Restaurant Company Performance Analysis: 2009-2010 Financial Report

This financial analysis report provides a comparative study of three prominent restaurant companies: Yum Brands Inc., Panera Bread Company, and Starbucks Corporation, focusing on their performance during the years 2009 and 2010. The analysis examines key financial ratios, including net profit margin, return on assets (ROA), and return on total equity (ROE), to evaluate each company's profitability and efficiency. The report highlights the trends in these ratios for each company, explaining the factors contributing to changes, such as rising brand value, customer base expansion, and equity adjustments. Yum Brands Inc. shows growth in net profit margin, though its ROE decreased. Panera Bread demonstrated marginal growth across most metrics. Starbucks experienced the most significant growth, particularly in ROA and ROE, attributed to its expanding operations and product line improvements. The report concludes by comparing the relative financial performance of the three companies, identifying Yum Brands as a market leader and Starbucks as the top performer in 2010, with Panera Bread exhibiting stable performance.

The financial analysis report has been prepared on 3 restaurant companies namely Yum Breads Inc.,
Panera Break Company and Starbucks Corporation. All these 3 brands are well known international
brands having wings across different countries. The performance of these companies over the years
2009 and 2010 has been shown below:
Ratio Yum Brands Inc. Panera Bread Starbucks
2010 2009 2010 2009 2010 2009
Net Profit Margin % 10.21 9.88 7.25 6.36 8.83 4.00
Return on Assets % 14.98 15.66 12.70 11.39 15.81 6.95
Return on Total Equity % 83.22 210.00 18.71 15.85 28.14 14.11
2010
2009
2010
2009
2010
2009
Panera Bread
0.00 50.00 100.00 150.00 200.00 250.00
Profi tability Analysis 2009 - 2010
Net Profit Margin % Return on Assets % Return on Total Equity %
a. The net profit margin of Yum Brands Inc. has increased from 9.88% in 2009 to 10.21% in
2010. This is on account of rising brand value and revenues from KFC, Pizza Hut, Taco Bell
and Yum Restaurants China. On the other hand, the net margin for Panera Bread company
increased from 6.36% to 7.25% which was mainly triggered by increase in the proportion of
youth customers during the year. On the other hand, the net profit percentage in case of
Starbucks grew the most from 4% in 2009 to 8.83% in 2010 (Alexander, 2016). This was
mainly on account of rapid increase in the customer base for the company over the 50
countries in which it is operating.
b. The return on assets is indicative of the profit earned by the company on the assets invested
in the business. In terms of ROA, it decreased for Yum Brands Inc. due to expansion in
several areas and thus less return in relatively new areas. The ROA for Panera Break
increased marginally from 11.39% to 12.70% on account of increase in profit and assets
being almost stable. The major gainer in terms of ROA was Starbucks again as it got the
maximum profit out of the assets increased. It grew by nearly 150% from 6.95% in 2009 to
15.81% in 2010 (Goldmann, 2016).
c. Return on total equity shows the return to the shareholders of the company on the equity
investment in the company and the same has dropped drastically for Yum brands for 2010. It
has dropped staggeringly from 210% to 83.22% and this is mainly because the company
increased the equity balance during the year. There was marginal increase in Panera Bread

from 15.85% to 18.71% on account of increase in the profitability with almost the same
equity base. The major gainer was again Starbucks as the ROE almost doubled from 14.11%
and 28.14% which shows that it is meeting the shareholder’s expectations (Heminway,
2017).
d. In terms of measuring the relative profitability of these 3 restaurant companies, it is clear
that Yum brands is a market leader and has grown in most of the aspects but Starbucks is
another brands which has grown the best amongst the all in 2010. This is fuelled by growing
operations in newer areas and improving the product line as well. Panera Bread had an
average year with marginal growth in all the aspects and it is relatively a stable company as
compared to the rest (Bromwich & Scapens, 2016).
References
Alexander, F. (2016). The Changing Face of Accountability. The Journal of Higher Education, 71(4),
411-431.
Bromwich, M., & Scapens, R. (2016). Management Accounting Research: 25 years on. Management
Accounting Research, 31(1), 1-9.
Goldmann, K. (2016). Financial Liquidity and Profitability Management in Practice of Polish Business.
Financial Environment and Business Development, 4(3), 103-112.
Heminway, J. (2017). Shareholder Wealth Maximization as a Function of Statutes, Decisional Law,
and Organic Documents. SSRN, 1-35.