Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 03, 2022 | |
Document And Entity Information [Line Items] | ||
Entity Registrant Name | Yum China Holdings, Inc. | |
Entity Central Index Key | 0001673358 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Trading Symbol | YUMC | |
Amendment Flag | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Document Period End Date | Sep. 30, 2022 | |
Entity Common Stock Shares Outstanding | 418,427,345 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Entity Incorporation, State or Country Code | DE | |
Security Exchange Name | NYSE | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-37762 | |
Entity Tax Identification Number | 81-2421743 | |
Entity Address, Address Line One | 7100 Corporate Drive | |
Entity Address, City or Town | Plano | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75024 | |
City Area Code | 469 | |
Local Phone Number | 980-2898 | |
Entity Address, Country | US | |
The Stock Exchange of Hong Kong Limited [Member] | ||
Document And Entity Information [Line Items] | ||
Trading Symbol | 9987 | |
Other Address [Member] | ||
Document And Entity Information [Line Items] | ||
Entity Address, Address Line One | Yum China Building | |
Entity Address, City or Town | Shanghai | |
Entity Address, Postal Zip Code | 200030 | |
Entity Address, Country | CN | |
Entity Address, Address Line Two | 20 Tian Yao Qiao Road |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Revenues | |||||
Total revenues | $ 2,685 | $ 2,554 | $ 7,481 | $ 7,562 | |
Costs and Expenses, Net | |||||
General and administrative expenses | 157 | 142 | 449 | 408 | |
Other operating costs and expenses | 18 | 17 | 53 | 41 | |
Closures and impairment expenses, net | 4 | 2 | 20 | 13 | |
Other expenses (income), net | 24 | (10) | 73 | (15) | |
Total costs and expenses, net | 2,369 | 2,376 | 6,893 | 6,809 | |
Operating Profit | 316 | 178 | 588 | 753 | |
Interest income, net | [1] | 25 | 16 | 51 | 47 |
Investment loss | [1] | (15) | (39) | (32) | (43) |
Income Before Income Taxes and Equity in Net Earnings (Losses) from Equity Method Investments | 326 | 155 | 607 | 757 | |
Income tax provision | (97) | (44) | (183) | (210) | |
Equity in net earnings (losses) from equity method investments | (2) | (4) | |||
Net income – including noncontrolling interests | 227 | 111 | 420 | 547 | |
Net income – noncontrolling interests | 21 | 7 | 31 | 32 | |
Net Income – Yum China Holdings, Inc. | $ 206 | $ 104 | $ 389 | $ 515 | |
Weighted-average common shares outstanding (in millions): | |||||
Basic | [2] | 420 | 422 | 422 | 421 |
Diluted | [2] | 424 | 435 | 426 | 435 |
Basic Earnings Per Common Share | $ 0.49 | $ 0.25 | $ 0.92 | $ 1.23 | |
Diluted Earnings Per Common Share | $ 0.49 | $ 0.24 | $ 0.92 | $ 1.19 | |
Company Sales [Member] | |||||
Revenues | |||||
Revenues | $ 2,561 | $ 2,310 | $ 7,135 | $ 6,874 | |
Franchise [Member] | |||||
Revenues | |||||
Revenues | 22 | 40 | 65 | 120 | |
Costs and Expenses, Net | |||||
Cost of goods and services sold | 9 | 17 | 27 | 50 | |
Transactions With Franchisees and Unconsolidated Affiliates [Member] | |||||
Revenues | |||||
Revenues | 80 | 184 | 219 | 519 | |
Costs and Expenses, Net | |||||
Cost of goods and services sold | 76 | 180 | 212 | 509 | |
Other Revenues [Member] | |||||
Revenues | |||||
Revenues | 22 | 20 | 62 | 49 | |
Company Restaurant Expenses [Member] | |||||
Costs and Expenses, Net | |||||
Food and paper | 787 | 743 | 2,206 | 2,133 | |
Payroll and employee benefits | 603 | 591 | 1,819 | 1,675 | |
Occupancy and other operating expenses | 691 | 694 | 2,034 | 1,995 | |
Cost of goods and services sold | $ 2,081 | $ 2,028 | $ 6,059 | $ 5,803 | |
[1] Amounts have not been allocated to any segment for performance reporting purposes. As a result of the separation, shares of Yum China common stock were distributed to YUM’s shareholders of record as of October 19, 2016 and included in the calculated weighted-average common shares outstanding. Holders of outstanding YUM equity awards generally received both adjusted YUM awards and Yum China awards, or adjusted awards of either YUM or Yum China in their entirety. Any subsequent exercise of these awards, whether held by the Company’s employees or YUM’s employees, would increase the number of common shares outstanding. The incremental shares arising from outstanding equity awards are included in the computation of diluted EPS, if there is dilutive effect. In September 2020, 41,910,700 common shares were issued as a result of the Company’s global offering and secondary listing on the HKEX and they were included in the calculated weighted-average common shares outstanding. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income - including noncontrolling interests | $ 227 | $ 111 | $ 420 | $ 547 |
Other comprehensive (loss) income, net of tax of nil: | ||||
Foreign currency translation adjustments | (306) | 10 | (573) | 50 |
Comprehensive (loss) income - including noncontrolling interests | (79) | 121 | (153) | 597 |
Comprehensive (loss) income - noncontrolling interests | (23) | 9 | (52) | 36 |
Comprehensive (Loss) Income - Yum China Holdings, Inc. | $ (56) | $ 112 | $ (101) | $ 561 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | ||
Cash Flows – Operating Activities | |||
Net income - including noncontrolling interests | $ 420 | $ 547 | |
Depreciation and amortization | 467 | 380 | |
Non-cash operating lease cost | 333 | 310 | |
Closures and impairment expenses | 20 | 13 | |
Gain from re-measurement of equity interest upon acquisition | [1] | (10) | |
Investment loss | [2] | 32 | 43 |
Equity income from investments in unconsolidated affiliates | (38) | ||
Distributions of income received from unconsolidated affiliates | 7 | 21 | |
Deferred income taxes | (7) | 17 | |
Share-based compensation expense | 31 | 32 | |
Changes in accounts receivable | (6) | 2 | |
Changes in inventories | 71 | 13 | |
Changes in prepaid expenses, other current assets and VAT assets | 216 | ||
Changes in accounts payable and other current liabilities | (19) | 82 | |
Changes in income taxes payable | 70 | (5) | |
Changes in non-current operating lease liabilities | (299) | (309) | |
Other, net | (7) | (24) | |
Net Cash Provided by Operating Activities | 1,329 | 1,074 | |
Cash Flows – Investing Activities | |||
Capital spending | (509) | (482) | |
Purchases of short-term investments | (4,290) | (4,524) | |
Purchases of long-term time deposits | (25) | ||
Maturities of short-term investments | 4,226 | 4,544 | |
Acquisition of business, net of cash acquired | (23) | ||
Acquisition of equity investment | (261) | ||
Other, net | 3 | 5 | |
Net Cash Used in Investing Activities | (593) | (743) | |
Cash Flows – Financing Activities | |||
Repurchase of shares of common stock | (411) | (32) | |
Cash dividends paid on common stock | (152) | (152) | |
Dividends paid to noncontrolling interests | (29) | (22) | |
Contribution from noncontrolling interests | 18 | ||
Payment of acquisition related holdback | (7) | (8) | |
Other, net | (2) | (6) | |
Net Cash Used in Financing Activities | (583) | (220) | |
Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash | (78) | 9 | |
Net Increase in Cash, Cash Equivalents and Restricted Cash | 75 | 120 | |
Cash, Cash Equivalents and Restricted Cash - Beginning of Period | 1,136 | 1,158 | |
Cash, Cash Equivalents and Restricted Cash - End of Period | 1,211 | 1,278 | |
Supplemental Cash Flow Data | |||
Cash paid for income tax | 124 | 210 | |
Non-cash Investing and Financing Activities | |||
Capital expenditures included in accounts payable and other current liabilities | $ 133 | $ 208 | |
[1] For the quarter and year to date ended September 30, 2021, the Company recognized a gain of $ 10 million from the re-measurement of our previously held equity interest at fair value, as a result the consolidation of Lavazza joint venture as disclosed in Note 3. Amounts have not been allocated to any segment for performance reporting purposes. |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 1,211 | $ 1,136 |
Short-term investments | 2,826 | 2,860 |
Accounts receivable, net | 66 | 67 |
Inventories, net | 321 | 432 |
Prepaid expenses and other current assets | 286 | 221 |
Total Current Assets | 4,710 | 4,716 |
Property, plant and equipment, net | 1,965 | 2,251 |
Operating lease right-of-use assets | 2,154 | 2,612 |
Goodwill | 1,927 | 2,142 |
Intangible assets, net | 176 | 272 |
Investments in unconsolidated affiliates | 256 | 292 |
Deferred income tax assets | 89 | 106 |
Other assets | 419 | 832 |
Total Assets | 11,696 | 13,223 |
Current Liabilities | ||
Accounts payable and other current liabilities | 1,992 | 2,332 |
Income taxes payable | 112 | 51 |
Total Current Liabilities | 2,104 | 2,383 |
Non-current operating lease liabilities | 1,862 | 2,286 |
Non-current finance lease liabilities | 36 | 40 |
Deferred income tax liabilities | 370 | 425 |
Other liabilities | 156 | 167 |
Total Liabilities | 4,528 | 5,301 |
Redeemable Noncontrolling Interest | 13 | 14 |
Equity | ||
Common stock, $0.01 par value; 1,000 million shares authorized; 419 million shares and 449 million shares issued at September 30, 2022 and December 31, 2021, respectively; 419 million shares and 428 million shares outstanding at September 30, 2022 and December 31, 2021, respectively | 4 | 4 |
Treasury stock | 0 | (803) |
Additional paid-in capital | 4,408 | 4,695 |
Retained earnings | 2,228 | 2,892 |
Accumulated other comprehensive (loss) income | (222) | 268 |
Total Yum China Holdings, Inc. Stockholders' Equity | 6,418 | 7,056 |
Noncontrolling interests | 737 | 852 |
Total Equity | 7,155 | 7,908 |
Total Liabilities, Redeemable Noncontrolling Interest and Equity | $ 11,696 | $ 13,223 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 419,000,000 | 449,000,000 |
Common stock, shares outstanding | 419,000,000 | 428,000,000 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Note 1 – Description of Business Yum China Holdings, Inc. (“Yum China” and, together with its subsidiaries, the “Company,” “we,” “us” and “our”) was incorporated in Delaware on April 1, 2016 . The Company owns, franchises or has ownership in entities that own and operate restaurants (also referred to as “stores” or “units”) under the KFC, Pizza Hut, Little Sheep, Huang Ji Huang, Lavazza, COFFii & JOY and Taco Bell concepts (collectively, the “concepts”). In connection with the separation of the Company in 2016 from its former parent company, YUM! Brands, Inc. (“YUM”), a master license agreement was entered into between Yum Restaurants Consulting (Shanghai) Company Limited (“YCCL”), a wholly-owned indirect subsidiary of the Company, and YUM, through YRI China Franchising LLC, a subsidiary of YUM, effective from January 1, 2020 and previously through Yum! Restaurants Asia Pte. Ltd., another subsidiary of YUM, from October 31, 2016 to December 31, 2019. Pursuant to the master license agreement, we are the exclusive licensee of KFC, Pizza Hut and, subject to achieving certain agreed-upon milestones as amended in April 2022, Taco Bell brands and their related marks and other intellectual property rights for restaurant services in the People’s Republic of China (the “PRC” or “China”), excluding Hong Kong, Macau and Taiwan. The term of the license is 50 years from October 31, 2016 for the KFC and Pizza Hut brands and, subject to achieving certain agreed-upon milestones, 50 years from April 15, 2022 for the Taco Bell brand, with automatic renewals for additional consecutive renewal terms of 50 years each, subject only to YCCL being in “good standing” and unless YCCL gives notice of its intent not to renew. In exchange, we pay a license fee to YUM equal to 3 % of net system sales from both our Company and franchise restaurants. We own the intellectual property of Little Sheep, Huang Ji Huang and COFFii & JOY, and pay no license fee related to these concepts. In the second quarter of 2020, the Company partnered with Luigi Lavazza S.p.A. (“Lavazza Group”), the world renowned family-owned Italian coffee company, and entered into a joint venture to explore and develop the Lavazza coffee shop concept in China. In September 2021, the Company and Lavazza Group entered into agreements for the previously formed joint venture (“Lavazza joint venture”) to accelerate the expansion of Lavazza coffee shops in China. Upon execution of these agreements, the Company controls and consolidates the joint venture with its 65 % equity interest. The acquisition was considered immaterial. During the fourth quarter of 2021, the Company completed its investment of a 28 % equity interest in Hangzhou Catering Service Group (“Hangzhou Catering”), for cash consideration of $ 255 million. Upon closing, the Company directly and indirectly holds an approximately 60 % equity interest in the Hangzhou KFC joint venture that operates KFC stores in and around Hangzhou, China (“Hangzhou KFC”), allowing the Company to consolidate Hangzhou KFC. The acquisition was considered immaterial. As part of our strategy to drive growth from off-premise occasions, we have also developed our own retail brand operations, SoulFun, since 2018, which sells ready meals such as steak, fried rice and pasta through online and offline channels. The operating results of SoulFun are included in our e-commerce business operating segment. The Company has two reportable segments: KFC and Pizza Hut. Our remaining operating segments, including the operations of Little Sheep, Huang Ji Huang, Lavazza, COFFii & JOY, Taco Bell, East Dawning, Daojia and our e-commerce business, are combined and referred to as All Other Segments, as those operating segments are insignificant both individually and in the aggregate. East Dawning was severely impacted by the COVID-19 pandemic. As a result, the Company decided to wind down the operations of East Dawning brand in 2021, and closed all East Dawning units in China by March 2022. In addition, the Company decided to wind down the operations of COFFii & JOY by the end of 2022. The Company will leverage its experience in COFFii & JOY to better capture growing coffee market opportunities in China. Additional details on our reportable operating segments are included in Note 14. The Company’s common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “YUMC”. On September 10, 2020, the Company completed a secondary listing of its common stock on the Main Board of the Hong Kong Stock Exchange (“HKEX”) under the stock code “9987”, in connection with a global offering of 41,910,700 shares of its common stock. Net proceeds raised by the Company from the global offering after deducting underwriting fees and the offering expenses amounted to $ 2.2 billion. On October 24, 2022, the Company’s voluntary conversion of its secondary listing status to a primary listing status on the HKEX became effective (“Primary Conversion”). On the same day, the Company’s shares of common stock traded on the HKEX was included in the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect. Yum China is now a dual primary listed company on the NYSE and HKEX. The Company’s common stock listed on the two exchanges will continue to be fully fungible. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Note 2 – Basis of Presentation Our preparation of the accompanying Condensed Consolidated Financial Statements in conformity with Generally Accepted Accounting Principles in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. We have prepared the Condensed Consolidated Financial Statements in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The Condensed Consolidated Financial Statements include all normal and recurring adjustments considered necessary to present fairly our financial position as of September 30, 2022, our results of operations and comprehensive income for the quarters and years to date ended September 30, 2022 and 2021, and cash flows for the years to date ended September 30, 2022 and 2021. Our results of operations, comprehensive income and cash flows for these interim periods are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K as filed with the SEC on February 28, 2022. Through the acquisition of Daojia, the Company also acquired a variable interest entity (“VIE”) and subsidiaries of the VIE effectively controlled by Daojia. There exists a parent-subsidiary relationship between Daojia and its VIE as a result of certain exclusive agreements that require Daojia to consolidate its VIE and subsidiaries of the VIE because Daojia is the primary beneficiary that possesses the power to direct the activities of the VIE that most significantly impact its economic performance, and is entitled to substantially all of the profits and has the obligation to absorb all of the expected losses of the VIE. The acquired VIE and its subsidiaries were considered immaterial, both individually and in the aggregate. The results of Daojia’s operations have been included in the Company’s Condensed Consolidated Financial Statements since the acquisition date. The results of the Lavazza joint venture and Hangzhou KFC’s operations have been included in the Company’s Condensed Consolidated Financial Statements since the respective acquisition dates. Certain comparative items in the Condensed Consolidated Financial Statements have been reclassified to conform to the current period’s presentation to facilitate comparison. Recently Adopted Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which eliminates two of the three models in ASC 470-20 that require separate accounting for embedded conversion features and eliminates some of the conditions for equity classification in ASC 815-40 for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and generally requires them to include the effect of share settlement for instruments that may be settled in cash or shares. We adopted this standard on January 1, 2022, and such adoption did not have a material impact on our financial statements. In May 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). It requires issuers to account for a modification or exchange of freestanding equity-classified written call options that remain equity-classified after the modification or exchange based on the economic substance of the modification or exchange. We adopted this standard on January 1, 2022, and such adoption did not have a material impact on our financial statements. In July 2021, the FASB issued ASU 2021-05, Lessors — Certain Leases with Variable Lease (“ASU 2021-05”). It requires lessors to classify leases as operating leases if they have variable lease payments that do not depend on an index or rate and would have selling losses if they were classified as sales-type or direct financing leases. We adopted this standard on January 1, 2022, and such adoption did not have a material impact on our financial statements. |
Business Acquisitions and Equit
Business Acquisitions and Equity Investments | 9 Months Ended |
Sep. 30, 2022 | |
Business Acquisitions And Equity Investments [Abstract] | |
