Chris Turner
Chief Financial Officer at Yum! Brands
Thank you, David. And good morning, everyone. Today, I'll discuss our fourth quarter financial results, Bold Restaurant Development and Unmatched Operating Capability as well as our strong balance sheet position and capital allocation strategy.
I'll begin by discussing our financial results. We finished the year strong, opening a record-breaking 4,180 gross units or 3,057 net new units, resulting in 6% unit growth for full year 2021. A robust 10% same-store sales growth helped us achieve 13% system sales growth, driving full year core operating profit growth of 18%. That is a tremendous outcome given the inflation, labor, supply chain and consumer mobility challenges our brands faced in the back half of the year, particularly in Q4.
Q4 results also reflect impressive performance. System sales grew 9%, led by same-store sales growth of 5%, or 4% on a two-year basis, accelerating from Q3. Strong underlying profit growth was masked by elevated G&A levels owing to higher incentive compensation as a result of our strong full year results and the normalization of Taco Bell company-owned restaurant margins in the quarter, as previously signaled.
We anticipate quarterly variability in our company-owned restaurant margins as we remain focused on balancing relative value for our customers while protecting margins in the long run. To that end, full year 2021 Taco Bell company-owned restaurant margins were in line with our historical range of 23% to 24%, virtually unchanged relative to 2019 levels. This demonstrates our ability to drive strong top-line results, while managing profitability in an inflationary environment.
Our Q4 ex-special EPS was impacted by two items: first, we recorded a $35 million pre-tax gain on our investment in Devyani International Limited; second, we had a higher than normal tax rate for the quarter due to a tax reserve related to a prior year filing position that was challenged. And so, our Q4 results were in line with our internal expectations and culminated in full year results that exceeded all elements of our long-term growth algorithm.
Moving on to our Bold Restaurant Development growth driver. We opened 1,678 gross units in the quarter, or 1,259 on a net new unit basis, resulting in nearly 4,200 gross units opened for the full year, which is a record for YUM and the restaurant industry. That equates to over 100,000 jobs created worldwide last year alone. We're able to achieve these record-breaking openings, thanks to the contributions from each of our four brands and incredible franchisees around the globe.
China continues to be the biggest developer. However, we continue to see broad-based strength across our portfolio evidenced by over 2,500 restaurants opened outside of China this year. In fact, we saw new restaurants built in over 110 countries this year, a step-up from prior years, significantly our development engine is diversified and stronger than ever.
At KFC, the brand delivered a record development year, led by significant contributions from China, India and Russia. Overall, KFC International opened over 2,400 gross units and nearly 2,000 net new units during 2021. At KFC US, after several years of same-store sales growth and strengthening unit economics, we have a much stronger foundation now on which to grow in the future as evidenced by the inflection point in development with the system moving to positive unit growth in 2021.
Taco Bell reported a strong development year in both the US and International. In the US, Taco Bell reached an impressive milestone ending the year with over 7,000 restaurants and ample whitespace for future development. During the fourth quarter, Taco Bell celebrated mass international expansion as Spain was the first market to surpass 100 units. We believe this development threshold unlocks accelerated growth fueled by the benefits of scale, including supply chain advantages as well as marketing and brand awareness. We're confident in what the future holds for Taco Bell International, particularly as scale ties directly to profitability.
Pizza Hut International delivered a record year in development with all international business units reporting net positive growth, led by China and India. Continued improvement in unit economics and a more HMR focus footprint are drivers of the broad-based unit growth. Pizza Hut US continues to make progress on its development journey and is poised for future growth, thanks to improved unit economics and a healthy franchise base.
Finally, The Habit Burger Grill restarted their development engine this year with 23 net new units. Our brands are entering 2022 from a position of strength with plans to continue exceptional growth owing to our world-class operators and franchise partners. We're confident in our future growth engine, given our broad-based strengths, improved unit economics and the visibility we have into our development pipeline.
I want to say a huge thank you to our development teams and franchise partners for all the hard work it takes to open nearly 4,200 restaurants in a single year, let alone a year with ongoing COVID and supply chain-related challenges.
Next, I'll talk about our Unmatched Operating Capability growth driver. We remain focused on leveraging our digital and technology strategy to elevate both customer and team member experiences by leaning in on three key elements, easy experiences, easy operations and easy insights.
Starting with easy experiences, we expanded our digital ordering channels, including chat ordering via Tictuk to nearly 2,000 stores at year-end, an increase of roughly 60% since our acquisition in the first quarter. We also saw digital sales at KFC US grow approximately 70% year-over-year, fueled by our delivery service channel and e-commerce platform that launched nationwide in early 2021.
We continue to invest in technology platforms focused on delivering a frictionless experience for our guests, including the launch of Quick Pick-Up at KFC US in the fourth quarter that allows guests to bypass the drive-thru and grab their digital orders from cubbies inside the restaurant. The outstanding sales growth across our digital channels is evidence that our customers continue to expect and opt for easy access to our brands.
