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Business Combinations, Asset Acquisitions, and Joint Venture Formation
 6 Months Ended
Jun. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combination [Text Block]
KFC United Kingdom ("U.K.") and Ireland Restaurant Acquisition

On April 29, 2024, we completed the acquisition of all of the issued shares of two franchisee entities that owned 216 KFC restaurants in the U.K. and Ireland. The acquisition created a significant opportunity to accelerate KFC's growth strategy in the
large and growing U.K. and Ireland chicken market. The purchase price to be allocated for accounting purposes of $177 million consisted of cash, net of cash acquired, in the amount of $180 million, which included $174 million paid in 2024 and $6 million paid in 2025, offset by the settlement of a liability of $3 million related to our preexisting contractual relationship with the franchisee.

The acquisition was accounted for as a business combination using the acquisition method of accounting. The preliminary allocation of the purchase price is based on management's analysis, including preliminary work performed by third party valuation specialists, as of April 29, 2024.

During the quarter ended June 30, 2025, we finalized our preliminary estimate of the fair value of net assets acquired. The components of the final purchase price allocation, subsequent to the adjustments to the allocation in the quarter ended June 30, 2025 and prior quarters were as follows:

Total Current Assets$2 
Property, plant and equipment, net99 
Reacquired franchise rights (included in Intangible assets, net)
48 
Operating lease right-of-use assets (included in Other assets)124 
Total Identifiable Assets
273 
Total Current Liabilities(30)
Operating lease liabilities (included in Other liabilities and deferred credits)(115)
Other liabilities(41)
Total Liabilities Assumed
(186)
Total identifiable net assets87 
Goodwill90 
Purchase price to be allocated$177 

The cumulative adjustments to the preliminary estimate of identifiable net assets acquired (as recorded in the June 30, 2024 quarter of acquisition) resulted in a corresponding $14 million increase in estimated goodwill due to the following changes to the preliminary purchase price allocation.

Increase (Decrease) in Goodwill
Increase in Property, plant and equipment, net
$(11)
Increase in Required franchise rights
(1)
Increase in Operating lease right-of-use assets
(15)
Increase in Total Current Liabilities
12 
Increase in Operating lease liabilities
13 
Increase in Other liabilities
10 
Increase in consideration
6 
     Total increase in Goodwill$14 
Reacquired franchise rights, which were valued based on after-royalty cash flows expected to be earned by the acquired restaurants over the remaining term of their then-existing franchise agreements, have an estimated weighted average useful life of 5 years.

Other Restaurant Acquisitions

In addition to the acquisition discussed above, we acquired 58 and 63 restaurants from franchisees in the quarter and year to date ended June 30, 2025, respectively, including 12 KFC, 15 Taco Bell and 36 Pizza Hut restaurants (the "Other restaurant acquisitions"). Total cash consideration paid in connection with these acquisitions was $98 million, net of cash acquired.
These restaurant acquisitions were accounted for as business combinations using the acquisition method of accounting. The primary assets recorded as a result of the preliminary purchase price allocations were operating lease right-of-use assets (and corresponding lease liabilities) of $44 million, reacquired franchise rights of $43 million and goodwill of $42 million. Reacquired franchise rights, which were valued similarly to those in the KFC U.K. and Ireland restaurant acquisition, have estimated weighted average useful lives of 5 years for the KFCs, 17 years for the Taco Bells and 6 years for the Pizza Huts.

For both the KFC U.K. and Ireland restaurant acquisition and the Other restaurant acquisitions, the excess of the purchase price over the estimated fair value of the net, identifiable assets acquired was recorded as goodwill. The goodwill recognized represents expected benefits of the acquisitions that do not qualify for recognition as intangible assets. This includes value arising from cash flows expected to be earned in years subsequent to the expiration of the terms of franchise agreements existing upon acquisition. The goodwill is expected to be partially deductible for income tax purposes and has been allocated to the respective reporting units.

The financial results of all acquired restaurants have been included in our Condensed Consolidated Financial Statements since the respective dates of acquisition, which individually and in the aggregate, did not significantly impact our results for the quarter and year to date ended June 30, 2025. Pro forma financial information of the combined entities for the periods prior to acquisition is not presented due to the immaterial impact of the restaurant acquisitions on our Condensed Consolidated Financial Statements. The direct transaction costs associated with the restaurant acquisitions were also not material and were expensed as incurred.