Business Acquisitions and Equity Investments | Note 3 – Business Acquisitions and Equity Investments Consolidation of Hangzhou KFC and Equity Investment in Hangzhou Catering During the fourth quarter of 2021, the Company completed its investment of a 28 % equity interest in Hangzhou Catering for total consideration of approximately $ 255 million. Hangzhou Catering holds a 45 % equity interest in Hangzhou KFC, of which the Company previously held a 47 % equity interest. Along with the investment, the Company also obtained two additional seats on the board of directors of Hangzhou KFC. Upon completion of the transaction, the Company directly and indirectly holds an approximately 60 % equity interest in Hangzhou KFC and has majority representation on its board of directors, and thus obtained control over Hangzhou KFC and started to consolidate its results from the acquisition date. As a result of the acquisition of Hangzhou KFC, $ 66 million of the purchase price was allocated to the reacquired franchise right, which is amortized over the remaining franchise contract period of 1 year . In addition to its equity interest in Hangzhou KFC, Hangzhou Catering operates approximately 60 Chinese dining restaurants under four time-honored brands and a food processing business. The Company applies the equity method of accounting to the 28 % equity interest in Hangzhou Catering excluding the Hangzhou KFC business and classified this investment in Investment in unconsolidated affiliates based on its then fair value. The Company elected to report its share of Hangzhou Catering’s financial results with a one-quarter lag because its results are not available in time for the Company to record them in the concurrent period. The Company's equity loss from Hangzhou Catering, net of taxes, was immaterial for both the quarter and year to date ended September 30, 2022, which was included in Equity in net earnings (losses) from equity method investments in our Condensed Consolidated Statement of Income. As of September 30, 2022, the carrying amount of the Company’s equity method investment in Hangzhou Catering was $ 35 million, exceeding the Company’s interest in Hangzhou Catering’s underlying net assets by $ 26 million. Substantially all of this difference was attributable to its self-owned properties and impact of related deferred tax liabilities determined upon acquisition, which is being depreciated over a weighted-average remaining useful life of 20 years . Consolidation of Lavazza Joint Venture In April 2020, the Company and Lavazza Group established the Lavazza joint venture to explore and develop the Lavazza coffee shop concept in China, with equity ownership of 65 % and 35 %, respectively. The Company accounted for the Lavazza joint venture under the equity method of accounting because Lavazza Group held substantive participating rights on certain significant financial and operating decisions. In September 2021, the Company and Lavazza Group entered into agreements for the joint venture, whereby substantive participating rights previously held by Lavazza Group were removed, and thus the Company obtained control over the joint venture and started to consolidate its results from the acquisition date. As a result of the consolidation of the Lavazza joint venture, the Company also recognized a gain of $ 10 million in the third quarter of 2021 from the re-measurement of our previously held equity interest at fair value. The gain was recorded in Other expenses (income), net and not allocated to any segment for performance reporting purposes. Fujian Sunner Development Co., Ltd. (“Sunner”) Investment In the first quarter of 2021, the Company acquired a 5 % equity interest in Sunner, a Shenzhen Stock Exchange-listed company, for total consideration of approximately $ 261 million. Sunner is China’s largest white-feathered chicken producer and the Company’s largest poultry supplier. The Company accounted for the equity securities at fair value based on their closing market price on each measurement date, with subsequent fair value changes recorded in our Condensed Consolidated Statements of Income. The unrealized loss of $ 22 million was included in Investment gain or loss in our Condensed Consolidated Statements of Income for the year to date ended September 30, 2021, representing changes in fair value before the equity method of accounting was applied. In May 2021, a senior executive of the Company was nominated and appointed to Sunner’s board of directors upon Sunner’s shareholder approval. Through this representation, the Company participates in Sunner’s policy making process. The representation on Sunner’s board, along with the Company being one of Sunner’s significant shareholders, provides the Company with the ability to exercise significant influence over the operating and financial policies of Sunner. As a result, the Company started to apply the equity method of accounting to the investment and reclassified this investment from Other assets to Investment in unconsolidated affiliates in May 2021 based on its then fair value. The Company elected to report its share of Sunner’s financial results with a one-quarter lag because Sunner’s results are not available in time for the Company to record them in the concurrent period. In the quarter and year to date ended September 30, 2022, the Company's equity loss from Sunner, net of taxes, was immaterial, which was included in Equity in net earnings (losses) from equity method investments in our Condensed Consolidated Statement of Income. Since Sunner became the Company’s unconsolidated affiliate in May 2021, the Company purchased inventories of $ 125 million and $ 198 million from Sunner for the quarter and year to date ended September 30, 2021. The Company purchased inventories of $ 116 million and $ 307 million for the quarter and year to date ended September 30, 2022, respectively. The Company’s accounts payable and other current liabilities due to Sunner were $ 44 million and $ 56 million as of September 30, 2022 and December 31, 2021, respectively. As of September 30, 2022, the carrying amount of the Company’s investment in Sunner was $ 219 million, exceeding the Company’s interest in Sunner’s underlying net assets by $ 153 million. Of this basis difference, $ 17 million was related to finite-lived intangible assets determined upon acquisition, which are being amortized over estimated useful life of 20 years . The remaining differences were related to goodwill and indefinite-lived intangible assets, which are not subject to amortization, as well as deferred tax liabilities impact. As of September 30, 2022, the market value of the Company’s investment in Sunner was $ 169 million based on its quoted closing price. Meituan Dianping (“Meituan”) Investment In the third quarter of 2018, the Company subscribed for 8.4 million, or less than 1 %, of the ordinary shares of Meituan, an e-commerce platform for services in China, for total consideration of approximately $ 74 million, when it launched its initial public offering on the HKEX in September 2018. In the second quarter of 2020, the Company sold 4.2 million of the ordinary shares of Meituan. The Company accounts for the equity securities at fair value with subsequent fair value changes recorded in our Condensed Consolidated Statements of Income. The fair value of the investment in Meituan is determined based on the closing market price for the shares at the end of each reporting period. The fair value change, to the extent the closing market price of shares of Meituan as of the end of reporting period is higher than our cost, is subject to U.S. tax. A summary of pre-tax gains or losses on investment in equity securities of Meituan recognized, which was included in Investment gain or loss in our Condensed Consolidated Statements of Income, is as follows: Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Unrealized losses recorded on equity securities $ ( 15 ) $ ( 41 ) $ ( 33 ) $ ( 27 ) |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Note 4 – Revenue Recognition The Company’s revenues primarily include Company sales, Franchise fees and income and Revenues from transactions with franchisees and unconsolidated affiliates. Company Sales Revenues from Company-owned restaurants are recognized when a customer takes possession of the food and tenders payment, which is when our obligation to perform is satisfied. The Company presents sales net of sales-related taxes. We also offer our customers delivery through both our own mobile applications and third-party aggregators’ platforms. For delivery orders placed through our mobile applications, we use our dedicated riders, while for orders placed through third-party aggregators’ platforms, we either used our dedicated riders or third-party aggregators’ delivery staff in the past. With respect to delivery orders delivered by our dedicated riders, we control and determine the price for the delivery service and generally recognize revenue, including delivery fees, when a customer takes possession of the food. When orders are fulfilled by the delivery staff of third-party aggregators, who control and determine the price for the delivery service, we recognize revenue, excluding delivery fees, when control of the food is transferred to the third-party aggregators’ delivery staff. The payment terms with respect to these sales are short-term in nature. Starting in 2019, we use our own dedicated riders to deliver orders placed through aggregators’ platforms to customers of KFC and Pizza Hut stores. We recognize revenues from prepaid stored-value products, including gift cards and product vouchers, when they are redeemed by the customer. Prepaid gift cards sold at any given point generally expire over the next 36 months, and product vouchers generally expire over a period of up to 12 months. We recognize breakage revenue, which is the amount of prepaid stored-value products that is not expected to be redeemed, either (1) proportionally in earnings as redemptions occur, in situations where the Company expects to be entitled to a breakage amount, or (2) when the likelihood of redemption is remote, in situations where the Company does not expect to be entitled to breakage, provided that there is no requirement for remitting balances to government agencies under unclaimed property laws. The Company reviews its breakage estimates at least annually based upon the latest available information regarding redemption and expiration patterns. Our privilege membership programs offer privilege members rights to multiple benefits, such as free delivery and discounts on certain products. For certain KFC and Pizza Hut privilege membership programs offering a pre-defined amount of benefits that can be redeemed ratably over the membership period, revenue is ratably recognized over the period based on the elapse of time. With respect to the KFC and Pizza Hut family privilege membership program offering members a mix of distinct benefits, including a welcome gift and assorted discount coupons with pre-defined quantities, consideration collected is allocated to the benefits provided based on their relative standalone selling price and revenue is recognized when food or services are delivered or the benefits expire. In determining the relative standalone selling price of the benefits, the Company considers likelihood of future redemption based on historical redemption pattern and reviews such estimates periodically based upon the latest available information regarding redemption and expiration patterns. Franchise Fees and Income Franchise fees and income primarily include upfront franchise fees, such as initial fees and renewal fees, and continuing fees. We have determined that the services we provide in exchange for upfront franchise fees and continuing fees are highly interrelated with the franchise right. We recognize upfront franchise fees received from a franchisee as revenue over the term of the franchise agreement or the renewal agreement because the franchise rights are accounted for as rights to access our symbolic intellectual property. The franchise agreement term is generally 10 years for KFC and Pizza Hut, five or 10 years for Little Sheep and three or 10 years for Huang Ji Huang. We recognize continuing fees, which are based upon a percentage of franchisee sales, as those sales occur. Revenues from Transactions with Franchisees and Unconsolidated Affiliates Revenues from transactions with franchisees and unconsolidated affiliates consist primarily of sales of food and paper products, advertising services and other services provided to franchisees and unconsolidated affiliates that operate our concepts. The Company centrally purchases substantially all food and paper products from suppliers for substantially all of our restaurants, including franchisees and unconsolidated affiliates that operate our concepts, and then sells and delivers them to the restaurants. In addition, the Company owns seasoning facilities for its Chinese dining business unit, which manufacture and sell seasoning products to Huang Ji Huang and Little Sheep franchisees. The performance obligation arising from such transactions is considered distinct from the franchise agreement as it is not highly dependent on the franchise agreement and the customer can benefit from the procurement service on its own. We consider ourselves the principal in this arrangement as we have the ability to control a promised good or service before transferring that good or service to the franchisees and unconsolidated affiliates that operate our concepts. Revenue is recognized upon transfer of control over ordered items, generally upon delivery to the franchisees and unconsolidated affiliates. For advertising services, the Company often engages third parties to provide services and acts as a principal in the transaction based on our responsibilities of defining the nature of the services and administering and directing all marketing and advertising programs in accordance with the provisions of our franchise agreements. The Company collects advertising contributions, which are generally based on certain percentage of sales from substantially all of our restaurants, including franchisees and unconsolidated affiliates. Other services provided to franchisees and unconsolidated affiliates consist primarily of customer and technology support services. Advertising services and other services provided are highly interrelated to franchise right, and are not considered individually distinct. We recognize revenue when the related sales occur. Loyalty Programs Each of the Company’s KFC and Pizza Hut reportable segments operates a loyalty program that allows registered members to earn points for each qualifying purchase. Points, which generally expire 18 months after being earned, may be redeemed for future purchases of KFC or Pizza Hut branded products or other products for free or at a discounted price. Points cannot be redeemed or exchanged for cash. The estimated value of points earned by the loyalty program members is recorded as a reduction of revenue at the time the points are earned, based on the percentage of points that are projected to be redeemed, with a corresponding deferred revenue liability included in Accounts payable and other current liabilities on the Condensed Consolidated Balance Sheets and subsequently recognized into revenue when the points are redeemed or expire. The Company estimates the value of the future redemption obligations based on the estimated value of the product for which points are expected to be redeemed and historical redemption patterns and reviews such estimates periodically based upon the latest available information regarding redemption and expiration patterns . Disaggregation of Revenue The following tables present revenue disaggregated by types of arrangements and segments: Quarter Ended 9/30/2022 Revenues KFC Pizza Hut All Other Corporate and Unallocated Combined Elimination Consolidated Company sales $ 1,992 $ 556 $ 13 $ — $ 2,561 $ — $ 2,561 Franchise fees and income 15 2 5 — 22 — 22 Revenues from transactions 9 1 11 59 80 — 80 Other revenues 1 2 157 12 172 ( 150 ) 22 Total revenues $ 2,017 $ 561 $ 186 $ 71 $ 2,835 $ ( 150 ) $ 2,685 Quarter Ended 9/30/2021 Revenues KFC Pizza Hut All Other Corporate and Unallocated Combined Elimination Consolidated Company sales $ 1,750 $ 546 $ 14 $ — $ 2,310 $ — $ 2,310 Franchise fees and income 32 2 6 — 40 — 40 Revenues from transactions 17 2 26 139 184 — 184 Other revenues 2 1 88 7 98 ( 78 ) 20 Total revenues $ 1,801 $ 551 $ 134 $ 146 $ 2,632 $ ( 78 ) $ 2,554 Year to Date Ended 9/30/2022 Revenues KFC Pizza Hut All Other Corporate and Unallocated Combined Elimination Consolidated Company sales $ 5,554 $ 1,541 $ 40 $ — $ 7,135 $ — $ 7,135 Franchise fees and income 44 6 15 — 65 — 65 Revenues from transactions 24 3 29 163 219 — 219 Other revenues 6 6 407 31 450 ( 388 ) 62 Total revenues $ 5,628 $ 1,556 $ 491 $ 194 $ 7,869 $ ( 388 ) $ 7,481 Year to Date Ended 9/30/2021 Revenues KFC Pizza Hut All Other Corporate and Unallocated Combined Elimination Consolidated Company sales $ 5,220 $ 1,617 $ 37 $ — $ 6,874 $ — $ 6,874 Franchise fees and income 95 6 19 — 120 — 120 Revenues from transactions 46 5 75 393 519 — 519 Other revenues 6 2 187 11 206 ( 157 ) 49 Total revenues $ 5,367 $ 1,630 $ 318 $ 404 $ 7,719 $ ( 157 ) $ 7,562 Accounts Receivable Accounts receivable primarily consist of trade receivables and royalties from franchisees, and are generally due within 30 days of the period in which the corresponding sales occur and are classified as Accounts receivable on the Condensed Consolidated Balance Sheets. Our provision of credit losses for accounts receivable is based upon the current expected credit losses (“CECL”) model. The CECL model requires an estimate of the credit losses expected over the life of accounts receivable since initial recognition, and accounts receivable with similar risk characteristics are grouped together when estimating CECL. In assessing the CECL, the Company considers both quantitative and qualitative information that is reasonable and supportable, including historical credit loss experience, adjusted for relevant factors impacting collectability and forward-looking information indicative of external market conditions. While we use the best information available in making our determination, the ultimate recovery of recorded receivables is also dependent upon future economic events and other conditions that may be beyond our control. Accounts receivable that are ultimately deemed to be uncollectible, and for which collection efforts have been exhausted, are written off against the allowance for doubtful accounts. As of September 30, 2022 and December 31, 2021, the ending balances of provision for accounts receivable were $ 2 million and $ 1 million, respectively, and amounts of accounts receivable past due were immaterial. Accounts receivable due from unconsolidated affiliates were insignificant as of both September 30, 2022 and December 31, 2021. Costs to Obtain Contracts Costs to obtain contracts consist of upfront franchise fees that we paid to YUM prior to the separation in relation to initial fees or renewal fees we received from franchisees and unconsolidated affiliates that operate our concepts, as well as license fees that are payable to YUM in relation to our deferred revenue of prepaid stored-value products, privilege membership programs and customer loyalty programs. They meet the requirements to be capitalized as they are incremental costs of obtaining contracts with customers and the Company expects to generate future economic benefits from such costs incurred. Such costs to obtain contracts are included in Other assets on the Condensed Consolidated Balance Sheets and are amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the assets relate. Subsequent to the separation, we are no longer required to pay YUM initial or renewal fees that we receive from franchisees and unconsolidated affiliates. The Company did no t incur any impairment losses related to costs to obtain contracts during any of the periods presented. Costs to obtain contracts were $ 5 million and $ 7 million at September 30, 2022 and December 31, 2021, respectively. Contract Liabilities Contract liabilities at September 30, 2022 and December 31, 2021 were as follows: Contract liabilities 9/30/2022 12/31/2021 – Deferred revenue related to prepaid stored-value products $ 112 $ 134 – Deferred revenue related to upfront franchise fees 29 30 – Deferred revenue related to customer loyalty programs 23 25 – Deferred revenue related to privilege membership programs 12 18 – Others — 1 Total $ 176 $ 208 Contract liabilities primarily consist of deferred revenue related to prepaid stored-value products, privilege membership programs, customer loyalty programs and upfront franchise fees. Deferred revenue related to prepaid stored-value products, privilege membership programs and customer loyalty programs is included in Accounts payable and other current liabilities in the Condensed Consolidated Balance Sheets. Deferred revenue related to upfront franchise fees that we expect to recognize as revenue in the next 12 months is included in Accounts payable and other current liabilities, and the remaining balance is included in Other liabilities in the Condensed Consolidated Balance Sheets. Revenue recognized that was included in the contract liability balance at the beginning of each period amounted to $ 60 million and $ 68 million for the quarters ended September 30, 2022 and 2021, respectively, and $ 103 million and $ 115 million for the years to date ended September 30, 2022 and 2021, respectively. Changes in contract liability balances were not materially impacted by business acquisition, change in estimate of transaction price or any other factors during any of the periods presented. The Company has elected, as a practical expedient, not to disclose the value of remaining performance obligations associated with sales-based royalty promised to franchisees in exchange for the franchise right and other related services. The remaining duration of the performance obligation is the remaining contractual term of each franchise agreement. We recognize continuing franchisee fees and revenues from advertising services and other services provided to franchisees and unconsolidated affiliates that operate our concepts based on a certain percentage of sales, as those sales occur. |
