YUMYum! Brands
Yum! Brands, Inc. (referred to herein as “YUM”, the “Registrant” or the “Company”), was incorporated under the laws of the state of North Carolina in 1997. 10-K, Item 1
- Headquarters
- Louisville, KY
- CEO
- Christopher Lee Turner
- Next results
- around Feb 3, 2027
7 paragraphs in Risk Factors of the 10-K filed Feb 20, 2026 with nothing like them in the 10-K filed Feb 19, 2025. Quoted exactly. Paragraphs that were only edited are under 10-K change.
Compared with the Risk Factors in the latest 10-K of the other 46 Consumer discretionary companies: a paragraph with at least half its words the same at another company is called similar, and the companies are listed under it. A paragraph most of them have is marked boilerplate. No line means no other company has one like it. This counts text; it does not say how serious a risk is.
construction, development and team member training timelines, and (v) consumer sentiment related to our Concepts, and (vi) supply chain challenges, including our ability to secure sufficient supply to support new restaurants.
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We have initiated a process to explore strategic options for the Pizza Hut brand, and there can be no assurance that this process will result in any transaction or outcome, that we will be able to realize the anticipated benefits of any transaction, if completed, or other outcome, or that this process will not adversely impact our business.
We have initiated a process to explore strategic options for our Pizza Hut brand to maximize long-term value creation. Our ability to successfully engage in any transactions with regard to our Pizza Hut brand is subject to prevailing general, market and industry-specific economic conditions and certain regulatory, financial, business and other factors beyond our control. There is no assurance that this process will result in any transaction or outcome, or if any transaction is completed, the timing or terms of any such transaction.
We expect to incur significant expenses in connection with this process, and there are risks inherent with this process, including the potential diversion of management’s attention, interference with our ability to retain or attract key personnel and business partners, disruption of Pizza Hut or other businesses and exposure to litigation. It may also be disruptive to our business operations and long-term planning, which may cause concern to our current or potential investors, employees, strategic partners, vendors and other stakeholders and may have a material impact on our operating results or result in increased volatility in our stock price. Further, there can be no assurance that we will be able to realize the anticipated benefits of any transaction, if completed, or other outcome. We are taking steps to mitigate any impact to Pizza Hut's near-term results as a result of this review. In addition, we have aligned with stakeholders in the U.S. on a marketing program, modernization of certain technology and franchise agreements and a YUM contribution to marketing support. However, if we are unable to mitigate these and other risks related to this process, our business may be adversely affected.
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The Company, and our Concepts and their franchisees, are subject to numerous laws and regulations around the world which change regularly and are increasingly complex, including: the Americans with Disabilities Act in the U.S. and similar laws; laws related to employment, including the U.S. Fair Labor Standards Act, the U.S. Family and Medical Leave Act, laws related to workplace health and safety, meal and rest breaks, exempt classification, non-discrimination, non-harassment, and whistleblower protections, and laws related to union organizing rights and activities; laws and regulations in government-mandated health care benefits such as the Patient Protection and Affordable Care Act in the U.S.; laws and regulations relating to nutritional content, nutritional labeling, product safety, product marketing and menu labeling; laws relating to state and local licensing; laws relating to the relationship between franchisors and franchisees; laws and regulations relating to health, sanitation, food, workplace safety, child labor, including laws regulating the use of certain “hazardous equipment”, building and zoning, and fire safety and prevention; laws relating to information and data security, privacy, cashless payments, consumer protection, and the use of AI and other emerging technologies; laws relating to our use of third party aggregators; laws relating to international trade and sanctions, tariffs, and currency conversion or exchange; anti-bribery and anti-corruption laws, including the U.S. Foreign Corrupt Practices Act; environmental laws and regulations, including with respect to climate change and greenhouse gas emissions; federal and state immigration laws and regulations; and laws related to public company compliance, disclosure and governance matters.
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country basis. We anticipate an increase in the burdens related to the tax compliance and reporting costs as a result of these developments.