Now moving on the easy operations, which are focused on making it easier for our team members to run the business and ensure a superior customer experience. I want to highlight the exceptional operating performance of our brands, starting with Taco Bell, whose team members were unwavering in their commitment to deliver a superior customer experience. In 2021, Taco Bell's drive-thru times were two seconds faster year-over-year and the fourth quarter marked the eighth consecutive quarter of an average drive-thru time under four minutes. This truly is an impressive performance considering labor availability challenges.
Additionally, the Dragontail order and delivery platform is now live in 2,800 stores in 21 markets across KFC and Pizza Hut, up from 13 markets last quarter and nine markets from the end of 2020. Dragontail allows us to tap into the power of artificial intelligence to streamline the end-to-end food preparation process and optimize delivery routes for drivers.
At Pizza Hut International, we continued deploying HutBot, our intelligent coaching app designed to enhance both the team member and customer experience by digitizing routines and insights into operational efficiencies. When HutBot is deployed and used effectively, it's proven to increase customer satisfaction scores. We ended the year with HutBot live in over 6,000 Pizza Hut locations in 70 markets.
To round out our technology strategy, our easy insights platform provides us with invaluable knowledge about our consumers, enabling us to enhance the customer relationship. When we acquired Kvantum, a leading AI-based consumer insights and marketing performance analytics business, in the first quarter, it was operating in 13 markets. We have since tripled Kvantum's footprint to over 45 markets. We will continue to prioritize initiatives that lead to incremental sales growth and improve unit economics for our franchisees.
The impressive adoption rates of these technology platforms are evidence of our franchisees' confidence and the investments we made to advance our digital and technology ecosystem this year. We're confident these investments have created a meaningful competitive advantage and will be a point of differentiation for YUM as we serve the elevated expectations of customers.
Now, for an update on our strong balance sheet position and our capital allocation strategy. We ended the year with cash and cash equivalents of $486 million, excluding restricted cash. We closed the year temporarily below our net leverage target of 5 times as a result of our strong earnings growth. Capital expenditures net of refranchising proceeds were $55 million during the quarter and $145 million for the full year. The full year consisted of $230 million in gross capex and $85 million in refranchising proceeds. We paid a healthy quarterly dividend of $0.50 per share or approximately $600 million for the full year.
With respect to our share buyback program, during the quarter, we repurchased 5.6 million shares at an average share price of $128, totaling $720 million. For the full year, we have repurchased 13 million shares at an average price of $122, totaling $1.6 billion.
As we look to 2022, our capital priorities remain unchanged, invest in the business, maintain a healthy balance sheet, pay a competitive dividend and return excess cash to shareholders via share repurchases. We remain committed to maintaining our asset-light business model of at least a 98% franchise mix. Going forward, we expect strong returns from our equity store investments to continue and, like our franchisees, see attractive opportunities to invest in unit development.
Capitalizing on these opportunities, we expect net capital expenditures for full year 2022 to be approximately $250 million, reflecting up to $350 million of gross capex and $100 million of refranchising proceeds. In the long run, we expect our refranchising proceeds to offset our new store investments as they have in the past. But in the near-term, new store investments may exceed refranchising by $50 million to $100 million annually, primarily driven by our strategy to accelerate growth of the Habit equity estate.
We were pleased to announce earlier this week an increase in our quarterly cash dividend of 14% to $0.57 per share in 2022. The recovery of our business in 2021 and proven resilience of our free cash flow supported this increase, reflecting a two-year double-digit CAGR, in line with our historical earnings growth and dividend increases.
I'd like to wrap up by providing color on the shape of 2022. I'm pleased to share that we expect to deliver full year growth, in line with our long-term growth algorithm, which includes 2% to 3% same-store sales growth and 4% to 5% unit growth, culminating in mid to high-single-digit system sales growth, leading to high-single-digit core operating profit growth, which excludes FX. Reflecting on 2021 results, we had several quarterly drivers that created lumpiness in the shape of the year, creating noise in our year-over-year laps in 2022.
We expect our full year G&A to be approximately $1.1 billion, but our G&A spend will return to a more balanced quarterly cadence relative to 2021. Given the shape of our anticipated G&A spend throughout 2022 and comparison to 2021, we expect G&A to be a headwind to operating profit growth in the first half and a tailwind to growth in the second half of 2022. Due primarily to these timing factors related to G&A, we are expecting roughly flat core operating profit growth in the first half and high-teens core operating growth in the second half, culminating in full year high-single-digit core operating profit growth in line with our long-term growth outlook.
Finally, on our 2022 effective tax rate, although it's difficult to forecast with precision, at this time, we continue to believe 21% to 23% is the appropriate range, but there are factors that could move us toward the high end of the range. We'll continue to provide updates as appropriate. Overall, I couldn't be prouder of the results for the year.
Looking forward to 2022, I'm confident we're poised to take share and deliver on our long-term growth algorithm, driven by our expanding competitive advantages tied to our unmatched global scale, investments in our digital ecosystem and world-class franchise partners. I'm looking forward to the year ahead and the continued success of our iconic global brands, while delivering consistent earnings growth for shareholders.
With that, operator, we're ready to take any questions.