Earnings Per Common Share ("EPS
Earnings Per Common Share ("EPS") | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earning Per Common Share (EPS) | Note 5 – Earnings Per Common Share (“EPS”) The following table summarizes the components of basic and diluted EPS (in millions, except per share data): Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Net Income – Yum China Holdings, Inc. $ 206 $ 104 $ 389 $ 515 Weighted-average common shares outstanding (a) 420 422 422 421 Effect of dilutive share-based awards (a) 4 6 4 6 Effect of dilutive warrants (b) — 7 — 8 Weighted-average common and dilutive potential common shares (a) 424 435 426 435 Basic Earnings Per Common Share $ 0.49 $ 0.25 $ 0.92 $ 1.23 Diluted Earnings Per Common Share $ 0.49 $ 0.24 $ 0.92 $ 1.19 Share-based awards excluded from the diluted EPS computation (c) 4 2 4 2 (a) As a result of the separation, shares of Yum China common stock were distributed to YUM’s shareholders of record as of October 19, 2016 and included in the calculated weighted-average common shares outstanding. Holders of outstanding YUM equity awards generally received both adjusted YUM awards and Yum China awards, or adjusted awards of either YUM or Yum China in their entirety. Any subsequent exercise of these awards, whether held by the Company’s employees or YUM’s employees, would increase the number of common shares outstanding. The incremental shares arising from outstanding equity awards are included in the computation of diluted EPS, if there is dilutive effect. In September 2020, 41,910,700 common shares were issued as a result of the Company’s global offering and secondary listing on the HKEX and they were included in the calculated weighted-average common shares outstanding. (b) Pursuant to the investment agreements dated September 1, 2016, Yum China issued to strategic investors two tranches of warrants on January 9, 2017, with each tranche initially providing the right to purchase 8,200,405 shares of Yum China common stock, at an initial exercise price of $ 31.40 and $ 39.25 per share, respectively, subject to customary anti-dilution adjustments. The warrants were exercisable at any time through October 31, 2021. The incremental shares arising from outstanding warrants were included in the computation of diluted EPS, if there is dilutive effect when the average market price of Yum China common stock for the periods exceeds the applicable exercise price of the warrants. During the second half of 2021, an aggregate of 7,534,316 common shares were issued as a result of the cashless exercise of all warrants outstanding, which upon exercise were excluded from the calculation of dilutive warrants and included in the weighted-average common shares outstanding. (c) These outstanding stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”) were excluded from the computation of diluted EPS because to do so would have been antidilutive for the quarters presented, or because certain PSUs are contingently issuable based on the achievement of performance and market conditions, which have not been met as of September 30, 2022 and 2021. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
Equity | Note 6 – Equity Changes in Equity and Redeemable Noncontrolling Interest (in millions) Yum China Holdings, Inc. Accumulated Common Additional Other Redeemable Stock Paid-in Retained Comprehensive Treasury Stock Noncontrolling Total Noncontrolling Shares* Amount Capital Earnings Income (Loss) Shares* Amount Interests Equity Interest Balance at June 30, 2022 420 $ 4 $ 4,402 $ 2,083 $ 40 — $ — $ 760 $ 7,289 $ 13 Net Income 206 21 227 — Foreign currency translation ( 262 ) ( 44 ) ( 306 ) — Comprehensive loss ( 79 ) — Cash dividends declared 0.12 per common share) ( 51 ) ( 51 ) Repurchase and retirement — — ( 3 ) ( 10 ) ( 13 ) Exercise and vesting of share- — — ( 1 ) ( 1 ) Share-based compensation 10 — 10 Balance at September 30, 2022 419 $ 4 $ 4,408 $ 2,228 $ ( 222 ) — $ — $ 737 $ 7,155 $ 13 Balance at June 30, 2021 440 $ 4 $ 4,679 $ 2,415 $ 205 ( 20 ) $ ( 728 ) $ 241 $ 6,816 $ 12 Net Income 104 7 111 — Foreign currency translation 8 2 10 — Comprehensive income 121 — Acquisition of business 7 7 Cash dividends declared 0.12 per common share) ( 51 ) ( 51 ) Repurchase of shares of ( 1 ) ( 34 ) ( 34 ) Exercise and vesting of share- 1 — — — Exercise of warrants 3 — — — Share-based compensation 6 6 Balance at September 30, 2021 444 $ 4 $ 4,685 $ 2,468 $ 213 ( 20 ) $ ( 762 ) $ 257 $ 6,865 $ 12 Yum China Holdings, Inc. Accumulated Common Additional Other Redeemable Stock Paid-in Retained Comprehensive Treasury Stock Noncontrolling Total Noncontrolling Shares* Amount Capital Earnings Income (Loss) Shares* Amount Interests Equity Interest Balance at December 31, 2021 449 $ 4 $ 4,695 $ 2,892 $ 268 ( 21 ) $ ( 803 ) $ 852 $ 7,908 $ 14 Net Income 389 31 420 — Foreign currency translation ( 490 ) ( 83 ) ( 573 ) — Comprehensive loss ( 153 ) — Cash dividends declared 0.36 per common share) ( 152 ) ( 152 ) Dividends declared ( 81 ) ( 81 ) Contribution from 18 18 Repurchase and retirement ( 30 ) — ( 315 ) ( 901 ) 21 803 ( 413 ) Exercise and vesting of share- 1 — ( 3 ) ( 3 ) Share-based compensation 31 — 31 Acquisition of noncontrolling — ( 1 ) Balance at September 30, 2022 419 $ 4 $ 4,408 $ 2,228 $ ( 222 ) — $ — $ 737 $ 7,155 $ 13 Balance at December 31, 2020 440 $ 4 $ 4,658 $ 2,105 $ 167 ( 20 ) $ ( 728 ) $ 253 $ 6,459 $ 12 Net Income 515 32 547 — Foreign currency translation 46 4 50 — Comprehensive income 597 — Acquisition of business 7 7 Cash dividends declared 0.36 per common share) ( 152 ) ( 152 ) Dividends declared ( 39 ) ( 39 ) Repurchase of shares of ( 1 ) ( 34 ) ( 34 ) Exercise and vesting of share- 1 — ( 5 ) ( 5 ) Exercise of warrants 3 — — — Share-based compensation 32 32 Balance at September 30, 2021 444 $ 4 $ 4,685 $ 2,468 $ 213 ( 20 ) $ ( 762 ) $ 257 $ 6,865 $ 12 *: Shares may not add due to rounding. Share Repurchase and Retirement Our Board of Directors has authorized an aggregate of $ 2.4 billion for our share repurchase program, including its most recent increase in authorization in March 2022. The Company repurchased 9 million and 0.6 million shares of Yum China common stock at a total cost of $ 413 million and $ 34 million during the years to date ended September 30, 2022 and 2021, respectively. The total repurchase cost included $ 2 million settled subsequent to both September 30, 2022 and 2021, for shares repurchased with trade dates prior to September 30, 2022 and 2021, respectively. As of September 30, 2022, $ 1.2 billion remained available for future share repurchases under the authorization. As of September 30, 2022, all shares repurchased under the current and previous authorizations were retired and resumed the status of authorized and unissued shares of common stock. When shares are retired, the Company's accounting policy is to allocate the excess of the repurchase price over the par value of shares acquired between Additional paid-in capital and Retained earnings. The amount allocated to Additional paid-in capital is based on the value of Additional paid-in capital per share outstanding at the time of retirement and the number of shares to be retired. Any remaining amount is allocated to Retained earnings. |
Items Affecting Comparability o
Items Affecting Comparability of Net Income | 9 Months Ended |
Sep. 30, 2022 | |
Items Affecting Comparability Of Net Income [Abstract] | |
Items Affecting Comparability of Net Income | Note 7 – Items Affecting Comparability of Net Income Impact of COVID-19 Pandemic Starting in the first quarter of 2020, the COVID-19 pandemic significantly impacted the Company’s operations. Since then, fluid COVID-19 conditions have caused significant volatility in our operations. During the first half of 2022, the most severe COVID-19 outbreaks to date in China significantly affected the Company’s business and operating profit. During the third quarter of 2022, the Company reported significant year-over-year operating profit growth as the Company captured the sales demand when COVID-19 conditions were relatively calmer in July and August, and also benefited from lapping the Delta variant outbreak in the prior year period. Fair Value Changes for Investment in Equity Securities In September 2018, we invested in the equity securities of Meituan, the fair value of which is determined based on the closing market price for the shares at the end of each reporting period, with subsequent fair value changes recorded in our Condensed Consolidated Statements of Income. We recorded related pre-tax loss of $ 15 million and $ 41 million for the quarters ended September 30, 2022 and 2021, respectively, and related pre-tax loss of $ 33 million and $ 27 million for the years to date ended September 30, 2022 and 2021, respectively. In the first quarter of 2021, we invested in a 5 % equity interest in Sunner. The investment in Sunner was recorded at fair value based on its closing market price on each measurement date before it became subject to the equity method of accounting when the Company established significant influence over the operating and financial policies of Sunner in May 2021. We recorded related pre-tax loss of $ 22 million for the year to date ended September 30, 2021, representing changes in fair value before the equity method of accounting was applied. See Note 3 for additional information on our investment in Meituan and Sunner. |
Other Expenses (Income), Net
Other Expenses (Income), Net | 9 Months Ended |
Sep. 30, 2022 | |
Other Income and Expenses [Abstract] | |
Other Expenses (Income), Net | Note 8 – Other Expenses (Income), net Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Amortization of reacquired franchise rights (a) $ 24 $ 10 $ 74 $ 29 Equity income from investments in (b) — ( 10 ) — ( 37 ) Gain from re-measurement of equity interest (c) — ( 10 ) — ( 10 ) Foreign exchange impact and others — — ( 1 ) 3 Other expenses (income), net $ 24 $ ( 10 ) $ 73 $ ( 15 ) (a) Increase in amortization of reacquired franchise rights as a result of the acquisition of Hangzhou KFC as disclosed in Note 3, with $ 66 million of the purchase price allocated to intangible assets related to reacquired franchise right, which is being amortized over the remaining franchise contract period of 1 year. (b) Includes equity income from our investments in Hangzhou KFC and the Lavazza joint venture before we consolidated the results of these entities upon completion of the acquisitions in 2021 (See Note 3 for additional information). (c) For the quarter and year to date ended September 30, 2021, the Company recognized a gain of $ 10 million from the re-measurement of our previously held equity interest at fair value, as a result the consolidation of Lavazza joint venture as disclosed in Note 3. |
Supplemental Balance Sheet Info
Supplemental Balance Sheet Information | 9 Months Ended |
Sep. 30, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplemental Balance Sheet Information | Note 9 – Supplemental Balance Sheet Information Accounts Receivable, net 9/30/2022 12/31/2021 Accounts receivable, gross $ 68 $ 68 Allowance for doubtful accounts ( 2 ) ( 1 ) Accounts receivable, net $ 66 $ 67 Prepaid Expenses and Other Current Assets 9/30/2022 12/31/2021 VAT assets (a) $ 93 $ — Receivables from payment processors and aggregators 37 45 Dividends receivable from unconsolidated affiliates 6 — Other prepaid expenses and current assets 150 176 Prepaid expenses and other current assets $ 286 $ 221 Property, Plant and Equipment 9/30/2022 12/31/2021 Buildings and improvements, and construction in progress $ 2,727 $ 2,984 Finance leases, primarily buildings 52 52 Machinery and equipment 1,525 1,589 Property, plant and equipment, gross 4,304 4,625 Accumulated depreciation ( 2,339 ) ( 2,374 ) Property, plant and equipment, net $ 1,965 $ 2,251 Other Assets 9/30/2022 12/31/2021 Land use right $ 120 $ 138 Investment in equity securities 89 122 Long-term deposits 87 101 Investment in long-term time deposits (b) 83 90 Costs to obtain contracts 5 7 VAT assets (a) 4 322 Others 31 52 Other Assets $ 419 $ 832 Accounts Payable and Other Current Liabilities 9/30/2022 12/31/2021 Accounts payable $ 673 $ 830 Operating lease liabilities 441 508 Accrued compensation and benefits 252 283 Contract liabilities 152 182 Accrued capital expenditures 133 269 Accrued marketing expenses 107 71 Dividends payable 93 38 Other current liabilities 141 151 Accounts payable and other current liabilities $ 1,992 $ 2,332 Other Liabilities 9/30/2022 12/31/2021 Accrued income tax payable $ 50 $ 56 Contract liabilities 24 26 Other non-current liabilities 82 85 Other liabilities $ 156 $ 167 (a) On June 7, 2022, the Chinese Ministry of Finance and the Chinese State Tax Administration jointly issued Circular [2022] No. 21, to extend full VAT credit refunds to more sectors and increase the frequency for accepting taxpayers' applications with an aim to support business recovery. Beginning on July 1, 2022, entities engaged in providing catering services in China are allowed to apply for a lump sum refund of VAT assets accumulated prior to March 31, 2019. In addition, VAT assets accumulated after March 31, 2019 can be refunded on a monthly basis. As the benefits of certain VAT assets are expected to be realized within one year pursuant to Circular [2022] No. 21, $ 303 million of VAT assets as of June 30, 2022 were reclassified from Other assets to Prepaid expense and other current assets . As of September 30, 2022, VAT assets of $ 93 million were included in Prepaid expenses and other current assets. (b) As of September 30, 2022 and December 31, 2021, the Company had $ 83 million and $ 90 million invested in long-term time deposits, respectively, bearing a fixed interest rate, with original maturity of three years . The asset is restricted for use in order to secure the balance of prepaid stored-value cards issued by the Company pursuant to regulatory requirements. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 10 – Goodwill and Intangible Assets The changes in the carrying amount of goodwill are as follows: Total KFC Pizza Hut All Other Balance as of December 31, 2021 Goodwill, gross $ 2,533 $ 2,040 $ 20 $ 473 Accumulated impairment losses (a) ( 391 ) — — ( 391 ) Goodwill, net 2,142 2,040 20 82 Goodwill acquired (b) 16 15 1 — Effect of currency translation adjustment ( 231 ) ( 220 ) ( 2 ) ( 9 ) Balance as of September 30, 2022 Goodwill, gross 2,318 1,835 19 464 Accumulated impairment losses (a) ( 391 ) — — ( 391 ) Goodwill, net $ 1,927 $ 1,835 $ 19 $ 73 (a) Accumulated impairment losses represent goodwill impairment attributable to the reporting units of Little Sheep and Daojia. (b) Goodwill acquired as a result of the acquisition of restaurants from our existing franchisees. The acquisition is considered immaterial. Intangible assets, net as of September 30, 2022 and December 31, 2021 are as follows: 9/30/2022 12/31/2021 Gross (a) Accumulated (a) Accumulated Impairment Losses (b) Net Carrying Amount Gross Accumulated Accumulated Impairment Losses (b) Net Carrying Amount Finite-lived intangible Reacquired franchise $ 268 $ ( 240 ) $ — $ 28 $ 295 $ ( 191 ) $ — $ 104 Huang Ji Huang 21 ( 3 ) — 18 23 ( 2 ) — 21 Daojia platform 16 ( 4 ) ( 12 ) — 16 ( 4 ) ( 12 ) — Customer-related assets 12 ( 10 ) ( 2 ) — 12 ( 9 ) ( 2 ) 1 Others 9 ( 5 ) — 4 10 ( 5 ) — 5 $ 326 $ ( 262 ) $ ( 14 ) $ 50 $ 356 $ ( 211 ) $ ( 14 ) $ 131 Indefinite-lived intangible Little Sheep trademark $ 51 $ — $ — $ 51 $ 57 $ — $ — $ 57 Huang Ji Huang 75 — — 75 84 — — 84 $ 126 $ — $ — $ 126 $ 141 $ — $ — $ 141 Total intangible assets $ 452 $ ( 262 ) $ ( 14 ) $ 176 $ 497 $ ( 211 ) $ ( 14 ) $ 272 (a) Changes in gross carrying amount and accumulated amortization include effect of currency translation adjustments. (b) Accumulated impairment losses represent impairment charges on intangible assets acquired from Daojia primarily attributable to the Daojia platform. Amortization expense of finite-lived intangible assets was $ 24 million and $ 10 million for the quarters ended September 30, 2022 and 2021, respectively, and $ 76 million and $3 1 million for the years to date ended September 30, 2022 and 2021, respectively. As of September 30, 2022, expected amortization expense for the unamortized finite-lived intangible assets is approximately $ 23 million for the remainder of 2022, $ 4 million in 2023, and $ 2 million in each of 2024, 2025 and 2026. Increase in amortization expenses for finite-lived intangible assets in 2022 primarily relates to reacquired franchise rights resulting from the acquisition of Hangzhou KFC (Note 3). |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Leases | Note 11 – Leases As of September 30, 2022, we leased over 10,600 properties in China for our Company-owned restaurants. We generally enter into lease agreements for our restaurants with initial terms of 10 to 20 years . Most of our lease agreements contain termination options that permit us to terminate the lease agreement early if the restaurant’s unit contribution is negative for a specified period of time. We generally do not have renewal options for our leases. Such options are accounted for only when it is reasonably certain that we will exercise the options. The rent under the majority of our current restaurant lease agreements is generally payable in one of three ways: (i) fixed rent; (ii) the higher of a fixed base rent or a percentage of the restaurant’s sales; or (iii) a percentage of the restaurant’s sales. Most leases require us to pay common area maintenance fees for the leased property. In addition to restaurants leases, we also lease office spaces, logistics centers and equipment. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. In limited cases, we sub-lease certain restaurants to franchisees in connection with refranchising transactions or lease our properties to other third parties. The lease payments under these leases are generally based on the higher of a fixed base rent or a percentage of the restaurant’s annual sales. Income from sub-lease agreements with franchisees or lease agreements with other third parties are included in Franchise fees and income and Other revenues, respectively, within our Condensed Consolidated Statements of Income. Supplemental Balance Sheet 9/30/2022 12/31/2021 Account Classification Assets Operating lease right-of-use assets $ 2,154 $ 2,612 Operating lease right-of-use assets Finance lease right-of-use assets 31 33 Property, plant and equipment, net Total leased assets $ 2,185 $ 2,645 Liabilities Current Operating lease liabilities $ 441 $ 508 Accounts payable and other current liabilities Finance lease liabilities 4 3 Accounts payable and other current liabilities Non-current Operating lease liabilities 1,862 2,286 Non-current operating lease liabilities Finance lease liabilities 36 40 Non-current finance lease liabilities Total lease liabilities $ 2,343 $ 2,837 Summary of Lease Cost Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Account Classification Operating lease cost $ 133 $ 140 $ 433 $ 414 Occupancy and other operating expenses, Finance lease cost Amortization of leased assets 1 1 3 2 Occupancy and other operating expenses Interest on lease liabilities 1 — 2 1 Interest expense, net Variable lease cost (a) 89 91 248 273 Occupancy and other operating expenses Short-term lease cost 3 3 10 8 Occupancy and other operating expenses Sub-lease income ( 5 ) ( 6 ) ( 18 ) ( 20 ) Franchise fees and income or Total lease cost $ 222 $ 229 $ 678 $ 678 (a) The Company was granted $ 13 million and $ 2 million in lease concessions from landlords related to the effects of the COVID-19 pandemic during the quarters ended September 30, 2022 and 2021, respectively, and $ 27 million and $ 9 million during the years to date ended September 30, 2022 and 2021, respectively. The lease concessions were primarily in the form of rent reduction over the period of time when the Company’s restaurant business was adversely impacted. The Company applied the interpretive guidance in a FASB staff Q&A document issued in April 2020 and elected: (1) not to evaluate whether a concession received in response to the COVID-19 pandemic is a lease modification and (2) to assume such concession was contemplated as part of the existing lease contract with no contract modification. Such concession was recognized as negative variable lease cost in the period the concession was granted. Supplemental Cash Flow Information Year to Date Ended 9/30/2022 9/30/2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 416 $ 423 Operating cash flows from finance leases 2 1 Financing cash flows from finance leases 3 2 Right-of-use assets obtained in exchange for lease liabilities (b) : Operating leases $ 106 $ 394 Finance leases 4 7 (b) This supplemental non-cash disclosure for right-of-use (“ROU”) assets obtained in exchange for lease liabilities includes an increase in lease liabilities associated with obtaining new ROU assets of $ 232 million and $ 399 million for the years to date ended September 30, 2022 and 2021, respectively, as well as adjustments to lease liabilities or ROU assets due to modification or other reassessment events, which resulted in a $ 122 million decrease and $ 2 million increase in lease liabilities for the years to date ended September 30, 2022 and 2021, respectively. Lease Term and Discount Rate 9/30/2022 9/30/2021 Weighted-average remaining lease term (years) Operating leases 7.1 7.0 Finance leases 11.3 11.2 Weighted-average discount rate Operating leases 5.2 % 5.7 % Finance leases 5.3 % 5.6 % Summary of Future Lease Payments and Lease Liabilities Maturities of lease liabilities as of September 30, 2022 were as follows: Amount of Amount of Total Remainder of 2022 $ 175 $ 1 $ 176 2023 490 6 496 2024 430 5 435 2025 366 5 371 2026 317 5 322 Thereafter 981 31 1,012 Total undiscounted lease payment 2,759 53 2,812 Less: imputed interest (c) 456 13 469 Present value of lease liabilities $ 2,303 $ 40 $ 2,343 (c) As the rate implicit in the lease cannot be readily determined, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the imputed interest and present value of lease payments. We used the incremental borrowing rate on January 1, 2019 for operating leases that commenced prior to that date. As of September 30, 2022, we have additional lease agreements that have been signed but not yet commenced, with total undiscounted minimum lease payments of $ 131 million. These leases will commence between the fourth quarter of 2022 and 2026 with lease terms of 1 year to 20 years. |
