AddedRisk Factors
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.
The 10-K against last year's
188 changes: 33 added, 42 removed, 112 reworded, 1 quiet changes
10-K 0001041061-26-000084 (2026-02-20) vs 10-K 0001041061-25-000013 (2025-02-19)
The redline
The paragraph that changed most in each section
Marked against last year's 10-K:
cut words struck through, new words highlighted and underlined.
Risk Factors 294 words changed in this paragraph; it is 49% similar to last year's version.
Much of our future success depends on the continued availability and service of senior management personnel. The loss or failure to engage in adequate succession planning of any of our executive officers or other key senior management personnel could harm our business and/or our growth prospects. In addition, changes in our leadership, including changes to the Company’s senior leadership team may present management transition challenges, and the effectiveness with which these changes are implemented could influence our financial results. Our restaurant operations are highly service-oriented, and our success depends in part on our and our Concepts’ franchisees’ ability to attract, retain and motivate a sufficient number of qualified employees, including franchisee management, restaurant managers and other crew members. Our Concepts and their franchisees have experienced and may continue to experience labor shortages and employee turnover at many restaurants and increased competition for qualified employees. These labor market conditions and the ongoing inflationary environment in markets where we operate have increased, and may continue to increase, the labor costs for our Concepts and their franchisees, including due to the payment of higher wages to attract or retain qualified employees (including franchisee management, restaurant managers and other crew members) and due to increased overtime costs to meet demand. Additionally, recent changes in immigration regulation and enforcement in the U.S. could decrease the pool of candidates with legal work authorizations, cause disruptions in the workforce for companies (such as restaurant companies) and increase the cost, time and requirements to hire new employees. Moreover, there may be a long-term trend toward higher wages in emerging markets as well as various other markets. In addition, increases in labor costs have also been driven by, and may continue to be driven by regulatory requirements to raise minimum wages, including in connection with the increases in minimum wages that have recently been enacted in various jurisdictions. For example, effective April 1, 2024, California's Assembly Bill No. 1228 (“AB 1228”) raised 1228”), which became effective during 2024, has various provisions impacting our Concepts, including an increase in the minimum wage to $20 an hour beginning April 2024 for workers at quick service restaurants in the state that are part of brands that have more than 60 establishments nationwide. AB 1228 also created an advisory-only council with powers to enact additional minimum wage increases and to recommend that state agencies enact additional health, safety and employment standards for quick service restaurants. a national chain. AB 1228 has increased, and is expected to continue to increase the operating costs for our Concepts’ restaurants in California, and may otherwise adversely impact and disrupt our operations in California.
Source: Item 1A, 10-K 0001041061-26-000084 vs Item 1A, 10-K 0001041061-25-000013
Legal Proceedings 173 words changed in this paragraph; it is 42% similar to last year's version.
Number ───────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── 97.1† Yum! Brands Inc. Compensation Recovery Policy, Amended and Restated November 16, 2023, which is incorporated by reference from Exhibit 97.1 to YUM’s Annual Report on Form-10K for the fiscal year ended 31 December, 2023. ──────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── 31.1 Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101. INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101. SCH XBRL Taxonomy Extension Schema Document 101. CAL XBRL Taxonomy Extension Calculation Linkbase Document 101. LAB XBRL Taxonomy Extension Label Linkbase Document 101. PRE XBRL Taxonomy Extension Presentation Linkbase Document 101. DEF XBRL Taxonomy Extension Definition Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) † Indicates a management contract or compensatory plan.
Source: Item 3, via Note 20 – Contingencies, 10-K 0001041061-26-000084 vs Item 3, via Note 20 – Contingencies, 10-K 0001041061-25-000013
MD&A 158 words changed in this paragraph; it is 52% similar to last year's version.
The fair values of all our reporting units with goodwill balances were in excess of their respective carrying values as of our fourth quarter 2024 2025 goodwill testing date, with all but the Habit Burger & Grill reporting unit having fair values that were substantially in excess of their respective carrying values. As it relates to our Habit Burger & Grill reporting unit, which includes a goodwill balance of $66 million as of the end of 2024, $64 million, the assumptions that are were most impactful to our reporting unit fair value estimate include margin improvement, in the fourth quarter of 2025 were future same-store sales growth from net new units and same-store sales growth. Significant changes company restaurant margin improvement. Such assumptions were consistent with our internal plans for the brand and considered reasonable given historical experiences for both the Habit Burger & Grill as well as our other Concepts. However, should future Habit Burger & Grill actual results continue to underperform relative to expectations as was the case in the assumptions used year ended December 31, 2025, some or all of this goodwill may be impaired in our analysis could result in a future goodwill impairment charge. Circumstances that could result in changes to our assumptions and related fair value estimate include, but are not limited to, expectations of lower than originally estimated margin improvement, which can be caused by a variety of factors including changes in expected labor costs and commodity inflation. years.
