("IP") rights. As a result, our effective tax rates have fluctuated significantly and were 21.8%, 12.1% and 20.3% for the years ended December 31, 2024, 2023 and 2022, respectively. See Note 18.

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