Fair Value Measurements and Dis
Fair Value Measurements and Disclosures | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements and Disclosures | Note 12 – Fair Value Measurements and Disclosures The Company’s financial assets and liabilities primarily consist of cash and cash equivalents, short-term investments, long-term time deposits, accounts receivable, accounts payable and lease liabilities, and the carrying values of these assets and liabilities approximate their fair value in general. The Company accounts for its investment in equity securities of Meituan at fair value, which is determined based on the respective closing market price for the shares at the end of each reporting period, with subsequent fair value changes recorded in our Condensed Consolidated Statements of Income. The following table is a summary of our financial assets measured on a recurring basis or disclosed at fair value and the level within the fair value hierarchy in which the measurement falls. The Company classifies its cash equivalents, short-term investments, long-term time deposits and investment in equity securities within Level 1 or Level 2 in the fair value hierarchy because it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value, respectively. No transfers among the levels within the fair value hierarchy occurred during the quarters and years to date ended September 30, 2022 and 2021. Fair Value Measurement or Disclosure Balance at Level 1 Level 2 Level 3 Cash equivalents: Time deposits $ 291 $ 291 Fixed income debt securities (a) 100 100 Money market funds 63 63 Total cash equivalents 454 63 391 — Short-term investments: Time deposits 1,990 1,990 Fixed income debt securities (a) 550 550 Structured deposits 267 267 Variable return investments 19 19 Total short-term investments 2,826 19 2,807 — Other assets: Investment in equity securities 89 89 Long-term time deposits 83 83 Total $ 3,452 $ 171 $ 3,281 $ — Fair Value Measurement or Disclosure Balance at Level 1 Level 2 Level 3 Cash equivalents: Time deposits $ 321 $ 321 Fixed income debt securities (a) 163 63 100 Money market funds 45 45 Total cash equivalents 529 108 421 — Short-term investments: Time deposits 1,726 1,726 Fixed income debt securities (a) 1,055 1,055 Variable return investments 79 79 Total short-term investments 2,860 79 2,781 — Other assets: Investment in equity securities 122 122 Long-term time deposits 90 90 Total $ 3,601 $ 309 $ 3,292 $ — (a) Classified as held-to-maturity investments and measured at amortized cost. Non-Recurring Fair Value Measurements In addition, certain of the Company’s restaurant-level assets (including operating lease ROU assets, property, plant and equipment), goodwill and intangible assets, are measured at fair value based on unobservable inputs (Level 3) on a non-recurring basis, if determined to be impaired. In determining the fair value of restaurant-level assets, the Company considered the highest and best use of the assets from a market participants’ perspective, which is represented by the higher of the forecasted discounted cash flows from operating restaurants and the price market participants would pay to sub-lease the ROU assets and acquire the remaining restaurants assets, even if that use differs from the current use by the Company. The after-tax cash flows incorporate reasonable assumptions we believe a franchisee would make, such as sales growth, and include a deduction for royalties we would receive under a franchise agreement with terms substantially at market. The discount rate used in the fair value calculation is our estimate of the required rate-of-return that a franchisee would expect to receive when purchasing a similar restaurant and the related long-lived assets. In situations where the highest and best use of restaurant-level assets are represented by sub-leasing the operating lease ROU assets and acquiring the remaining restaurant assets, the Company continues to use these assets in operating its restaurant business, which is consistent with its long-term strategy of growing revenue through operating restaurant concepts. As of each relevant measurement date, the fair value of restaurant-level assets, if determined to be impaired, are primarily represented by the price market participant would pay to sub-lease the operating lease ROU assets and acquire the remaining restaurants assets, which reflects the highest and best use of the assets. Significant unobservable inputs used in the fair value measurement include market rental prices, which were determined with the assistance of an independent valuation specialist. The direct comparison approach is used as the valuation technique by assuming a sub-lease of each of the properties in its existing state with vacant possession. By making reference to lease transactions as available in the relevant market, comparable properties in close proximity have been selected and adjustments have been made to account for any difference in factors such as location and property size. The following table presents amounts recognized from all non-recurring fair value measurements based on unobservable inputs (Level 3) during the quarters and years to date ended September 30, 2022 and 2021. These amounts exclude fair value measurements made for restaurants that were subsequently closed or refranchised prior to those respective period-end dates. Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Account Classification Restaurant-level impairment (a) $ — $ — $ 15 $ 13 Closure and impairment expenses, net (a) Restaurant-level impairment charges are recorded in Closures and impairment expenses, net and resulted from our semi-annual impairment evaluation of long-lived assets of individual restaurants that were being operated at the time of impairment and had not been offered for refranchising. After considering the impairment charges recorded during the corresponding periods, the fair value of assets as of the relevant measurement date was $ 67 million and $ 50 million for the years to date ended September 30, 2022 and 2021, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 13 – Income Taxes Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Income tax provision $ 97 $ 44 $ 183 $ 210 Effective tax rate 29.9 % 28.3 % 30.1 % 27.7 % The higher effective tax rate for the quarter ended September 30, 2022 was primarily due to a prior year tax benefit from equity income from investments in unconsolidated affiliates. The higher effective tax rate for the year to date ended September 30, 2022 was primarily due to a prior year tax benefit from equity income from investments in unconsolidated affiliates and the impact of lower pre-tax income. In December 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”), which included a broad range of tax reforms. The Tax Act requires a U.S. shareholder to be subject to tax on Global Intangible Low Taxed Income (“GILTI”) earned by certain foreign subsidiaries. We have elected the option to account for current year GILTI tax as a period cost as incurred, and therefore included it in estimating the annual effective tax rate. In August 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into law in the U.S. The IRA contains certain tax measures, including a corporate alternative minimum tax of 15 % on certain large corporations and an excise tax of 1 % on net share repurchases that occur after December 31, 2022. Based on our preliminary analysis of the provisions, we do not believe this legislation will have a material impact on our financial statements. However, the details of the computation will be subject to regulations to be issued by the Department of the Treasury. The Company will monitor the regulatory developments and continue to evaluate the impact, if any. We are subject to reviews, examinations and audits by Chinese tax authorities, the Internal Revenue Service and other tax authorities with respect to income and non-income based taxes. Since 2016, we have been under a national audit on transfer pricing by the Chinese State Tax Administration (the “STA”) regarding our related party transactions for the period from 2006 to 2015. The information and views currently exchanged with the tax authorities focus on our franchise arrangement with YUM. We continue to provide information requested by the tax authorities to the extent it is available to the Company. It is reasonably possible that there could be significant developments, including expert review and assessment by the STA, within the next 12 months. The ultimate assessment and decision of the STA will depend upon further review of the information provided, as well as ongoing technical and other discussions with the STA and in-charge local tax authorities, and therefore, it is not possible to reasonably estimate the potential impact at this time. We will continue to defend our transfer pricing position. However, if the STA prevails in the assessment of additional tax due based on its ruling, the assessed tax, interest and penalties, if any, could have a material adverse impact on our financial position, results of operations and cash flows. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 14 –Segment Reporting We have two reportable segments: KFC and Pizza Hut. Our remaining non-reportable operating segments, including the operations of Little Sheep, Huang Ji Huang, Lavazza, COFFii & JOY, Taco Bell, East Dawning, Daojia and our e-commerce business, are combined and referred to as All Other Segments, as these operating segments are insignificant both individually and in aggregate. Quarter Ended 9/30/2022 Revenues KFC Pizza Hut All Other Corporate and Unallocated (a) Combined Elimination Consolidated Revenue from external $ 2,017 $ 561 $ 41 $ 66 $ 2,685 $ — $ 2,685 Inter-segment revenue — — 145 5 150 ( 150 ) — Total $ 2,017 $ 561 $ 186 $ 71 $ 2,835 $ ( 150 ) $ 2,685 Quarter Ended 9/30/2021 Revenues KFC Pizza Hut All Other Corporate and Unallocated (a) Combined Elimination Consolidated Revenue from external $ 1,801 $ 551 $ 59 $ 143 $ 2,554 $ — $ 2,554 Inter-segment revenue — — 75 3 78 ( 78 ) — Total $ 1,801 $ 551 $ 134 $ 146 $ 2,632 $ ( 78 ) $ 2,554 Year to Date Ended 9/30/2022 Revenues KFC Pizza Hut All Other Corporate and Unallocated (a) Combined Elimination Consolidated Revenue from external $ 5,628 $ 1,556 $ 115 $ 182 $ 7,481 $ — $ 7,481 Inter-segment revenue — — 376 12 388 ( 388 ) — Total $ 5,628 $ 1,556 $ 491 $ 194 $ 7,869 $ ( 388 ) $ 7,481 Year to Date Ended 9/30/2021 Revenues KFC Pizza Hut All Other Corporate and Unallocated (a) Combined Elimination Consolidated Revenue from external $ 5,367 $ 1,630 $ 164 $ 401 $ 7,562 $ — $ 7,562 Inter-segment revenue — — 154 3 157 ( 157 ) — Total $ 5,367 $ 1,630 $ 318 $ 404 $ 7,719 $ ( 157 ) $ 7,562 Quarter Ended Year to Date Ended Operating Profit (Loss) 9/30/2022 9/30/2021 9/30/2022 9/30/2021 KFC (b) $ 328 $ 196 $ 670 $ 763 Pizza Hut 49 18 90 117 All Other Segments ( 9 ) ( 6 ) ( 39 ) ( 15 ) Unallocated revenues from transactions with (c) 59 139 163 393 Unallocated other revenues 12 7 31 11 Unallocated expenses from transactions with (c) ( 58 ) ( 138 ) ( 163 ) ( 390 ) Unallocated other operating costs and expenses ( 10 ) ( 5 ) ( 28 ) ( 10 ) Unallocated and corporate G&A expenses ( 55 ) ( 42 ) ( 138 ) ( 123 ) Unallocated other income, net (d) — 9 2 7 Operating Profit $ 316 $ 178 $ 588 $ 753 Interest income, net (a) 25 16 51 47 Investment loss (a) ( 15 ) ( 39 ) ( 32 ) ( 43 ) Income Before Income Taxes and Equity in $ 326 $ 155 $ 607 $ 757 Quarter Ended Year to Date Ended Impairment Charges 9/30/2022 9/30/2021 9/30/2022 9/30/2021 KFC (e) $ 5 $ 3 $ 24 $ 14 Pizza Hut (e) — 1 5 8 All Other Segments (e) 2 — 8 1 $ 7 $ 4 $ 37 $ 23 Total Assets 9/30/2022 12/31/2021 KFC $ 5,137 $ 6,072 Pizza Hut 835 972 All Other Segments 364 454 Corporate and Unallocated (f) 5,360 5,725 $ 11,696 $ 13,223 (a) Amounts have not been allocated to any segment for performance reporting purposes. (b) Includes equity income from our investment in Hangzhou KFC of $ 13 million and $ 45 million for the quarter and year to date ended September 30, 2021 before we consolidated the results of the entity upon completion of the acquisition. See Note 3 for details. (c) Primarily includes revenues and associated expenses of transactions with franchisees and unconsolidated affiliates derived from the Company’s central procurement model whereby the Company centrally purchases substantially all food and paper products from suppliers and then sells and delivers them to KFC and Pizza Hut restaurants, including franchisees and unconsolidated affiliates that operate our concepts. Amounts have not been allocated to any segment for purposes of making operating decisions or assessing financial performance as the transactions are deemed corporate revenues and expenses in nature. (d) Primarily includes a gain from the re-measurement of our previously-held equity interest in connection with the acquisition of the Lavazza joint venture for the quarter and year to date ended September 30, 2021. As the re-measurement at fair value resulted from the acquisition, it was not allocated to any segment for performance reporting purposes. See Note 3. (e) Primarily includes store closure impairment charges and restaurant-level impairment charges resulting from our semi-annual impairment evaluation. See Note 12. (f) Primarily includes cash and cash equivalents, short-term investments, investments in equity securities of Meituan, investments in Sunner and Hangzhou Catering, long-term time deposits and inventories that are centrally managed. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Note 15 – Contingencies Indemnification of China Tax on Indirect Transfers of Assets In February 2015, the STA issued Bulletin 7 on Income arising from Indirect Transfers of Assets by Non-Resident Enterprises. Pursuant to Bulletin 7, an “indirect transfer” of Chinese taxable assets, including equity interests in a Chinese resident enterprise, by a non-resident enterprise, may be recharacterized and treated as a direct transfer of Chinese taxable assets, if such arrangement does not have reasonable commercial purpose and the transferor has avoided payment of Chinese enterprise income tax. As a result, gains derived from such an indirect transfer may be subject to Chinese enterprise income tax at a rate of 10 %. YUM concluded, and we concurred, that it is more likely than not that YUM will not be subject to this tax with respect to the pro rata distribution of all outstanding shares of Yum China common stock to shareholders of YUM in connection with the separation (the “distribution”). However, there are significant uncertainties regarding what constitutes a reasonable commercial purpose, how the safe harbor provisions for group restructurings are to be interpreted, and how the taxing authorities will ultimately view the distribution. As a result, YUM’s position could be challenged by Chinese tax authorities resulting in a 10 % tax assessed on the difference between the fair market value and the tax basis of the separated China business. As YUM’s tax basis in the China business is minimal, the amount of such a tax could be significant. Any tax liability arising from the application of Bulletin 7 to the distribution is expected to be settled in accordance with the tax matters agreement between the Company and YUM. Pursuant to the tax matters agreement, to the extent any Chinese indirect transfer tax pursuant to Bulletin 7 is imposed, such tax and related losses will be allocated between YUM and the Company in proportion to their respective share of the combined market capitalization of YUM and the Company during the 30 trading days after the separation. Such a settlement could be significant and have a material adverse effect on our results of operations and our financial condition. At the inception of the tax indemnity being provided to YUM, the fair value of the non-contingent obligation to stand ready to perform was insignificant and the liability for the contingent obligation to make payment was not probable or estimable. Guarantees for Franchisees From time to time, we have guaranteed certain lines of credit and loans of franchisees. As of September 30, 2022, no guarantees were outstanding for franchisees. Legal Proceedings The Company is subject to various lawsuits covering a variety of allegations from time to time. The Company believes that the ultimate liability, if any, in excess of amounts already provided for these matters in the Condensed Consolidated Financial Statements, is not likely to have a material adverse effect on the Company’s results of operations, financial condition or cash flows. Matters faced by the Company from time to time include, but are not limited to, claims from landlords, employees, customers and others related to operational, contractual or employment issues. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16 – Subsequent Events Cash Dividend On November 1, 2022 , the Company announced that the Board of Directors declared a cash dividend of $ 0.12 per share on Yum China ’ s common stock, payable as of the close of business on December 20, 2022 , to stockholders of record as of the close of business on November 29, 2022 . Total estimated cash dividend payable is approximately $ 50 million. Long Term Incentive Plan In connection with the Primary Conversion, the Company’s stockholders approved the Yum China Holdings, Inc. 2022 Long Term Incentive Plan (the “2022 Plan”). The 2022 Plan became effective on October 24, 2022 upon consummation of the Primary Conversion. The 2022 Plan replaces the Yum China Holdings, Inc. Long Term Incentive Plan (the “2016 Plan”). No new awards will be granted under the 2016 Plan after the 2022 Plan becomes effective, but the 2016 Plan will continue to govern awards granted under the 2016 Plan prior to the effectiveness of the 2022 Plan. Subject to the terms and conditions of the 2022 Plan, the number of shares of Company common stock authorized for grants under the 2022 Plan is 31,000,000 shares. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which eliminates two of the three models in ASC 470-20 that require separate accounting for embedded conversion features and eliminates some of the conditions for equity classification in ASC 815-40 for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and generally requires them to include the effect of share settlement for instruments that may be settled in cash or shares. We adopted this standard on January 1, 2022, and such adoption did not have a material impact on our financial statements. In May 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). It requires issuers to account for a modification or exchange of freestanding equity-classified written call options that remain equity-classified after the modification or exchange based on the economic substance of the modification or exchange. We adopted this standard on January 1, 2022, and such adoption did not have a material impact on our financial statements. In July 2021, the FASB issued ASU 2021-05, Lessors — Certain Leases with Variable Lease (“ASU 2021-05”). It requires lessors to classify leases as operating leases if they have variable lease payments that do not depend on an index or rate and would have selling losses if they were classified as sales-type or direct financing leases. We adopted this standard on January 1, 2022, and such adoption did not have a material impact on our financial statements. |