Source: Item 7, 10-K 0001041061-26-000084 vs Item 7, 10-K 0001041061-25-000013
Accounting Policies 48 words changed in this paragraph; it is 46% similar to last year's version.
Recent Accounting Pronouncements. In November December 2023, the Financial Accounting Standards Board ("FASB") (“FASB”) issued ASU 2023-07, Segment Reporting 2023-09, Income Taxes (Topic 280): 740): Improvements to Reportable Segment Income Tax Disclosures, which updates reportable income tax disclosure requirements related to the income tax rate reconciliation and requires disclosure of income taxes paid by jurisdiction. We adopted this standard for the fiscal year ended December 31, 2025. See Note 18.
Source: 10-K text, Note 2 – Summary of Significant Accounting Policies, 10-K 0001041061-26-000084 vs 10-K text, Note 2 – Summary of Significant Accounting Policies, 10-K 0001041061-25-000013
Every change, by type
Sentences and paragraphs added, removed or reworded
Sentences and paragraphs of YUM's Risk Factors and MD&A, 10-K 2026-02-20 against 10-K 2025-02-19. Each links to the text at sec.gov.
Quiet changes are sentences kept from last year with one to four words changed, at least one of them a hedge, a modal or a qualifier (may, could, will, not, significant, material…). A year or date rolling forward is not counted.
The full word list
adverse, adversely, all, although, anticipate, anticipates, any, approximately, believe, believes, can, cannot, certain, could, expect, expects, generally, however, if, intend, intends, largely, likely, many, material, materially, may, might, most, must, never, no, not, possible, primarily, probable, should, significant, significantly, some, substantial, substantially, unlikely, will, wouldAddedRisk Factors
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.
AddedRisk Factors
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.
AddedRisk Factors
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.
AddedRisk Factors
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.
AddedRisk Factors
country basis. We anticipate an increase in the burdens related to the tax compliance and reporting costs as a result of these developments.
AddedRisk Factors
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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If our IT Systems or the information systems of any of our Concepts’ franchisees, or other third parties which we interact, such as suppliers, distributors or third-party delivery providers, are disrupted or compromised, in a manner which impacts us or our IT Systems, as a result of a cyber-attack, data or security breach, or other security incident, incident or fraud, or if our employees, franchisees, suppliers or vendors fail to comply with applicable laws and regulations or fail to meet contractual and industry standards in connection therewith, any such developments could result in liabilities and penalties, have an adverse impact on our financial results and growth prospects, damage our brands and reputation, cause interruption of normal business operations, cause us to incur substantial costs, result in a loss of consumer confidence and sales and disrupt our supply chain, business and plans.
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Moreover, technology and consumer offerings continue to develop, and our failure to adequately invest in or implement new technology (e.g., automation, AI, new delivery channels) or adapt to technological advancements and industry trends, particularly with respect to digital commerce capabilities, could result in a loss dissatisfaction from our customers or our employees (or the employees of customers and related market share. our Concepts’ franchisees), negative publicity, or adversely impact our financial results..
RewordedRisk Factors
For example, effective April 1, 2024, California's Assembly Bill No. 1228 (“AB 1228”) raised 1228”), which became effective during 2024, has various provisions impacting our Concepts, including an increase in the minimum wage to $20 an hour beginning April 2024 for workers at quick service restaurants in the state that are part of brands that have more than 60 establishments nationwide. a national chain.
RewordedRisk Factors
Raw materials purchased for use in our Concepts’ restaurants are subject to price volatility caused by fluctuations in aggregate supply and demand, or other external conditions, such as weather and climate conditions, (which may be exacerbated by climate change), energy costs or natural events or disasters that affect expected harvests of such raw materials, taxes and tariffs (including potential tariffs or other adverse impacts resulting from restrictive trade policies or trade disputes), tariffs, industry demand, inflationary conditions, labor shortages, transportation issues, fuel costs, food safety concerns, product recalls, governmental regulation and other factors, all of which are beyond our control and in many instances are unpredictable. factors.