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As of December 31, 2025, our total outstanding short-term borrowings and long-term debt was approximately $12.0 billion. Subject to the limits contained in the agreements governing our outstanding indebtedness, we may incur additional debt from time to time, which would increase the risks related to our level of indebtedness. Our level of indebtedness could have important potential consequences, including, but not limited to: increasing our vulnerability to, and reducing our flexibility to plan for and respond to, adverse economic and industry conditions and changes in our business and the competitive environment; requiring the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, indebtedness, thereby reducing or eliminating the availability of such cash flow to fund working capital, capital expenditures, acquisitions, dividends, share repurchases or other corporate purposes; increasing our vulnerability to a downgrade of our credit rating, which could adversely affect our cost of funds, liquidity and access to capital markets; restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; placing us at a disadvantage compared to other less leveraged competitors or competitors with comparable debt at more favorable interest rates; increasing our exposure to the risk of increased interest rates insofar as current and future borrowings are subject to variable rates of interest or we are forced to refinance indebtedness at higher interest rates, which risks are heightened by the current elevated interest rate environment; increasing our exposure to the risk of discontinuance, replacement or modification of certain reference rates; limiting our ability to repay, refinance or satisfy our existing debt obligations, as well as to borrow additional funds in the future and increasing the cost of any such borrowing; imposing restrictive covenants on our operations due to the terms of our indebtedness, which, if not complied with, could result in an event of default, which if not cured or waived, could result in the acceleration of the applicable debt or the acceleration of any other debt to which a cross-acceleration or cross-default provision applies; and increasing our exposure to risks related to fluctuations in foreign currency as we earn profits in a variety of currencies around the world and our debt is primarily denominated in U.S. dollars.
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New in the latest 10-Q
21 paragraphs in the 10-Q filed Nov 6, 2026 with nothing like them in the 10-Q filed Aug 5, 2026 (at least half the words must differ; new numbers alone do not count). Quoted exactly, grouped by the item heading above them. This is text that changed, not a judgement of how serious it is.
Financial statements and notes
As of September 1, 2026, the Company determined it has three reportable segments on a prospective basis as a result of the sales of the Pizza Hut business. The Company has included the results of our divested segment, Pizza Hut Division, through the sale dates in the accompanying Notes for comparability purposes.
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The total $ 1.7 billion pre-tax gain was recorded to Gain on Pizza Hut divestitures in our Condensed Consolidated Statement of Income in the quarter ended September 30, 2026.
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(a) Includes the effect of $15 million in share repurchases (0.1 million shares) with trade dates on, or prior to, September 30, 2026, but cash settlement dates subsequent to September 30, 2026.
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During the quarter ended September 30, 2026, we entered into an operating lease that has not yet commenced with estimated future nominal lease payments of approximately $ 165 million related to the relocation of our Taco Bell and Habit Burger & Grill headquarters. The lease is expected to commence in 2027 with a lease term, excluding renewals, through 2043.
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Our third quarter 2026 effective tax rate was unfavorably impacted by $ 466 million of tax expense recorded upon the divestitures of the Pizza Hut business. The year to date 2026 effective tax rate also reflected the following favorable factors:
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• As a result of the enactment of the OBBBA, during the quarter ended September 30, 2025 we recorded $ 90 million of tax expense primarily associated with a change in management's judgment regarding our ability to utilize U.S. foreign tax credit related deferred tax assets prior to their expiration. Of this amount, $ 76 million related to taxable events and related positions prior to enactment with the remaining $ 14 million attributable to the post-enactment period.
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• The above unfavorable factors were partially offset by the favorable impact of recognizing $ 63 million in tax benefit in the quarter ended September 30, 2025, associated with releasing reserves due to the favorable resolution of an audit.
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As of September 1, 2026, the Company determined it has three reportable segments on a prospective basis as a result of the sale of the Pizza Hut business. The Company has included the results of our divested segment, Pizza Hut Division, through the sale dates in the accompanying Financial Statements, notes thereto and this MD&A for comparability purposes.
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• 2026 GAAP Operating Profit figures reflect a pre-tax gain of approximately $1.7 billion related to the sales of Pizza Hut.