Fair Value Measurements and Disclosures | Non-Recurring Fair Value Measurements In addition, certain of the Company’s restaurant-level assets (including operating lease ROU assets, property, plant and equipment), goodwill and intangible assets, are measured at fair value based on unobservable inputs (Level 3) on a non-recurring basis, if determined to be impaired. In determining the fair value of restaurant-level assets, the Company considered the highest and best use of the assets from a market participants’ perspective, which is represented by the higher of the forecasted discounted cash flows from operating restaurants and the price market participants would pay to sub-lease the ROU assets and acquire the remaining restaurants assets, even if that use differs from the current use by the Company. The after-tax cash flows incorporate reasonable assumptions we believe a franchisee would make, such as sales growth, and include a deduction for royalties we would receive under a franchise agreement with terms substantially at market. The discount rate used in the fair value calculation is our estimate of the required rate-of-return that a franchisee would expect to receive when purchasing a similar restaurant and the related long-lived assets. In situations where the highest and best use of restaurant-level assets are represented by sub-leasing the operating lease ROU assets and acquiring the remaining restaurant assets, the Company continues to use these assets in operating its restaurant business, which is consistent with its long-term strategy of growing revenue through operating restaurant concepts. As of each relevant measurement date, the fair value of restaurant-level assets, if determined to be impaired, are primarily represented by the price market participant would pay to sub-lease the operating lease ROU assets and acquire the remaining restaurants assets, which reflects the highest and best use of the assets. Significant unobservable inputs used in the fair value measurement include market rental prices, which were determined with the assistance of an independent valuation specialist. The direct comparison approach is used as the valuation technique by assuming a sub-lease of each of the properties in its existing state with vacant possession. By making reference to lease transactions as available in the relevant market, comparable properties in close proximity have been selected and adjustments have been made to account for any difference in factors such as location and property size. The following table presents amounts recognized from all non-recurring fair value measurements based on unobservable inputs (Level 3) during the quarters and years to date ended September 30, 2022 and 2021. These amounts exclude fair value measurements made for restaurants that were subsequently closed or refranchised prior to those respective period-end dates. Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Account Classification Restaurant-level impairment (a) $ — $ — $ 15 $ 13 Closure and impairment expenses, net (a) Restaurant-level impairment charges are recorded in Closures and impairment expenses, net and resulted from our semi-annual impairment evaluation of long-lived assets of individual restaurants that were being operated at the time of impairment and had not been offered for refranchising. After considering the impairment charges recorded during the corresponding periods, the fair value of assets as of the relevant measurement date was $ 67 million and $ 50 million for the years to date ended September 30, 2022 and 2021, respectively. |
Business Acquisitions and Equ_2
Business Acquisitions and Equity Investments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Meituan Dianping [Member] | |
Debt and Equity Securities, FV-NI [Line Items] | |
Summary of Pre-tax Gains or Losses on Investment in Equity Securities | A summary of pre-tax gains or losses on investment in equity securities of Meituan recognized, which was included in Investment gain or loss in our Condensed Consolidated Statements of Income, is as follows: Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Unrealized losses recorded on equity securities $ ( 15 ) $ ( 41 ) $ ( 33 ) $ ( 27 ) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue by Types of Arrangements and Segments | The following tables present revenue disaggregated by types of arrangements and segments: Quarter Ended 9/30/2022 Revenues KFC Pizza Hut All Other Corporate and Unallocated Combined Elimination Consolidated Company sales $ 1,992 $ 556 $ 13 $ — $ 2,561 $ — $ 2,561 Franchise fees and income 15 2 5 — 22 — 22 Revenues from transactions 9 1 11 59 80 — 80 Other revenues 1 2 157 12 172 ( 150 ) 22 Total revenues $ 2,017 $ 561 $ 186 $ 71 $ 2,835 $ ( 150 ) $ 2,685 Quarter Ended 9/30/2021 Revenues KFC Pizza Hut All Other Corporate and Unallocated Combined Elimination Consolidated Company sales $ 1,750 $ 546 $ 14 $ — $ 2,310 $ — $ 2,310 Franchise fees and income 32 2 6 — 40 — 40 Revenues from transactions 17 2 26 139 184 — 184 Other revenues 2 1 88 7 98 ( 78 ) 20 Total revenues $ 1,801 $ 551 $ 134 $ 146 $ 2,632 $ ( 78 ) $ 2,554 Year to Date Ended 9/30/2022 Revenues KFC Pizza Hut All Other Corporate and Unallocated Combined Elimination Consolidated Company sales $ 5,554 $ 1,541 $ 40 $ — $ 7,135 $ — $ 7,135 Franchise fees and income 44 6 15 — 65 — 65 Revenues from transactions 24 3 29 163 219 — 219 Other revenues 6 6 407 31 450 ( 388 ) 62 Total revenues $ 5,628 $ 1,556 $ 491 $ 194 $ 7,869 $ ( 388 ) $ 7,481 Year to Date Ended 9/30/2021 Revenues KFC Pizza Hut All Other Corporate and Unallocated Combined Elimination Consolidated Company sales $ 5,220 $ 1,617 $ 37 $ — $ 6,874 $ — $ 6,874 Franchise fees and income 95 6 19 — 120 — 120 Revenues from transactions 46 5 75 393 519 — 519 Other revenues 6 2 187 11 206 ( 157 ) 49 Total revenues $ 5,367 $ 1,630 $ 318 $ 404 $ 7,719 $ ( 157 ) $ 7,562 |
Contract Liabilities | Contract liabilities at September 30, 2022 and December 31, 2021 were as follows: Contract liabilities 9/30/2022 12/31/2021 – Deferred revenue related to prepaid stored-value products $ 112 $ 134 – Deferred revenue related to upfront franchise fees 29 30 – Deferred revenue related to customer loyalty programs 23 25 – Deferred revenue related to privilege membership programs 12 18 – Others — 1 Total $ 176 $ 208 |
Earnings Per Common Share ("E_2
Earnings Per Common Share ("EPS") (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | The following table summarizes the components of basic and diluted EPS (in millions, except per share data): Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Net Income – Yum China Holdings, Inc. $ 206 $ 104 $ 389 $ 515 Weighted-average common shares outstanding (a) 420 422 422 421 Effect of dilutive share-based awards (a) 4 6 4 6 Effect of dilutive warrants (b) — 7 — 8 Weighted-average common and dilutive potential common shares (a) 424 435 426 435 Basic Earnings Per Common Share $ 0.49 $ 0.25 $ 0.92 $ 1.23 Diluted Earnings Per Common Share $ 0.49 $ 0.24 $ 0.92 $ 1.19 Share-based awards excluded from the diluted EPS computation (c) 4 2 4 2 (a) As a result of the separation, shares of Yum China common stock were distributed to YUM’s shareholders of record as of October 19, 2016 and included in the calculated weighted-average common shares outstanding. Holders of outstanding YUM equity awards generally received both adjusted YUM awards and Yum China awards, or adjusted awards of either YUM or Yum China in their entirety. Any subsequent exercise of these awards, whether held by the Company’s employees or YUM’s employees, would increase the number of common shares outstanding. The incremental shares arising from outstanding equity awards are included in the computation of diluted EPS, if there is dilutive effect. In September 2020, 41,910,700 common shares were issued as a result of the Company’s global offering and secondary listing on the HKEX and they were included in the calculated weighted-average common shares outstanding. (b) Pursuant to the investment agreements dated September 1, 2016, Yum China issued to strategic investors two tranches of warrants on January 9, 2017, with each tranche initially providing the right to purchase 8,200,405 shares of Yum China common stock, at an initial exercise price of $ 31.40 and $ 39.25 per share, respectively, subject to customary anti-dilution adjustments. The warrants were exercisable at any time through October 31, 2021. The incremental shares arising from outstanding warrants were included in the computation of diluted EPS, if there is dilutive effect when the average market price of Yum China common stock for the periods exceeds the applicable exercise price of the warrants. During the second half of 2021, an aggregate of 7,534,316 common shares were issued as a result of the cashless exercise of all warrants outstanding, which upon exercise were excluded from the calculation of dilutive warrants and included in the weighted-average common shares outstanding. (c) These outstanding stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”) were excluded from the computation of diluted EPS because to do so would have been antidilutive for the quarters presented, or because certain PSUs are contingently issuable based on the achievement of performance and market conditions, which have not been met as of September 30, 2022 and 2021. |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
Changes in Equity and Redeemable Noncontrolling Interest | Changes in Equity and Redeemable Noncontrolling Interest (in millions) Yum China Holdings, Inc. Accumulated Common Additional Other Redeemable Stock Paid-in Retained Comprehensive Treasury Stock Noncontrolling Total Noncontrolling Shares* Amount Capital Earnings Income (Loss) Shares* Amount Interests Equity Interest Balance at June 30, 2022 420 $ 4 $ 4,402 $ 2,083 $ 40 — $ — $ 760 $ 7,289 $ 13 Net Income 206 21 227 — Foreign currency translation ( 262 ) ( 44 ) ( 306 ) — Comprehensive loss ( 79 ) — Cash dividends declared 0.12 per common share) ( 51 ) ( 51 ) Repurchase and retirement — — ( 3 ) ( 10 ) ( 13 ) Exercise and vesting of share- — — ( 1 ) ( 1 ) Share-based compensation 10 — 10 Balance at September 30, 2022 419 $ 4 $ 4,408 $ 2,228 $ ( 222 ) — $ — $ 737 $ 7,155 $ 13 Balance at June 30, 2021 440 $ 4 $ 4,679 $ 2,415 $ 205 ( 20 ) $ ( 728 ) $ 241 $ 6,816 $ 12 Net Income 104 7 111 — Foreign currency translation 8 2 10 — Comprehensive income 121 — Acquisition of business 7 7 Cash dividends declared 0.12 per common share) ( 51 ) ( 51 ) Repurchase of shares of ( 1 ) ( 34 ) ( 34 ) Exercise and vesting of share- 1 — — — Exercise of warrants 3 — — — Share-based compensation 6 6 Balance at September 30, 2021 444 $ 4 $ 4,685 $ 2,468 $ 213 ( 20 ) $ ( 762 ) $ 257 $ 6,865 $ 12 Yum China Holdings, Inc. Accumulated Common Additional Other Redeemable Stock Paid-in Retained Comprehensive Treasury Stock Noncontrolling Total Noncontrolling Shares* Amount Capital Earnings Income (Loss) Shares* Amount Interests Equity Interest Balance at December 31, 2021 449 $ 4 $ 4,695 $ 2,892 $ 268 ( 21 ) $ ( 803 ) $ 852 $ 7,908 $ 14 Net Income 389 31 420 — Foreign currency translation ( 490 ) ( 83 ) ( 573 ) — Comprehensive loss ( 153 ) — Cash dividends declared 0.36 per common share) ( 152 ) ( 152 ) Dividends declared ( 81 ) ( 81 ) Contribution from 18 18 Repurchase and retirement ( 30 ) — ( 315 ) ( 901 ) 21 803 ( 413 ) Exercise and vesting of share- 1 — ( 3 ) ( 3 ) Share-based compensation 31 — 31 Acquisition of noncontrolling — ( 1 ) Balance at September 30, 2022 419 $ 4 $ 4,408 $ 2,228 $ ( 222 ) — $ — $ 737 $ 7,155 $ 13 Balance at December 31, 2020 440 $ 4 $ 4,658 $ 2,105 $ 167 ( 20 ) $ ( 728 ) $ 253 $ 6,459 $ 12 Net Income 515 32 547 — Foreign currency translation 46 4 50 — Comprehensive income 597 — Acquisition of business 7 7 Cash dividends declared 0.36 per common share) ( 152 ) ( 152 ) Dividends declared ( 39 ) ( 39 ) Repurchase of shares of ( 1 ) ( 34 ) ( 34 ) Exercise and vesting of share- 1 — ( 5 ) ( 5 ) Exercise of warrants 3 — — — Share-based compensation 32 32 Balance at September 30, 2021 444 $ 4 $ 4,685 $ 2,468 $ 213 ( 20 ) $ ( 762 ) $ 257 $ 6,865 $ 12 *: Shares may not add due to rounding. |
Other Expenses (Income), Net (T
Other Expenses (Income), Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Other Income and Expenses [Abstract] | |
Other Expenses (Income), Net | Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Amortization of reacquired franchise rights (a) $ 24 $ 10 $ 74 $ 29 Equity income from investments in (b) — ( 10 ) — ( 37 ) Gain from re-measurement of equity interest (c) — ( 10 ) — ( 10 ) Foreign exchange impact and others — — ( 1 ) 3 Other expenses (income), net $ 24 $ ( 10 ) $ 73 $ ( 15 ) (a) Increase in amortization of reacquired franchise rights as a result of the acquisition of Hangzhou KFC as disclosed in Note 3, with $ 66 million of the purchase price allocated to intangible assets related to reacquired franchise right, which is being amortized over the remaining franchise contract period of 1 year. (b) Includes equity income from our investments in Hangzhou KFC and the Lavazza joint venture before we consolidated the results of these entities upon completion of the acquisitions in 2021 (See Note 3 for additional information). (c) For the quarter and year to date ended September 30, 2021, the Company recognized a gain of $ 10 million from the re-measurement of our previously held equity interest at fair value, as a result the consolidation of Lavazza joint venture as disclosed in Note 3. |
Supplemental Balance Sheet In_2
Supplemental Balance Sheet Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Accounts Receivable, Net | Accounts Receivable, net 9/30/2022 12/31/2021 Accounts receivable, gross $ 68 $ 68 Allowance for doubtful accounts ( 2 ) ( 1 ) Accounts receivable, net $ 66 $ 67 |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets 9/30/2022 12/31/2021 VAT assets (a) $ 93 $ — Receivables from payment processors and aggregators 37 45 Dividends receivable from unconsolidated affiliates 6 — Other prepaid expenses and current assets 150 176 Prepaid expenses and other current assets $ 286 $ 221 |
Property, Plant and Equipment | Property, Plant and Equipment 9/30/2022 12/31/2021 Buildings and improvements, and construction in progress $ 2,727 $ 2,984 Finance leases, primarily buildings 52 52 Machinery and equipment 1,525 1,589 Property, plant and equipment, gross 4,304 4,625 Accumulated depreciation ( 2,339 ) ( 2,374 ) Property, plant and equipment, net $ 1,965 $ 2,251 |
Accounts Payable and Other Current Liabilities | Other Assets 9/30/2022 12/31/2021 Land use right $ 120 $ 138 Investment in equity securities 89 122 Long-term deposits 87 101 Investment in long-term time deposits (b) 83 90 Costs to obtain contracts 5 7 VAT assets (a) 4 322 Others 31 52 Other Assets $ 419 $ 832 Accounts Payable and Other Current Liabilities 9/30/2022 12/31/2021 Accounts payable $ 673 $ 830 Operating lease liabilities 441 508 Accrued compensation and benefits 252 283 Contract liabilities 152 182 Accrued capital expenditures 133 269 Accrued marketing expenses 107 71 Dividends payable 93 38 Other current liabilities 141 151 Accounts payable and other current liabilities $ 1,992 $ 2,332 |
Other Liabilities and Deferred Credits | Other Liabilities 9/30/2022 12/31/2021 Accrued income tax payable $ 50 $ 56 Contract liabilities 24 26 Other non-current liabilities 82 85 Other liabilities $ 156 $ 167 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the Carrying Amount of Goodwill | The changes in the carrying amount of goodwill are as follows: Total KFC Pizza Hut All Other Balance as of December 31, 2021 Goodwill, gross $ 2,533 $ 2,040 $ 20 $ 473 Accumulated impairment losses (a) ( 391 ) — — ( 391 ) Goodwill, net 2,142 2,040 20 82 Goodwill acquired (b) 16 15 1 — Effect of currency translation adjustment ( 231 ) ( 220 ) ( 2 ) ( 9 ) Balance as of September 30, 2022 Goodwill, gross 2,318 1,835 19 464 Accumulated impairment losses (a) ( 391 ) — — ( 391 ) Goodwill, net $ 1,927 $ 1,835 $ 19 $ 73 (a) Accumulated impairment losses represent goodwill impairment attributable to the reporting units of Little Sheep and Daojia. (b) Goodwill acquired as a result of the acquisition of restaurants from our existing franchisees. The acquisition is considered immaterial. |
Schedule of Finite and Indefinite Lived Intangible Assets by Major Class | Intangible assets, net as of September 30, 2022 and December 31, 2021 are as follows: 9/30/2022 12/31/2021 Gross (a) Accumulated (a) Accumulated Impairment Losses (b) Net Carrying Amount Gross Accumulated Accumulated Impairment Losses (b) Net Carrying Amount Finite-lived intangible Reacquired franchise $ 268 $ ( 240 ) $ — $ 28 $ 295 $ ( 191 ) $ — $ 104 Huang Ji Huang 21 ( 3 ) — 18 23 ( 2 ) — 21 Daojia platform 16 ( 4 ) ( 12 ) — 16 ( 4 ) ( 12 ) — Customer-related assets 12 ( 10 ) ( 2 ) — 12 ( 9 ) ( 2 ) 1 Others 9 ( 5 ) — 4 10 ( 5 ) — 5 $ 326 $ ( 262 ) $ ( 14 ) $ 50 $ 356 $ ( 211 ) $ ( 14 ) $ 131 Indefinite-lived intangible Little Sheep trademark $ 51 $ — $ — $ 51 $ 57 $ — $ — $ 57 Huang Ji Huang 75 — — 75 84 — — 84 $ 126 $ — $ — $ 126 $ 141 $ — $ — $ 141 Total intangible assets $ 452 $ ( 262 ) $ ( 14 ) $ 176 $ 497 $ ( 211 ) $ ( 14 ) $ 272 (a) Changes in gross carrying amount and accumulated amortization include effect of currency translation adjustments. (b) Accumulated impairment losses represent impairment charges on intangible assets acquired from Daojia primarily attributable to the Daojia platform. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Summary of Supplemental Balance Sheet | Supplemental Balance Sheet 9/30/2022 12/31/2021 Account Classification Assets Operating lease right-of-use assets $ 2,154 $ 2,612 Operating lease right-of-use assets Finance lease right-of-use assets 31 33 Property, plant and equipment, net Total leased assets $ 2,185 $ 2,645 Liabilities Current Operating lease liabilities $ 441 $ 508 Accounts payable and other current liabilities Finance lease liabilities 4 3 Accounts payable and other current liabilities Non-current Operating lease liabilities 1,862 2,286 Non-current operating lease liabilities Finance lease liabilities 36 40 Non-current finance lease liabilities Total lease liabilities $ 2,343 $ 2,837 |
Summary of Lease Cost | Summary of Lease Cost Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Account Classification Operating lease cost $ 133 $ 140 $ 433 $ 414 Occupancy and other operating expenses, Finance lease cost Amortization of leased assets 1 1 3 2 Occupancy and other operating expenses Interest on lease liabilities 1 — 2 1 Interest expense, net Variable lease cost (a) 89 91 248 273 Occupancy and other operating expenses Short-term lease cost 3 3 10 8 Occupancy and other operating expenses Sub-lease income ( 5 ) ( 6 ) ( 18 ) ( 20 ) Franchise fees and income or Total lease cost $ 222 $ 229 $ 678 $ 678 (a) The Company was granted $ 13 million and $ 2 million in lease concessions from landlords related to the effects of the COVID-19 pandemic during the quarters ended September 30, 2022 and 2021, respectively, and $ 27 million and $ 9 million during the years to date ended September 30, 2022 and 2021, respectively. The lease concessions were primarily in the form of rent reduction over the period of time when the Company’s restaurant business was adversely impacted. The Company applied the interpretive guidance in a FASB staff Q&A document issued in April 2020 and elected: (1) not to evaluate whether a concession received in response to the COVID-19 pandemic is a lease modification and (2) to assume such concession was contemplated as part of the existing lease contract with no contract modification. Such concession was recognized as negative variable lease cost in the period the concession was granted. |
