Update on Yum! Marks 5.375% 2032 per $2,000

Yum! Brands, the company that operates restaurants under the KFC, Taco Bell, Pizza Hut and The Habit Burger Grill brands, had an agreement with the market on December 13 on the occasion of its annual day for investors (“Investor Day”). The opportunity for Oblis to take stock of the world’s leading restaurant company, as it defines itself.

Yum! Brands is actually present in the bond market. For example, in April this year it raised funds of one billion dollars in denominations of 2,000. This bond, bearing interest at a coupon rate of 5.375% and maturing on April 1, 2032, can be purchased at 93.30% of face value on the secondary market. Investors can therefore count on a return of 6.34%, for a “High yield” rating of “Ba3” at Moody’s and “BB” at Standard & Poor’s.

Update on Yum! Marks 5.375% 2032 per $2,000

Notable facts: The coupon is paid on a semi-annual basis. The last payment therefore goes back to the beginning of October, which reduces by the same amount the accrued interest payable on purchase. Furthermore, it must be remembered that the bond is traded below par, which makes it tax-attractive for the Belgian resident investor. In the case of a bond, the realized capital gain between the purchase price and the redemption amount is actually exempt from taxation.

Growth through digital channels

Yum! Brands took advantage of its day dedicated to investors to express its confidence in the development of their business, indicators which are key. In particular, the company highlighted the 12% increase in the number of restaurants since 2019, despite the blockages associated with Covid and despite an environment that is more uncertain than ever. In 2021-2022, around 3,000 new restaurants opened (net growth figures), the American company states in its presentation (on 185 pages…)

For the future, the intention is to find new sources of growth by focusing on digital channels, which have already made good progress in recent years. In fact, before the pandemic, Yum! generated 22% of its sales through digital channels. That figure has since risen to 40%, the company says.

54,000 restaurants

Today Yum! Brands claims 54,000 restaurants, mostly franchisees, and it is present in 156 countries under the KFC, Taco Bell, Pizza Hut and Habit Burger Grill concepts.

The brands KFC, Taco Bell and Pizza Hut are world leaders in chicken catering, Mexican food and pizza respectively. Habit Burger Grill is a fast-casual restaurant concept with a focus on burgers, sandwiches and much more.

These companies have enabled Yum! Brands will reach revenue of $6.58 billion in 2021 (€6.2 billion), a 16% increase over 2020, based on the latest annual data available. The latest quarterly results are available here.

Listed on Wall Street, Yum! Brands has a market capitalization of around 36.8 billion dollars (+/- 34.65 billion euros).

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