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(b) During the quarter ended September 30, 2026, we completed the divestiture of the Pizza Hut brand in two transactions. On August 7, 2026, we completed the sale of Pizza Hut in mainland China to Yum China for $1.2 billion in proceeds. On September 1, 2026, we completed the sale of Pizza Hut excluding mainland China to LongRange Capital, a private equity firm, for $1.2 billion of net proceeds. The Pizza Hut divestitures resulted in a pre-tax gain of $1.7 billion, which represented the amount of net consideration received over the carrying value of the net assets and was recorded to Gain on Pizza Hut divestitures in the quarter ended September 30, 2026. Additionally, we incurred charges of $2 million within Other Pension (income) expense associated with an option for certain Pizza Hut employees to voluntarily elect an early payout of their pension benefits in connection with the sales. Due to the nature and size of the divestitures, we have reflected such amounts as Special Items.
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Tax Expense - U.S. OBBBA in the quarter and year to date ended September 30, 2025, reflects the tax expense recorded upon the July 4, 2025, enactment of H.R.1, commonly known as the One Big Beautiful Bill Act (“OBBBA”) in the United States. The tax expense was primarily associated with a change in management's judgment regarding our ability to utilize U.S. foreign tax credit related deferred tax assets that existed at the date of enactment and has been reflected as a Special Item due to the size of the non-recurring adjustment necessary upon enactment of the legislation.
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Tax (Benefit) - Tax audit in the quarter and year to date ended September 30, 2025, reflects the benefit associated with the reversal of a reserve due to a favorable audit resolution. Such reserve was established in prior years and was originally recorded as a Special Item.
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Sales at Taco Bell U.S. were negatively impacted in the quarter ended September 30, 2026 by an industry-wide food safety issue. This impact resulted in U.S. same store sales for the quarter of (-4%) and Company restaurant margins in the U.S. of 20.5%. From the low point in July, Taco Bell U.S. same-store sales strengthened week after week, and since the end of September, the brand has returned to outperforming the U.S. quick-service restaurant industry on same-store sales growth. More recently, same-store sales growth for the trailing four weeks ended October 30, 2026 was approximately 3%. Given current sales trends and our projections, we currently expect Taco Bell Division Company restaurant margins for the quarter ended December 31, 2026 in the range of 21.5% to 23.5%.
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On August 7, 2026 and September 1, 2026, we completed the divestitures of Pizza Hut (see Detail of Special Items section of this MD&A).
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Other than the impact on the quarter and year to date ended September 30, 2026 from only including the operations of Pizza Hut within our results prior to the dates of the divestitures of the business, significant factors impacting the comparability of above results include:
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• Higher Company sales and G&A expenses due to operating restaurants acquired from franchisees.
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• Higher Franchise and property expenses driven by advertising costs associated with the Pizza Hut U.S. Hut Forward program and increased bad debt expense.
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The quarterly decrease in Interest expense, net was driven by higher interest income, primarily due to interest earned on the proceeds from the divestitures of the Pizza Hut business.
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During the quarter ended September 30, 2026, we entered into an operating lease that has not yet commenced with estimated future nominal lease payments of approximately $165 million related to the relocation of our Taco Bell and Habit Burger & Grill headquarters. The lease is expected to commence in 2027 with a lease term, excluding renewals, through 2043.
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Item 6
10.1 Amended and Restated Master License Agreement, dated as of August 7, 2026, by and between YRI China Franchising, LLC and Yum Restaurants Consulting (Shanghai) Company Limited, which is incorporated by reference from Exhibit 10.1 to YUM's Report on Form 8-K filed on August 7, 2026.
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10.2 Guaranty, dated as of August 7, 2026, by Yum China Holdings, Inc., in favor of YRI China Franchising LLC, which is incorporated by reference from Exhibit 10.2 to YUM's Report on Form 8-K filed on August 7, 2026.
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The 10-Q's risk factors against the 10-K
Item 1A of the 10-Q filed Nov 6, 2026 against Item 1A of the 10-K filed Feb 20, 2026.
A 10-Q repeats only the risks that changed, so a 10-K paragraph that is missing from it is not counted as removed.
Added is a paragraph with nothing like it in the 10-K, Reworded a sentence that is in both with several words changed,
Quiet changes a sentence in both where one to four words changed and one is a hedge or a modal
(cut words struck through, new words highlighted and underlined).
Text on the page, not a score; each links to the filing at sec.gov.
This 10-Q has no Item 1A (Risk Factors) text of its own, so there is nothing to compare. Many companies leave it out when their risks have not changed.
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