Schedule of Supplemental Cash Flow Information | Supplemental Cash Flow Information Year to Date Ended 9/30/2022 9/30/2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 416 $ 423 Operating cash flows from finance leases 2 1 Financing cash flows from finance leases 3 2 Right-of-use assets obtained in exchange for lease liabilities (b) : Operating leases $ 106 $ 394 Finance leases 4 7 (b) This supplemental non-cash disclosure for right-of-use (“ROU”) assets obtained in exchange for lease liabilities includes an increase in lease liabilities associated with obtaining new ROU assets of $ 232 million and $ 399 million for the years to date ended September 30, 2022 and 2021, respectively, as well as adjustments to lease liabilities or ROU assets due to modification or other reassessment events, which resulted in a $ 122 million decrease and $ 2 million increase in lease liabilities for the years to date ended September 30, 2022 and 2021, respectively. |
Schedule of Lease Terms and Discount Rate | Lease Term and Discount Rate 9/30/2022 9/30/2021 Weighted-average remaining lease term (years) Operating leases 7.1 7.0 Finance leases 11.3 11.2 Weighted-average discount rate Operating leases 5.2 % 5.7 % Finance leases 5.3 % 5.6 % |
Summary of Maturities of Lease Liabilities | Maturities of lease liabilities as of September 30, 2022 were as follows: Amount of Amount of Total Remainder of 2022 $ 175 $ 1 $ 176 2023 490 6 496 2024 430 5 435 2025 366 5 371 2026 317 5 322 Thereafter 981 31 1,012 Total undiscounted lease payment 2,759 53 2,812 Less: imputed interest (c) 456 13 469 Present value of lease liabilities $ 2,303 $ 40 $ 2,343 (c) As the rate implicit in the lease cannot be readily determined, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the imputed interest and present value of lease payments. We used the incremental borrowing rate on January 1, 2019 for operating leases that commenced prior to that date. |
Fair Value Measurements and D_2
Fair Value Measurements and Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Assets Measured on Recurring Basis or Disclosed at Fair Value | The following table is a summary of our financial assets measured on a recurring basis or disclosed at fair value and the level within the fair value hierarchy in which the measurement falls. The Company classifies its cash equivalents, short-term investments, long-term time deposits and investment in equity securities within Level 1 or Level 2 in the fair value hierarchy because it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value, respectively. No transfers among the levels within the fair value hierarchy occurred during the quarters and years to date ended September 30, 2022 and 2021. Fair Value Measurement or Disclosure Balance at Level 1 Level 2 Level 3 Cash equivalents: Time deposits $ 291 $ 291 Fixed income debt securities (a) 100 100 Money market funds 63 63 Total cash equivalents 454 63 391 — Short-term investments: Time deposits 1,990 1,990 Fixed income debt securities (a) 550 550 Structured deposits 267 267 Variable return investments 19 19 Total short-term investments 2,826 19 2,807 — Other assets: Investment in equity securities 89 89 Long-term time deposits 83 83 Total $ 3,452 $ 171 $ 3,281 $ — Fair Value Measurement or Disclosure Balance at Level 1 Level 2 Level 3 Cash equivalents: Time deposits $ 321 $ 321 Fixed income debt securities (a) 163 63 100 Money market funds 45 45 Total cash equivalents 529 108 421 — Short-term investments: Time deposits 1,726 1,726 Fixed income debt securities (a) 1,055 1,055 Variable return investments 79 79 Total short-term investments 2,860 79 2,781 — Other assets: Investment in equity securities 122 122 Long-term time deposits 90 90 Total $ 3,601 $ 309 $ 3,292 $ — (a) Classified as held-to-maturity investments and measured at amortized cost. |
Schedule of Amounts Recognized From Non-recurring Fair Value Measurements | The following table presents amounts recognized from all non-recurring fair value measurements based on unobservable inputs (Level 3) during the quarters and years to date ended September 30, 2022 and 2021. These amounts exclude fair value measurements made for restaurants that were subsequently closed or refranchised prior to those respective period-end dates. Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Account Classification Restaurant-level impairment (a) $ — $ — $ 15 $ 13 Closure and impairment expenses, net (a) Restaurant-level impairment charges are recorded in Closures and impairment expenses, net and resulted from our semi-annual impairment evaluation of long-lived assets of individual restaurants that were being operated at the time of impairment and had not been offered for refranchising. After considering the impairment charges recorded during the corresponding periods, the fair value of assets as of the relevant measurement date was $ 67 million and $ 50 million for the years to date ended September 30, 2022 and 2021, respectively. |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Tax And Effective Tax Rate | Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Income tax provision $ 97 $ 44 $ 183 $ 210 Effective tax rate 29.9 % 28.3 % 30.1 % 27.7 % |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Quarter Ended 9/30/2022 Revenues KFC Pizza Hut All Other Corporate and Unallocated (a) Combined Elimination Consolidated Revenue from external $ 2,017 $ 561 $ 41 $ 66 $ 2,685 $ — $ 2,685 Inter-segment revenue — — 145 5 150 ( 150 ) — Total $ 2,017 $ 561 $ 186 $ 71 $ 2,835 $ ( 150 ) $ 2,685 Quarter Ended 9/30/2021 Revenues KFC Pizza Hut All Other Corporate and Unallocated (a) Combined Elimination Consolidated Revenue from external $ 1,801 $ 551 $ 59 $ 143 $ 2,554 $ — $ 2,554 Inter-segment revenue — — 75 3 78 ( 78 ) — Total $ 1,801 $ 551 $ 134 $ 146 $ 2,632 $ ( 78 ) $ 2,554 Year to Date Ended 9/30/2022 Revenues KFC Pizza Hut All Other Corporate and Unallocated (a) Combined Elimination Consolidated Revenue from external $ 5,628 $ 1,556 $ 115 $ 182 $ 7,481 $ — $ 7,481 Inter-segment revenue — — 376 12 388 ( 388 ) — Total $ 5,628 $ 1,556 $ 491 $ 194 $ 7,869 $ ( 388 ) $ 7,481 Year to Date Ended 9/30/2021 Revenues KFC Pizza Hut All Other Corporate and Unallocated (a) Combined Elimination Consolidated Revenue from external $ 5,367 $ 1,630 $ 164 $ 401 $ 7,562 $ — $ 7,562 Inter-segment revenue — — 154 3 157 ( 157 ) — Total $ 5,367 $ 1,630 $ 318 $ 404 $ 7,719 $ ( 157 ) $ 7,562 Quarter Ended Year to Date Ended Operating Profit (Loss) 9/30/2022 9/30/2021 9/30/2022 9/30/2021 KFC (b) $ 328 $ 196 $ 670 $ 763 Pizza Hut 49 18 90 117 All Other Segments ( 9 ) ( 6 ) ( 39 ) ( 15 ) Unallocated revenues from transactions with (c) 59 139 163 393 Unallocated other revenues 12 7 31 11 Unallocated expenses from transactions with (c) ( 58 ) ( 138 ) ( 163 ) ( 390 ) Unallocated other operating costs and expenses ( 10 ) ( 5 ) ( 28 ) ( 10 ) Unallocated and corporate G&A expenses ( 55 ) ( 42 ) ( 138 ) ( 123 ) Unallocated other income, net (d) — 9 2 7 Operating Profit $ 316 $ 178 $ 588 $ 753 Interest income, net (a) 25 16 51 47 Investment loss (a) ( 15 ) ( 39 ) ( 32 ) ( 43 ) Income Before Income Taxes and Equity in $ 326 $ 155 $ 607 $ 757 Quarter Ended Year to Date Ended Impairment Charges 9/30/2022 9/30/2021 9/30/2022 9/30/2021 KFC (e) $ 5 $ 3 $ 24 $ 14 Pizza Hut (e) — 1 5 8 All Other Segments (e) 2 — 8 1 $ 7 $ 4 $ 37 $ 23 Total Assets 9/30/2022 12/31/2021 KFC $ 5,137 $ 6,072 Pizza Hut 835 972 All Other Segments 364 454 Corporate and Unallocated (f) 5,360 5,725 $ 11,696 $ 13,223 (a) Amounts have not been allocated to any segment for performance reporting purposes. (b) Includes equity income from our investment in Hangzhou KFC of $ 13 million and $ 45 million for the quarter and year to date ended September 30, 2021 before we consolidated the results of the entity upon completion of the acquisition. See Note 3 for details. (c) Primarily includes revenues and associated expenses of transactions with franchisees and unconsolidated affiliates derived from the Company’s central procurement model whereby the Company centrally purchases substantially all food and paper products from suppliers and then sells and delivers them to KFC and Pizza Hut restaurants, including franchisees and unconsolidated affiliates that operate our concepts. Amounts have not been allocated to any segment for purposes of making operating decisions or assessing financial performance as the transactions are deemed corporate revenues and expenses in nature. (d) Primarily includes a gain from the re-measurement of our previously-held equity interest in connection with the acquisition of the Lavazza joint venture for the quarter and year to date ended September 30, 2021. As the re-measurement at fair value resulted from the acquisition, it was not allocated to any segment for performance reporting purposes. See Note 3. (e) Primarily includes store closure impairment charges and restaurant-level impairment charges resulting from our semi-annual impairment evaluation. See Note 12. (f) Primarily includes cash and cash equivalents, short-term investments, investments in equity securities of Meituan, investments in Sunner and Hangzhou Catering, long-term time deposits and inventories that are centrally managed. |
Description of Business - Narra
Description of Business - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 10, 2020 USD ($) | Dec. 31, 2021 USD ($) | Sep. 30, 2022 Segment shares | Apr. 30, 2020 | |
Segment Reporting Information [Line Items] | ||||
Entity, date of incorporation | Apr. 01, 2016 | |||
Entity Incorporation, State or Country Code | DE | |||
Additional consecutive renewal terms of license agreement | 50 years | |||
Percentage of license fees on net sales | 3% | |||
Number of reportable segments | Segment | 2 | |||
Global Offering [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Global offering shares of common stock | shares | 41,910,700 | |||
Net proceeds from global offering | $ 2,200 | |||
Hangzhou KFC [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Controlling ownership percentage maintained | 60% | |||
Joint Venture [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Joint venture equity interest percentage | 65% | |||
Lavazza Joint Venture [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Joint venture equity interest percentage | 65% | |||
KFC and Pizza Hut [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Expiration term of license agreement | 50 years | |||
Taco Bell [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Expiration term of license agreement | 50 years | |||
Hangzhou Catering [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of additional equity interest acquired | 28% | |||
Cash consideration paid to acquire interest | $ 255 |
Business Acquisitions and Equ_3
Business Acquisitions and Equity Investments - Narrative (Details) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||||||||
Sep. 30, 2022 USD ($) Restaurant | Dec. 31, 2021 USD ($) | Sep. 30, 2021 USD ($) | Mar. 31, 2021 USD ($) | Sep. 30, 2022 USD ($) Restaurant | Sep. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2020 shares | Apr. 30, 2020 | Sep. 30, 2018 USD ($) shares | ||
Business Acquisitions And Equity Investments [Line Items] | |||||||||||
Number of restaurants | Restaurant | 10,600 | 10,600 | |||||||||
Gain from re-measurement of previously held equity interest | [1] | $ 10 | $ 10 | ||||||||
Fujian Sunner Development Co., Ltd. [Member] | |||||||||||
Business Acquisitions And Equity Investments [Line Items] | |||||||||||
Percentage of equity interest acquired | 5% | ||||||||||
Total consideration paid to acquire interest | $ 261 | ||||||||||
Unrealized investment gain (loss) | (22) | ||||||||||
Purchase of inventories | $ 116 | 125 | $ 307 | 198 | |||||||
Investment carrying amount | 219 | ||||||||||
Market value | 169 | 169 | |||||||||
Investment in net assets excess of carrying amount | 153 | $ 153 | |||||||||
Finite-lived intangible asset, useful life | 20 years | ||||||||||
Fujian Sunner Development Co., Ltd. [Member] | Finite-Lived Intangible Assets [Member] | |||||||||||
Business Acquisitions And Equity Investments [Line Items] | |||||||||||
Investment in net assets excess of carrying amount | $ 17 | ||||||||||
Fujian Sunner Development Co., Ltd. [Member] | Accounts payable and other current liabilities [Member] | |||||||||||
Business Acquisitions And Equity Investments [Line Items] | |||||||||||
Accounts payable and other current liabilities due to Sunner | 44 | $ 56 | $ 44 | ||||||||
Meituan Dianping [Member] | |||||||||||
Business Acquisitions And Equity Investments [Line Items] | |||||||||||
Unrealized investment gain (loss) | $ (15) | (41) | $ (33) | $ (27) | |||||||
Number of ordinary shares subscribed | shares | 8.4 | ||||||||||
Maximum percentage of ordinary shares subscribed | 1% | ||||||||||
Fair value of Investment in Meituan's ordinary shares | $ 74 | ||||||||||
Number of ordinary shares sold | shares | 4.2 | ||||||||||
Joint Venture [Member] | |||||||||||
Business Acquisitions And Equity Investments [Line Items] | |||||||||||
Percentage of equity interest acquired | 65% | ||||||||||
Reacquired Franchise Rights [Member] | Hangzhou KFC [Member] | |||||||||||
Business Acquisitions And Equity Investments [Line Items] | |||||||||||
Purchase price allocated to intangible assets | $ 66 | ||||||||||
Remaining franchise contract period | 1 year | ||||||||||
Hangzhou KFC [Member] | |||||||||||
Business Acquisitions And Equity Investments [Line Items] | |||||||||||
Percentage of equity interest previously held by company | 47% | ||||||||||
Percentage of equity interest by company | 60% | ||||||||||
Lavazza Group [Member] | |||||||||||
Business Acquisitions And Equity Investments [Line Items] | |||||||||||
Gain from re-measurement of previously held equity interest | $ 10 | ||||||||||
Lavazza Group [Member] | Joint Venture [Member] | |||||||||||
Business Acquisitions And Equity Investments [Line Items] | |||||||||||
Percentage of equity interest acquired | 35% | ||||||||||
Hangzhou Catering [Member] | |||||||||||
Business Acquisitions And Equity Investments [Line Items] | |||||||||||
Percentage of additional equity interest acquired | 28% | ||||||||||
Cash consideration paid to acquire interest | $ 255 | ||||||||||
Total consideration paid to acquire interest | $ 255 | ||||||||||
Number of restaurants | Restaurant | 60 | 60 | |||||||||
Investment carrying amount | $ 35 | ||||||||||
Investment in net assets excess of carrying amount | $ 26 | $ 26 | |||||||||
Finite-lived intangible asset, useful life | 20 years | ||||||||||
Hangzhou Catering [Member] | Hangzhou KFC [Member] | |||||||||||
Business Acquisitions And Equity Investments [Line Items] | |||||||||||
Percentage of equity interest acquired | 45% | ||||||||||
Hangzhou Catering [Member] | Unconsolidated Affiliates [Member] | |||||||||||
Business Acquisitions And Equity Investments [Line Items] | |||||||||||
Percentage of equity interest acquired | 28% | 28% | |||||||||
[1] For the quarter and year to date ended September 30, 2021, the Company recognized a gain of $ 10 million from the re-measurement of our previously held equity interest at fair value, as a result the consolidation of Lavazza joint venture as disclosed in Note 3. |
Business Acquisitions and Equ_4
Business Acquisitions and Equity Investments - Summary of Pre-tax Gains or Losses in Investment in Equity Securities (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Meituan Dianping [Member] | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Unrealized losses recorded on equity securities still held as of the end of the period | $ (15) | $ (41) | $ (33) | $ (27) |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Revenue From Contract With Customer [Line Items] | |||||
Prepaid gift cards expiration period | 36 months | ||||
Product vouchers maximum expiration period | 12 months | ||||
Points expiration period | 18 months | ||||
Number of days from the period in which the corresponding sales occur that trade receivables are generally due | 30 days | ||||
Provision for accounts receivable | $ 2 | $ 2 | $ 1 | ||
Impairment losses related to costs to obtain contracts | 0 | 0 | |||
Costs to obtain contracts | 5 | 5 | $ 7 | ||
Revenue recognized | $ 60 | $ 68 | $ 103 | $ 115 | |
KFC [Member] | |||||
Revenue From Contract With Customer [Line Items] | |||||
Franchisee agreement term | 10 years | ||||
Pizza Hut [Member] | |||||
Revenue From Contract With Customer [Line Items] | |||||
Franchisee agreement term | 10 years | ||||
Little Sheep [Member] | Maximum [Member] | |||||
Revenue From Contract With Customer [Line Items] | |||||
Franchisee agreement term | 10 years | ||||
Huang Ji Huang [Member] | Maximum [Member] | |||||
Revenue From Contract With Customer [Line Items] | |||||
Franchisee agreement term | 10 years |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Disaggregation of Revenue by Types of Arrangements and Segments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation Of Revenue [Line Items] | ||||
Total revenues | $ 2,685 | $ 2,554 | $ 7,481 | $ 7,562 |
KFC [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenues | 2,017 | 1,801 | 5,628 | 5,367 |
Pizza Hut [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenues | 561 | 551 | 1,556 | 1,630 |
All Other Segments [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenues | 186 | 134 | 491 | 318 |
Corporate and Unallocated [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenues | 71 | 146 | 194 | 404 |
Combined [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenues | 2,835 | 2,632 | 7,869 | 7,719 |
Elimination [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenues | (150) | (78) | (388) | (157) |
Elimination [Member] | All Other Segments [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenues | 145 | 75 | 376 | 154 |
Operating Segments [Member] | KFC [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenues | 2,017 | |||
Operating Segments [Member] | Pizza Hut [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenues | 561 | |||
Operating Segments [Member] | All Other Segments [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenues | 186 | 134 | ||
Company Sales [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 2,561 | 2,310 | 7,135 | 6,874 |
Company Sales [Member] | KFC [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 1,992 | 1,750 | 5,554 | 5,220 |
Company Sales [Member] | Pizza Hut [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 556 | 546 | 1,541 | 1,617 |
Company Sales [Member] | All Other Segments [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 13 | 14 | 40 | 37 |
Company Sales [Member] | Combined [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 2,561 | 2,310 | 7,135 | 6,874 |
Franchise [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 22 | 40 | 65 | 120 |
Franchise [Member] | KFC [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 15 | 32 | 44 | 95 |
Franchise [Member] | Pizza Hut [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 2 | 2 | 6 | 6 |
Franchise [Member] | All Other Segments [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 5 | 6 | 15 | 19 |
Franchise [Member] | Combined [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 22 | 40 | 65 | 120 |
Transactions With Franchisees and Unconsolidated Affiliates [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 80 | 184 | 219 | 519 |
Transactions With Franchisees and Unconsolidated Affiliates [Member] | KFC [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 9 | 17 | 24 | 46 |
Transactions With Franchisees and Unconsolidated Affiliates [Member] | Pizza Hut [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 1 | 2 | 3 | 5 |
Transactions With Franchisees and Unconsolidated Affiliates [Member] | All Other Segments [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 11 | 26 | 29 | 75 |
Transactions With Franchisees and Unconsolidated Affiliates [Member] | Corporate and Unallocated [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 59 | 139 | 163 | 393 |
Transactions With Franchisees and Unconsolidated Affiliates [Member] | Combined [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 80 | 184 | 219 | 519 |
Other Revenues [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 22 | 20 | 62 | 49 |
Other Revenues [Member] | KFC [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 1 | 2 | 6 | 6 |