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We have been adversely affected, affected in the past, and may continue to in the future be adversely affected, by events such as the conflict increasing anti-American sentiment and instability and conflicts in the Middle East as well as the conflict between Russia and Ukraine, and ongoing geopolitical instability associated therewith. East.
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There is no assurance that any remedial actions will meaningfully limit the success of future attempts to breach our IT Systems, particularly because malicious actors are increasingly sophisticated and utilize tools and techniques specifically designed to circumvent security measures, avoid detection and obfuscate forensic evidence, which means we may be unable to identify, investigate or remediate effectively or in a timely manner.
RewordedRisk Factors
These labor market conditions and the ongoing inflationary environment in markets where we operate have increased, and may continue to increase, the labor costs for our Concepts and their franchisees, including due to the payment of higher wages to attract or retain qualified employees (including franchisee management, restaurant managers and other crew members) and due to increased overtime costs to meet demand.
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AddedMD&A
In the first quarter of 2025, the Company prospectively changed its basis of presentation to round financial figures in the Financial Statements and as presented in the tabular presentations in this MD&A to the nearest whole number in millions in all instances. As a result, some totals and percentages may not recompute based on rounded figures as presented within this MD&A. Previously, amounts were presented to ensure that all numbers herein recomputed, resulting in the presentation of certain figures inconsistent with their underlying rounding.
AddedMD&A
Through our Recipe for Good Growth we strive to grow iconic restaurant brands around the world that are loved by our customers, trusted everywhere we operate and connected through teamwork, technology and our global scale. These three ideas - being loved, trusted and connected - guide how we operate across our global system and engage with our customers, teams and communities:
AddedMD&A
As we enter into 2026, we intend to drive the next chapter of growth for YUM by Raising the B.A.R. through three clear priorities that reflect bold aspirations and a commitment to industry-leading performance:
AddedMD&A
• Battle for the future consumer by staying relentlessly focused on their needs and wants.
AddedMD&A
• Accelerate restaurant unit economics for our franchisees and maximize performance of every restaurant, serving as a catalyst for new unit development and keeping our franchise system healthy.
AddedMD&A
• Reach the full potential of Byte by Yum! by effectively operating, innovating and expanding our connected platform built by restaurant operators for restaurant operators to unlock its full potential for our franchise partners and our business.
AddedMD&A
• In 2024, the 53rd week favorably impacted EPS by approximately $0.09 per share.
AddedMD&A
(b) In 2025, we began a review of strategic options for the Pizza Hut brand. During the year ended December 31, 2025, we incurred charges of approximately $36 million primarily in third-party advising costs associated with this strategic options review and wrote-off approximately $5 million of franchise incentive assets associated with rationalizing the Pizza Hut estate in preparation for a potential transaction. These charges were recorded to Corporate and unallocated General and administrative expenses and Unallocated franchise and property revenues, respectively. Given the significance of the costs expected to be incurred through the course of this strategic options review, we have reflected such amounts as Special Items.
AddedMD&A
(c) During the year ended December 31, 2025, we recorded charges of approximately $27 million associated with our decision to designate two brand headquarters in the U.S., located in Plano, Texas and Irvine, California, to foster greater collaboration among brands and employees. This involved relocating the KFC U.S. corporate office to the KFC Global headquarters and requiring the majority of our U.S.-based remote employees to relocate to an appropriate headquarter office. These charges included $21 million, primarily for severance for employees who chose not to relocate and consultant fees, recorded to Corporate and unallocated General and administrative expenses. Additionally, we donated our YUM corporate headquarters in Louisville, Kentucky subsequent to the relocation of the KFC U.S. corporate office resulting in a charge of $6 million to Unallocated Other (income) expense representing the net book value of that headquarters. Due to their scope and size, these charges have been reflected as Special Items.
AddedMD&A
(g) During the year ended December 31, 2025, we recorded charges of approximately $7 million to Corporate and unallocated General and administrative expenses related to an acquisition of 128 Taco Bell Southeast U.S. restaurants from a franchisee for approximately $670 million. Due to the significant amount of legal and professional fees necessary to complete this large acquisition, these fees have been reflected as Special Items.