Other Revenues [Member] | Pizza Hut [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 2 | 1 | 6 | 2 |
Other Revenues [Member] | All Other Segments [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 157 | 88 | 407 | 187 |
Other Revenues [Member] | Corporate and Unallocated [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 12 | 7 | 31 | 11 |
Other Revenues [Member] | Combined [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 172 | 98 | 450 | 206 |
Other Revenues [Member] | Elimination [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ (150) | $ (78) | $ (388) | $ (157) |
Revenue Recognition - Contract
Revenue Recognition - Contract Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Contract liabilities | ||
Contract liabilities | $ 176 | $ 208 |
Deferred Revenue Related To Prepaid Stored Value Products [Member] | ||
Contract liabilities | ||
Contract liabilities | 112 | 134 |
Deferred Revenue Related To Upfront Franchise Fees [Member] | ||
Contract liabilities | ||
Contract liabilities | 29 | 30 |
Deferred Revenue Related To Customer Loyalty Programs [Member] | ||
Contract liabilities | ||
Contract liabilities | 23 | 25 |
Deferred Revenue Related To Privilege Membership Programs [Member] | ||
Contract liabilities | ||
Contract liabilities | $ 12 | 18 |
Others [Member] | ||
Contract liabilities | ||
Contract liabilities | $ 1 |
Earnings Per Common Share ("E_3
Earnings Per Common Share ("EPS") (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Earnings Per Share [Abstract] | |||||
Net Income - Yum China Holdings, Inc. | $ 206 | $ 104 | $ 389 | $ 515 | |
Weighted-average common shares outstanding (for basic calculation) | [1] | 420 | 422 | 422 | 421 |
Effect of dilutive share-based awards | [1] | 4 | 6 | 4 | 6 |
Effect of dilutive warrants | [2] | 7 | 8 | ||
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation) | [1] | 424 | 435 | 426 | 435 |
Basic Earnings Per Common Share | $ 0.49 | $ 0.25 | $ 0.92 | $ 1.23 | |
Diluted Earnings Per Common Share | $ 0.49 | $ 0.24 | $ 0.92 | $ 1.19 | |
Share-based awards excluded from the diluted EPS computation | [3] | 4 | 2 | 4 | 2 |
[1] As a result of the separation, shares of Yum China common stock were distributed to YUM’s shareholders of record as of October 19, 2016 and included in the calculated weighted-average common shares outstanding. Holders of outstanding YUM equity awards generally received both adjusted YUM awards and Yum China awards, or adjusted awards of either YUM or Yum China in their entirety. Any subsequent exercise of these awards, whether held by the Company’s employees or YUM’s employees, would increase the number of common shares outstanding. The incremental shares arising from outstanding equity awards are included in the computation of diluted EPS, if there is dilutive effect. In September 2020, 41,910,700 common shares were issued as a result of the Company’s global offering and secondary listing on the HKEX and they were included in the calculated weighted-average common shares outstanding. Pursuant to the investment agreements dated September 1, 2016, Yum China issued to strategic investors two tranches of warrants on January 9, 2017, with each tranche initially providing the right to purchase 8,200,405 shares of Yum China common stock, at an initial exercise price of $ 31.40 and $ 39.25 per share, respectively, subject to customary anti-dilution adjustments. The warrants were exercisable at any time through October 31, 2021. The incremental shares arising from outstanding warrants were included in the computation of diluted EPS, if there is dilutive effect when the average market price of Yum China common stock for the periods exceeds the applicable exercise price of the warrants. During the second half of 2021, an aggregate of 7,534,316 common shares were issued as a result of the cashless exercise of all warrants outstanding, which upon exercise were excluded from the calculation of dilutive warrants and included in the weighted-average common shares outstanding. These outstanding stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”) were excluded from the computation of diluted EPS because to do so would have been antidilutive for the quarters presented, or because certain PSUs are contingently issuable based on the achievement of performance and market conditions, which have not been met as of September 30, 2022 and 2021. |
Earnings Per Common Share ("E_4
Earnings Per Common Share ("EPS") (Parenthetical) (Details) | 1 Months Ended | 6 Months Ended | |
Jan. 09, 2017 Tranche $ / shares shares | Sep. 30, 2020 shares | Dec. 31, 2021 shares | |
Class Of Warrant Or Right [Line Items] | |||
Number of tranches of warrants | Tranche | 2 | ||
Number of common shares issued as result of cashless exercise | 7,534,316 | ||
Tranche One Warrants [Member] | |||
Class Of Warrant Or Right [Line Items] | |||
Warrants to purchase shares of common stock | 8,200,405 | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 31.40 | ||
Tranche Two Warrants [Member] | |||
Class Of Warrant Or Right [Line Items] | |||
Warrants to purchase shares of common stock | 8,200,405 | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 39.25 | ||
Secondary Listing [Member] | |||
Class Of Warrant Or Right [Line Items] | |||
Global offering shares of common stock | 41,910,700 |
Equity (Details)
Equity (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Class Of Stock [Line Items] | |||||
Beginning balance | $ 7,289 | $ 6,816 | $ 7,908 | $ 6,459 | |
Net Income | 227 | 111 | 420 | 547 | |
Foreign currency translation adjustments | (306) | 10 | (573) | 50 | |
Comprehensive income (Loss) | (79) | 121 | (153) | 597 | |
Cash dividends declared | (51) | (51) | (152) | (152) | |
Repurchase of shares of common stock | (34) | $ (413) | $ (34) | ||
Repurchase of shares of common stock, shares | (9) | (0.6) | |||
Repurchase and retirement of shares | (13) | $ (413) | |||
Dividends declared | (81) | $ (39) | |||
Contribution from noncontrolling interests | 18 | ||||
Exercise and vesting of share-based awards | (1) | (3) | (5) | ||
Share-based compensation | 10 | 6 | 31 | 32 | |
Acquisition of noncontrolling interest/business | 7 | 7 | |||
Ending balance | 7,155 | 6,865 | 7,155 | 6,865 | |
Common Stock [Member] | |||||
Class Of Stock [Line Items] | |||||
Beginning balance | $ 4 | $ 4 | $ 4 | $ 4 | |
Beginning balance (in shares) | [1] | 420 | 440 | 449 | 440 |
Repurchase and retirement of shares (in shares) | [1] | (30) | |||
Exercise and vesting of share-based awards, shares | [1] | 1 | 1 | 1 | |
Exercise of warrants, shares | [1] | 3 | 3 | ||
Ending balance | $ 4 | $ 4 | $ 4 | $ 4 | |
Ending balance (in shares) | [1] | 419 | 444 | 419 | 444 |
Additional Paid-in Capital [Member] | |||||
Class Of Stock [Line Items] | |||||
Beginning balance | $ 4,402 | $ 4,679 | $ 4,695 | $ 4,658 | |
Repurchase and retirement of shares | (3) | (315) | |||
Exercise and vesting of share-based awards | (3) | (5) | |||
Share-based compensation | 10 | 6 | 31 | 32 | |
Ending balance | 4,408 | 4,685 | 4,408 | 4,685 | |
Retained Earnings [Member] | |||||
Class Of Stock [Line Items] | |||||
Beginning balance | 2,083 | 2,415 | 2,892 | 2,105 | |
Net Income | 206 | 104 | 389 | 515 | |
Cash dividends declared | (51) | (51) | (152) | (152) | |
Repurchase and retirement of shares | (10) | (901) | |||
Ending balance | 2,228 | 2,468 | 2,228 | 2,468 | |
Accumulated Other Comprehensive Income (Loss) [Member] | |||||
Class Of Stock [Line Items] | |||||
Beginning balance | 40 | 205 | 268 | 167 | |
Foreign currency translation adjustments | (262) | 8 | (490) | 46 | |
Ending balance | (222) | 213 | (222) | 213 | |
Treasury Stock [Member] | |||||
Class Of Stock [Line Items] | |||||
Beginning balance | $ (728) | $ (803) | $ (728) | ||
Beginning balance (in shares) | [1] | (20) | (21) | (20) | |
Repurchase of shares of common stock | $ (34) | $ (34) | |||
Repurchase of shares of common stock, shares | [1] | (1) | (1) | ||
Repurchase and retirement of shares | $ 803 | ||||
Repurchase and retirement of shares (in shares) | [1] | 21 | |||
Ending balance | $ (762) | $ (762) | |||
Ending balance (in shares) | [1] | (20) | (20) | ||
Noncontrolling Interests [Member] | |||||
Class Of Stock [Line Items] | |||||
Beginning balance | 760 | $ 241 | $ 852 | $ 253 | |
Net Income | 21 | 7 | 31 | 32 | |
Foreign currency translation adjustments | (44) | 2 | (83) | 4 | |
Dividends declared | (81) | (39) | |||
Contribution from noncontrolling interests | 18 | ||||
Acquisition of noncontrolling interest/business | 7 | 7 | |||
Ending balance | 737 | 257 | 737 | 257 | |
Redeemable Noncontrolling Interest [Member] | |||||
Class Of Stock [Line Items] | |||||
Beginning balance | 13 | 12 | 14 | 12 | |
Acquisition of noncontrolling interest/business | (1) | ||||
Ending balance | $ 13 | $ 12 | $ 13 | $ 12 | |
[1] Shares may not add due to rounding. |
Equity (Parenthetical) (Details
Equity (Parenthetical) (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Equity [Abstract] | ||||
Cash dividends declared, per common share | $ 0.12 | $ 0.12 | $ 0.36 | $ 0.36 |
Equity - Narrative (Details)
Equity - Narrative (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Class Of Stock [Line Items] | |||
Stock repurchase program, authorized amount | $ 2,400 | ||
Treasury stock repurchased, shares | 9 | 0.6 | |
Treasury stock repurchased, value | $ 34 | $ 413 | $ 34 |
Stock repurchase program, remaining authorized repurchase amount | 1,200 | ||
$2 Million Settled Subsequent to September 30, 2022 [Member] | |||
Class Of Stock [Line Items] | |||
Treasury stock repurchased, value | $ 2 | ||
$2 Million Settled Subsequent to September 30, 2021 [Member] | |||
Class Of Stock [Line Items] | |||
Treasury stock repurchased, value | $ 2 |
Items Affecting Comparability_2
Items Affecting Comparability of Net Income - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Mar. 31, 2021 | |
Fujian Sunner Development Co., Ltd. [Member] | |||||
Percentage of equity interest acquired | 5% | ||||
Pre-tax loss from disposal of equity security | $ (22) | ||||
Meituan Dianping [Member] | |||||
Pre-tax loss from disposal of equity security | $ (15) | $ (41) | $ (33) | (27) | |
Pre-tax loss from disposal of equity security | $ (15) | $ (41) | $ (33) | $ (27) |
Other Expenses (Income), Net (D
Other Expenses (Income), Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Other Income and Expenses [Abstract] | |||||
Amortization of reacquired franchise rights | [1] | $ 24 | $ 10 | $ 74 | $ 29 |
Equity income from investments in unconsolidated affiliates | [2] | (10) | (37) | ||
Gain from re-measurement of equity interest upon acquisition | [3] | (10) | (10) | ||
Foreign exchange impact and others | (1) | 3 | |||
Other expenses (income), net | $ 24 | $ (10) | $ 73 | $ (15) | |
[1] Increase in amortization of reacquired franchise rights as a result of the acquisition of Hangzhou KFC as disclosed in Note 3, with $ 66 million of the purchase price allocated to intangible assets related to reacquired franchise right, which is being amortized over the remaining franchise contract period of 1 year. Includes equity income from our investments in Hangzhou KFC and the Lavazza joint venture before we consolidated the results of these entities upon completion of the acquisitions in 2021 (See Note 3 for additional information). For the quarter and year to date ended September 30, 2021, the Company recognized a gain of $ 10 million from the re-measurement of our previously held equity interest at fair value, as a result the consolidation of Lavazza joint venture as disclosed in Note 3. |
Other Expenses (Income), Net (P
Other Expenses (Income), Net (Parenthetical) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Other Operating Income Expense Net [Line Items] | ||||
Gain from re-measurement of previously held equity interest | [1] | $ 10 | $ 10 | |
Lavazza Joint Venture [Member] | ||||
Other Operating Income Expense Net [Line Items] | ||||
Gain from re-measurement of previously held equity interest | $ 10 | $ 10 | ||
Hangzhou KFC [Member] | Reacquired Franchise Rights [Member] | ||||
Other Operating Income Expense Net [Line Items] | ||||
Purchase price allocated to intangible assets | $ 66 | |||
Remaining franchise contract period | 1 year | |||
[1] For the quarter and year to date ended September 30, 2021, the Company recognized a gain of $ 10 million from the re-measurement of our previously held equity interest at fair value, as a result the consolidation of Lavazza joint venture as disclosed in Note 3. |
Supplemental Balance Sheet In_3
Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | ||
Accounts Receivable, net | |||||
Accounts receivable, gross | $ 68 | $ 68 | |||
Allowance for doubtful accounts | (2) | (1) | |||
Accounts receivable, net | 66 | 67 | |||
Prepaid Expenses and Other Current Assets | |||||
VAT assets | 93 | [1] | $ 303 | ||
Receivables from payment processors and aggregators | 37 | 45 | |||
Dividends receivable from unconsolidated affiliates | 6 | ||||
Other prepaid expenses and current assets | 150 | 176 | |||
Prepaid expenses and other current assets | 286 | 221 | |||
Other Assets | |||||
Land use right | 120 | 138 | |||
Investment in equity securities | 89 | 122 | |||
Long-term deposits | 87 | 101 | |||
Investment in long-term time deposits | [2] | 83 | 90 | ||
Costs to obtain contracts | 5 | 7 | |||
VAT assets | [1] | 4 | 322 | ||
Others | 31 | 52 | |||
Other Assets | 419 | 832 | |||
Accounts Payable and Other Current Liabilities | |||||
Accounts payable | 673 | 830 | |||
Operating lease liabilities | 441 | 508 | |||
Accrued compensation and benefits | 252 | 283 | |||
Contract liabilities | 152 | 182 | |||
Accrued capital expenditures | 133 | 269 | |||
Accrued marketing expenses | 107 | 71 | |||
Dividends payable | 93 | 38 | |||
Other current liabilities | 141 | 151 | |||
Accounts payable and other current liabilities | 1,992 | 2,332 | |||
Other Liabilities | |||||
Accrued income tax payable | 50 | 56 | |||
Contract liabilities | 24 | 26 | |||
Other non-current liabilities | 82 | 85 | |||
Other liabilities | $ 156 | $ 167 | |||
[1] On June 7, 2022, the Chinese Ministry of Finance and the Chinese State Tax Administration jointly issued Circular [2022] No. 21, to extend full VAT credit refunds to more sectors and increase the frequency for accepting taxpayers' applications with an aim to support business recovery. Beginning on July 1, 2022, entities engaged in providing catering services in China are allowed to apply for a lump sum refund of VAT assets accumulated prior to March 31, 2019. In addition, VAT assets accumulated after March 31, 2019 can be refunded on a monthly basis. As the benefits of certain VAT assets are expected to be realized within one year pursuant to Circular [2022] No. 21, $ 303 million of VAT assets as of June 30, 2022 were reclassified from Other assets to Prepaid expense and other current assets . As of September 30, 2022, VAT assets of $ 93 million were included in Prepaid expenses and other current assets. As of September 30, 2022 and December 31, 2021, the Company had $ 83 million and $ 90 million invested in long-term time deposits, respectively, bearing a fixed interest rate, with original maturity of three years . The asset is restricted for use in order to secure the balance of prepaid stored-value cards issued by the Company pursuant to regulatory requirements. |
Supplemental Balance Sheet In_4
Supplemental Balance Sheet Information (Details 1) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 4,304 | $ 4,625 |
Accumulated depreciation | (2,339) | (2,374) |
Property, plant and equipment, net | 1,965 | 2,251 |
Buildings and Improvements, and Construction in Progress [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 2,727 | 2,984 |
Finance Leases, Primarily Buildings [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 52 | 52 |
Machinery and Equipment [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 1,525 | $ 1,589 |
Supplemental Balance Sheet In_5
Supplemental Balance Sheet Information (Parenthetical) (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2021 | Sep. 30, 2022 | Jun. 30, 2022 | |||
Supplemental Balance Sheet Information Disclosure [Abstract] | |||||
VAT assets | $ 93 | [1] | $ 303 | ||
Investment in long-term time deposits | [2] | $ 90 | $ 83 | ||
Investment in long-term time deposits, maturity term | 3 years | ||||
[1] On June 7, 2022, the Chinese Ministry of Finance and the Chinese State Tax Administration jointly issued Circular [2022] No. 21, to extend full VAT credit refunds to more sectors and increase the frequency for accepting taxpayers' applications with an aim to support business recovery. Beginning on July 1, 2022, entities engaged in providing catering services in China are allowed to apply for a lump sum refund of VAT assets accumulated prior to March 31, 2019. In addition, VAT assets accumulated after March 31, 2019 can be refunded on a monthly basis. As the benefits of certain VAT assets are expected to be realized within one year pursuant to Circular [2022] No. 21, $ 303 million of VAT assets as of June 30, 2022 were reclassified from Other assets to Prepaid expense and other current assets . As of September 30, 2022, VAT assets of $ 93 million were included in Prepaid expenses and other current assets. As of September 30, 2022 and December 31, 2021, the Company had $ 83 million and $ 90 million invested in long-term time deposits, respectively, bearing a fixed interest rate, with original maturity of three years . The asset is restricted for use in order to secure the balance of prepaid stored-value cards issued by the Company pursuant to regulatory requirements. |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 | Dec. 31, 2021 | ||
Goodwill [Line Items] | |||
Goodwill, gross | $ 2,318 | $ 2,533 | |
Accumulated impairment losses | [1] | (391) | (391) |
Goodwill, net | 1,927 | 2,142 | |
Goodwill acquired | [2] | 16 | |
Effect of currency translation adjustment | (231) | ||
KFC [Member] | |||
Goodwill [Line Items] | |||
Goodwill, gross | 1,835 | 2,040 | |
Goodwill, net | 1,835 | 2,040 | |
Goodwill acquired | [2] | 15 | |
Effect of currency translation adjustment | (220) | ||
Pizza Hut [Member] | |||
Goodwill [Line Items] | |||
Goodwill, gross | 19 | 20 | |
Goodwill, net | 19 | 20 | |
Goodwill acquired | [2] | 1 | |
Effect of currency translation adjustment | (2) | ||
All Other Segments [Member] | |||
Goodwill [Line Items] | |||
Goodwill, gross | 464 | 473 | |
Accumulated impairment losses | [1] | (391) | (391) |
Goodwill, net | 73 | $ 82 | |
Effect of currency translation adjustment | $ (9) | ||
[1] Accumulated impairment losses represent goodwill impairment attributable to the reporting units of Little Sheep and Daojia. Goodwill acquired as a result of the acquisition of restaurants from our existing franchisees. The acquisition is considered immaterial. |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 | ||
Finite-lived intangible assets | ||||
Gross Carrying Amount | $ 326 | [1] | $ 356 | |
Accumulated Amortization | (262) | [1] | (211) | |
Accumulated impairment losses | [2] | (14) | (14) | |
Net Carrying Amount | 50 | 131 | ||
Indefinite-lived intangible assets | ||||
Net Carrying Amount | 126 | 141 | ||
Total intangible assets | ||||
Gross Carrying Amount | 452 | [1] | 497 | |
Intangible assets, net | 176 | 272 | ||
Reacquired franchise rights [Member] | ||||
Finite-lived intangible assets | ||||
Gross Carrying Amount | 268 | [1] | 295 | |
Accumulated Amortization | (240) | [1] | (191) | |
Net Carrying Amount | 28 | 104 | ||
Daojia platform [Member] | ||||
Finite-lived intangible assets | ||||
Gross Carrying Amount | 16 | [1] | 16 | |
Accumulated Amortization | (4) | [1] | (4) | |
Accumulated impairment losses | [2] | (12) | (12) | |
Customer-related assets [Member] | ||||
Finite-lived intangible assets | ||||
Gross Carrying Amount | 12 | [1] | 12 | |
Accumulated Amortization | (10) | [1] | (9) | |
Accumulated impairment losses | [2] | (2) | (2) | |
Net Carrying Amount | 1 | |||
Others [Member] | ||||
Finite-lived intangible assets | ||||
Gross Carrying Amount | 9 | [1] | 10 | |
Accumulated Amortization | (5) | [1] | (5) | |
Net Carrying Amount | 4 | 5 | ||
Huang Ji Huang Group [Member] | ||||
Finite-lived intangible assets | ||||
Gross Carrying Amount | 21 | [1] | 23 | |
Accumulated Amortization | (3) | [1] | (2) | |
Net Carrying Amount | 18 | 21 | ||
Trademark [Member] | Little Sheep [Member] | ||||
Indefinite-lived intangible assets | ||||
Net Carrying Amount | 51 | 57 | ||
Trademark [Member] | Huang Ji Huang Group [Member] | ||||