AddedMD&A
Tax Expense - Foreign tax reserve in the year ended December 31, 2025, is associated with a reserve, and the ongoing foreign exchange and inflationary adjustments, associated with a change in management's judgment around a Mexican subsidiary's ability to utilize losses to offset recapture gains triggered by a historical tax deconsolidation. This tax expense was reflected as a Special Item due to its size and the time elapsed since the years to which the reserve relates.
AddedMD&A
Tax Expense - U.S. OBBBA in the year ended December 31, 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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(Gain) loss associated with market-wide refranchisings(a) (1) 1 5 Charges associated with Pizza Hut Strategic Options Review(b) 41 — — Charges associated with Brand HQ Consolidation(c) 27 — — German acquisition and Turkey termination-related costs(d) 9 61 — Charges associated with Resource Optimization(e) 38 79 21 Operating (profit) loss impact from decision to exit Russia(b) Russia(f) — — 11 (44) Charges associated with resource optimization(c) 79 21 11 German acquisition and Turkey termination-related costs(d) 61 TB U.S. restaurant acquisition(g) 7 — — Other Special Items (Income) Expense — — 2 — Special Items (Income) Expense - Operating Profit 122 141 39 (33) Negative (Positive) Foreign Currency Impact on Operating Profit (12) 28 49 N/A Core Operating Profit 2,684 2,572 2,406 2,154 2,357 Impact of 53rd Week Operating Profit N/A (36) N/A N/A Core Operating Profit, excluding the 53rd Week $ 2,684 $ 2,536 $ 2,406 $ 2,154 2,357
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In 2024, 2025, the decrease in Operating Profit, excluding the impacts impact of foreign currency translation and lapping the 53rd week, week in 2024, was driven by a same store sales decline, the impact of restaurant acquisitions, higher current year bad debt expense (including bad debt expense associated with franchise entities that have transitioned to new ownership) and a same-store sales decline, partially offset by unit growth. decline.
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As it relates to our Habit Burger & Grill reporting unit, which includes a goodwill balance of $66 million as of the end of 2024, $64 million, the assumptions that are were most impactful to our reporting unit fair value estimate include margin improvement, in the fourth quarter of 2025 were future same-store sales growth from net new units and same-store sales growth. company restaurant margin improvement.
RewordedMD&A
Changes in the fair value of our ownership interest in Devyani prior to the date of sale resulted in pre-tax investment losses of $ 20 million in the year ended December 31, 2024 and pre-tax investment income of $ 8 million and $ 11 million in the years ended December 31, 2023 and 2022, respectively.
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In 2024, 2025, the decrease in Franchise and property revenues, excluding the impacts impact of foreign currency translation and lapping the 53rd week, were flat, as a week in 2024, was driven by franchise same-store sales decline declines of 4% was offset by (1%) and a unit growth. decline.
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In 2024, the decrease in 2025, G&A, excluding the impacts impact of foreign currency translation and lapping the 53rd week, week in 2024, was driven by lower flat, as the impact of restaurant acquisitions and higher expenses related to our annual incentive compensation programs, partially programs were offset by higher lower salaries and benefits.
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In 2024, 2025, the increase in Franchise and property revenues, excluding the impacts of foreign currency translation and lapping the 53rd week, were flat as week in 2024, was driven by unit growth was offset by a and franchise same-store sales decline growth of 2% and 2%, partially offset by a 1% negative impact from the KFC U.K. and Ireland restaurant acquisition.
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In 2024, 2025, the decrease increase in G&A, excluding the impacts of lapping the 53rd week, was driven by lower share-based compensation higher digital and lower technology expenses, higher expenses related to our annual incentive compensation programs and increased share-based compensation, partially offset by higher digital lower professional and technology expenses. legal fees.
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Our annual operating cash flows have been were in excess of $1.4 $2 billion in each of the past four years 2025 and we expect that to continue to be the case continued strong operating cash flows in 2025. 2026.
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The increase was primarily driven by an increase in Operating Profit before Special Items, partially offset by higher and lower current year incentive compensation and income tax payments and an increase in payments related to our resource optimization program. payments.
Quiet changesMD&A
The net periodic benefit cost we will record in 2025 is also impacted by the discount rate, as well as the long-term rates of return on plan assets and mortality assumptions we selected at our measurement date.