Indefinite-lived intangible assets | ||||
Net Carrying Amount | $ 75 | $ 84 | ||
[1] Changes in gross carrying amount and accumulated amortization include effect of currency translation adjustments. Accumulated impairment losses represent impairment charges on intangible assets acquired from Daojia primarily attributable to the Daojia platform. |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Finite-lived intangible assets | ||||
Finite-lived intangible assets, amortization expense | $ 24 | $ 10 | $ 76 | $ 1 |
Expected amortization expense for the unamortized finite-lived intangible assets - remainder of 2022 | 23 | 23 | ||
Expected amortization expense for the unamortized finite-lived intangible assets - 2023 | 4 | 4 | ||
Expected amortization expense for the unamortized finite-lived intangible assets - 2024 | 2 | 2 | ||
Expected amortization expense for the unamortized finite-lived intangible assets - 2025 | 2 | 2 | ||
Expected amortization expense for the unamortized finite-lived intangible assets - 2026 | $ 2 | $ 2 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) Restaurant | |
Schedule Of Lease Assets And Liabilities [Line Items] | |
Number of restaurants operated | Restaurant | 10,600 |
Additional lease signed but not commenced with total undiscounted minimum lease payments | $ | $ 131 |
Maximum [Member] | |
Schedule Of Lease Assets And Liabilities [Line Items] | |
Lease agreements initial terms | 20 years |
Lease terms | 20 years |
Minimum [Member] | |
Schedule Of Lease Assets And Liabilities [Line Items] | |
Lease agreements initial terms | 10 years |
Lease terms | 1 year |
Leases - Summary of Supplementa
Leases - Summary of Supplemental Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Schedule Of Lease Assets And Liabilities [Abstract] | ||
Operating lease right-of-use assets | $ 2,154 | $ 2,612 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Operating lease right-of-use assets | Operating lease right-of-use assets |
Finance lease right-of-use assets | $ 31 | $ 33 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
Total leased assets | $ 2,185 | $ 2,645 |
Operating lease liabilities | 441 | 508 |
Finance lease liabilities, Current | $ 4 | $ 3 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accounts payable and other current liabilities | Accounts payable and other current liabilities |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accounts payable and other current liabilities | Accounts payable and other current liabilities |
Non-current operating lease liabilities | $ 1,862 | $ 2,286 |
Non-current finance lease liabilities | 36 | 40 |
Total lease liabilities | $ 2,343 | $ 2,837 |
Leases - Summary of Lease Cost
Leases - Summary of Lease Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Lease, Cost [Abstract] | |||||
Operating lease cost | $ 133 | $ 140 | $ 433 | $ 414 | |
Finance lease cost | |||||
Amortization of leased assets | 1 | 1 | 3 | 2 | |
Interest on lease liabilities | 1 | 2 | 1 | ||
Variable lease cost | [1] | 89 | 91 | 248 | 273 |
Short-term lease cost | 3 | 3 | 10 | 8 | |
Sub-lease income | (5) | (6) | (18) | (20) | |
Total lease cost | $ 222 | $ 229 | $ 678 | $ 678 | |
[1] The Company was granted $ 13 million and $ 2 million in lease concessions from landlords related to the effects of the COVID-19 pandemic during the quarters ended September 30, 2022 and 2021, respectively, and $ 27 million and $ 9 million during the years to date ended September 30, 2022 and 2021, respectively. The lease concessions were primarily in the form of rent reduction over the period of time when the Company’s restaurant business was adversely impacted. The Company applied the interpretive guidance in a FASB staff Q&A document issued in April 2020 and elected: (1) not to evaluate whether a concession received in response to the COVID-19 pandemic is a lease modification and (2) to assume such concession was contemplated as part of the existing lease contract with no contract modification. Such concession was recognized as negative variable lease cost in the period the concession was granted. |
Leases - Summary of Lease Cos_2
Leases - Summary of Lease Cost (Parenthetical) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Lease, Cost [Abstract] | ||||
Lease concessions from landlords related to the effects of COVID-19 | $ 13 | $ 2 | $ 27 | $ 9 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | |||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ 416 | $ 423 | ||
Operating cash flows from finance leases | 2 | 1 | ||
Financing cash flows from finance leases | 3 | 2 | ||
Right-of-use assets obtained in exchange for new lease liabilities | ||||
Operating leases | [1] | 106 | 394 | |
Finance leases | $ 4 | $ 7 | [1] | |
[1] This supplemental non-cash disclosure for right-of-use (“ROU”) assets obtained in exchange for lease liabilities includes an increase in lease liabilities associated with obtaining new ROU assets of $ 232 million and $ 399 million for the years to date ended September 30, 2022 and 2021, respectively, as well as adjustments to lease liabilities or ROU assets due to modification or other reassessment events, which resulted in a $ 122 million decrease and $ 2 million increase in lease liabilities for the years to date ended September 30, 2022 and 2021, respectively. |
Leases - Schedule of Suppleme_2
Leases - Schedule of Supplemental Cash Flow Information (Parenthetical) (Details) - USD ($) $ in Millions | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | |||
Schedule Of Lease Assets And Liabilities [Line Items] | ||||
Right-of-use assets non-cash transactions, operating leases | [1] | $ 106 | $ 394 | |
Right-of-use assets non-cash transactions, finance leases | 4 | 7 | [1] | |
Non Cash Transactions [Member] | ||||
Schedule Of Lease Assets And Liabilities [Line Items] | ||||
Right-of-use assets non-cash transactions, operating leases | 232 | 399 | ||
Modification or Other Reassessment Events [Member] | ||||
Schedule Of Lease Assets And Liabilities [Line Items] | ||||
Right-of-use assets non-cash transactions, operating leases | $ 122 | $ 2 | ||
[1] This supplemental non-cash disclosure for right-of-use (“ROU”) assets obtained in exchange for lease liabilities includes an increase in lease liabilities associated with obtaining new ROU assets of $ 232 million and $ 399 million for the years to date ended September 30, 2022 and 2021, respectively, as well as adjustments to lease liabilities or ROU assets due to modification or other reassessment events, which resulted in a $ 122 million decrease and $ 2 million increase in lease liabilities for the years to date ended September 30, 2022 and 2021, respectively. |
Leases - Schedule of Lease Term
Leases - Schedule of Lease Term and Discount Rate (Details) | Sep. 30, 2022 | Sep. 30, 2021 |
Weighted-average remaining lease term (years) | ||
Operating leases | 7 years 1 month 6 days | 7 years |
Finance leases | 11 years 3 months 18 days | 11 years 2 months 12 days |
Weighted-average discount rate | ||
Operating leases | 5.20% | 5.70% |
Finance leases | 5.30% | 5.60% |
Leases - Summary of Maturities
Leases - Summary of Maturities of Lease Liabilities (Details) $ in Millions | Sep. 30, 2022 USD ($) | |
Amount of Operating Leases | ||
Remainder of 2022 | $ 175 | |
2023 | 490 | |
2024 | 430 | |
2025 | 366 | |
2026 | 317 | |
Thereafter | 981 | |
Total undiscounted lease payment | 2,759 | |
Less: imputed interest | 456 | [1] |
Present value of lease liabilities | 2,303 | |
Amount of Finance Leases | ||
Remainder of 2022 | 1 | |
2023 | 6 | |
2024 | 5 | |
2025 | 5 | |
2026 | 5 | |
Thereafter | 31 | |
Total undiscounted lease payment | 53 | |
Less: imputed interest | 13 | [1] |
Present value of lease liabilities | 40 | |
Amount of Operating And Finance Leases, Total | ||
Remainder of 2022 | 176 | |
2023 | 496 | |
2024 | 435 | |
2025 | 371 | |
2026 | 322 | |
Thereafter | 1,012 | |
Total undiscounted lease payment | 2,812 | |
Less: imputed interest | 469 | [1] |
Present value of lease liabilities | $ 2,343 | |
[1] As the rate implicit in the lease cannot be readily determined, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the imputed interest and present value of lease payments. We used the incremental borrowing rate on January 1, 2019 for operating leases that commenced prior to that date. |
Fair Value Measurements and D_3
Fair Value Measurements and Disclosures - Narrative (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Fair Value Disclosures [Abstract] | ||
Transfer from Level 1 to Level 2 | $ 0 | $ 0 |
Transfer from Level 2 to Level 1 | $ 0 | $ 0 |
Fair Value Measurements and D_4
Fair Value Measurements and Disclosures - Assets Measured on Recurring Basis or Disclosed at Fair Value (Details) - Recurring Fair Value Measurements [Member] - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Cash equivalents, Fair Value Measurement or Disclosure | $ 454 | $ 529 | |
Short-term investments, Fair Value Measurement or Disclosure | 2,826 | 2,860 | |
Total assets, Fair Value Measurement or Disclosure | 3,452 | 3,601 | |
Level 1 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Cash equivalents, Fair Value Measurement or Disclosure | 63 | 108 | |
Short-term investments, Fair Value Measurement or Disclosure | 19 | 79 | |
Total assets, Fair Value Measurement or Disclosure | 171 | 309 | |
Level 2 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Cash equivalents, Fair Value Measurement or Disclosure | 391 | 421 | |
Short-term investments, Fair Value Measurement or Disclosure | 2,807 | 2,781 | |
Total assets, Fair Value Measurement or Disclosure | 3,281 | 3,292 | |
Time Deposits [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Cash equivalents, Fair Value Measurement or Disclosure | 291 | 321 | |
Short-term investments, Fair Value Measurement or Disclosure | 1,990 | 1,726 | |
Time Deposits [Member] | Level 2 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Cash equivalents, Fair Value Measurement or Disclosure | 291 | 321 | |
Short-term investments, Fair Value Measurement or Disclosure | 1,990 | 1,726 | |
Money Market Funds [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Cash equivalents, Fair Value Measurement or Disclosure | 63 | 45 | |
Money Market Funds [Member] | Level 1 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Cash equivalents, Fair Value Measurement or Disclosure | 63 | 45 | |
Fixed Income Debt Securities [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Cash equivalents, Fair Value Measurement or Disclosure | [1] | 100 | 163 |
Short-term investments, Fair Value Measurement or Disclosure | [1] | 550 | 1,055 |
Fixed Income Debt Securities [Member] | Level 1 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Cash equivalents, Fair Value Measurement or Disclosure | [1] | 63 | |
Fixed Income Debt Securities [Member] | Level 2 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Cash equivalents, Fair Value Measurement or Disclosure | [1] | 100 | 100 |
Short-term investments, Fair Value Measurement or Disclosure | [1] | 550 | 1,055 |
Structured Deposits [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Short-term investments, Fair Value Measurement or Disclosure | 267 | ||
Structured Deposits [Member] | Level 2 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Short-term investments, Fair Value Measurement or Disclosure | 267 | ||
Investment in Equity Securities [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Other assets, Fair Value Measurement or Disclosure | 89 | 122 | |
Investment in Equity Securities [Member] | Level 1 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Other assets, Fair Value Measurement or Disclosure | 89 | 122 | |
Variable Return Investments [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Short-term investments, Fair Value Measurement or Disclosure | 19 | 79 | |
Variable Return Investments [Member] | Level 1 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Short-term investments, Fair Value Measurement or Disclosure | 19 | 79 | |
Long-term Time Deposits [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Other assets, Fair Value Measurement or Disclosure | 83 | 90 | |
Long-term Time Deposits [Member] | Level 2 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Other assets, Fair Value Measurement or Disclosure | $ 83 | $ 90 | |
[1] Classified as held-to-maturity investments and measured at amortized cost. |
Fair Value Measurements and D_5
Fair Value Measurements and Disclosures - Schedule of Amounts Recognized From Non-recurring Fair Value Measurements (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 3 [Member] | Restaurant-level impairment [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Restaurant-level impairment | [1] | $ 15 | $ 13 |
[1] Restaurant-level impairment charges are recorded in Closures and impairment expenses, net and resulted from our semi-annual impairment evaluation of long-lived assets of individual restaurants that were being operated at the time of impairment and had not been offered for refranchising. After considering the impairment charges recorded during the corresponding periods, the fair value of assets as of the relevant measurement date was $ 67 million and $ 50 million for the years to date ended September 30, 2022 and 2021, respectively. |
Fair Value Measurements and D_6
Fair Value Measurements and Disclosures - Schedule of Amounts Recognized From Non-recurring Fair Value Measurements (Parenthetical) (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Sep. 30, 2021 |
Restaurant-level impairment [Member] | Fair Value, Measurements, Nonrecurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | $ 67 | $ 50 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Income tax provision | $ 97 | $ 44 | $ 183 | $ 210 |
Effective tax rate | 29.90% | 28.30% | 30.10% | 27.70% |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 1 Months Ended |
Aug. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Corporate alternative minimum tax rate | 15% |
Excise tax on Corporate stock Buy-backs | 1% |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 9 Months Ended |
Sep. 30, 2022 Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | ||
Segment Reporting Information [Line Items] | ||||||
Revenues | $ 2,685 | $ 2,554 | $ 7,481 | $ 7,562 | ||
Operating Profit | 316 | 178 | 588 | 753 | ||
Unallocated other income, net | [1] | 9 | 2 | (7) | ||
Interest income, net | [2] | 25 | 16 | 51 | 47 | |
Investment loss | [2] | (15) | (39) | (32) | (43) | |
Income Before Income Taxes and Equity in Net Earnings (Losses) from Equity Method Investments | 326 | 155 | 607 | 757 | ||
Impairment Charges | 7 | 4 | 37 | 23 | ||
Total Assets | 11,696 | 11,696 | $ 13,223 | |||
KFC [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 2,017 | 1,801 | 5,628 | 5,367 | ||
Impairment Charges | [3] | 5 | 3 | 24 | 14 | |
Pizza Hut [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 561 | 551 | 1,556 | 1,630 | ||
Impairment Charges | [3] | 1 | 5 | 8 | ||
All Other Segments [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 186 | 134 | 491 | 318 | ||
Impairment Charges | [3] | 2 | 8 | 1 | ||
Combined Elimination [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 150 | 78 | 388 | 157 | ||
Revenue From External Customers [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 2,554 | 7,481 | 7,562 | |||
Revenue From External Customers [Member] | KFC [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 2,017 | 1,801 | 5,628 | 5,367 | ||
Revenue From External Customers [Member] | Pizza Hut [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 561 | 551 | 1,556 | 1,630 | ||
Revenue From External Customers [Member] | All Other Segments [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 41 | 59 | 115 | 164 | ||
Corporate and Unallocated [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 71 | 146 | 194 | 404 | ||
Unallocated revenues from transactions with franchisees and unconsolidated affiliates | [4] | 59 | 139 | 163 | 393 | |
Unallocated Other revenues | 12 | 7 | 31 | 11 | ||
Unallocated expenses from transactions with franchisees and unconsolidated affiliates | [4] | (58) | (138) | (163) | (390) | |
Unallocated Other operating costs and expenses | (10) | (5) | (28) | (10) | ||
Unallocated and corporate G&A expenses | (55) | (42) | (138) | (123) | ||
Total Assets | [5] | 5,360 | 5,360 | 5,725 | ||
Corporate and Unallocated [Member] | Revenue From External Customers [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 66 | 143 | 182 | 401 | ||
Operating Segments [Member] | KFC [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 2,017 | |||||
Operating Profit | [6] | 328 | 196 | 670 | 763 | |
Total Assets | 5,137 | 5,137 | 6,072 | |||
Operating Segments [Member] | Pizza Hut [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 561 | |||||
Operating Profit | 49 | 18 | 90 | 117 | ||
Total Assets | 835 | 835 | 972 | |||
Operating Segments [Member] | All Other Segments [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 186 | 134 | ||||
Operating Profit | (9) | (6) | (39) | (15) | ||
Total Assets | 364 | 364 | $ 454 | |||
Elimination [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | (150) | (78) | (388) | (157) | ||
Elimination [Member] | All Other Segments [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 145 | 75 | 376 | 154 | ||
Elimination [Member] | Corporate And Unallocated | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 5 | 3 | 12 | 3 | ||
Combined [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 2,835 | 2,632 | 7,869 | 7,719 | ||
Combined [Member] | Revenue From External Customers [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | $ 2,685 | $ 2,554 | $ 7,481 | $ 7,562 | ||
[1] Primarily includes a gain from the re-measurement of our previously-held equity interest in connection with the acquisition of the Lavazza joint venture for the quarter and year to date ended September 30, 2021. As the re-measurement at fair value resulted from the acquisition, it was not allocated to any segment for performance reporting purposes. See Note 3. Amounts have not been allocated to any segment for performance reporting purposes. Primarily includes store closure impairment charges and restaurant-level impairment charges resulting from our semi-annual impairment evaluation. See Note 12. Primarily includes revenues and associated expenses of transactions with franchisees and unconsolidated affiliates derived from the Company’s central procurement model whereby the Company centrally purchases substantially all food and paper products from suppliers and then sells and delivers them to KFC and Pizza Hut restaurants, including franchisees and unconsolidated affiliates that operate our concepts. Amounts have not been allocated to any segment for purposes of making operating decisions or assessing financial performance as the transactions are deemed corporate revenues and expenses in nature. Primarily includes cash and cash equivalents, short-term investments, investments in equity securities of Meituan, investments in Sunner and Hangzhou Catering, long-term time deposits and inventories that are centrally managed. Includes equity income from our investment in Hangzhou KFC of $ 13 million and $ 45 million for the quarter and year to date ended September 30, 2021 before we consolidated the results of the entity upon completion of the acquisition. See Note 3 for details. |
Segment Reporting (Parenthetica
Segment Reporting (Parenthetical) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||
Equity income from investments in unconsolidated affiliates | $ (2) | $ (4) | ||
KFC [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Equity income from investments in unconsolidated affiliates | $ 13 | $ 45 |
Contingencies - Narrative (Deta
Contingencies - Narrative (Details) - USD ($) | 1 Months Ended | |
Feb. 28, 2015 | Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Income tax rate on gains derived from indirect transfer of assets | 10% | |
Percentage of tax assessed on difference between fair market value and tax basis | 10% | |
Guarantees outstanding of unconsolidated affiliates | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - USD ($) $ / shares in Units, $ in Millions | Nov. 01, 2022 | Oct. 24, 2022 |
Subsequent Event [Line Items] | ||
Dividends declared date | Nov. 01, 2022 | |
Dividends payable, amount per share | $ 0.12 | |
Dividends payable date | Dec. 20, 2022 | |
Dividends payable, date of record | Nov. 29, 2022 | |
Estimated cash dividend payable | $ 50 | |
2022 Plan [Member] | Common Stock [Member] | ||
Subsequent Event [Line Items] | ||
Number of shares authorized for grants | 31,000,000 |