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, /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) today announced the opening of the 300th Pizza Hut Burger Bar in China. Since launching its first Burger Bar in late 2025, Pizza Hut China has been rapidly scaling this new side-by-side module, opening more than one location per day on average.

Pizza Hut Burger Bar opened its 300th location in China Jeff Kuai, General Manager of Pizza Hut China, said, "We entered the burger category two years ago with Pizza Dough Burgers, which have been well received by consumers. We are now taking the business to the next level through Pizza Hut Burger Bar, while continuously refining the module to meet the diverse needs of our consumers."

Pizza Hut Burger Bar offers great-tasting burgers at compelling value. Its Parmesan-and-parsley buns, made with pizza dough, are freshly baked in-store daily, while patties are seared on a hot griddle in an open kitchen. The focused menu centers on beef burgers, including the signature Pineapple and Beef Burger, while also extending the teppan-style cooking method to other protein options. New offerings include Teppan-Style Black Pork Burger and Sizzling Grilled Chicken Burger with Egg.

The quick-service model has resonated with young consumers and solo diners. Placed side-by-side with Pizza Hut stores, the module requires light investment and shares resources with the parent store. In the second quarter of 2026, Pizza Hut Burger Bars contributed double-digit incremental sales and meaningful profit to their parent Pizza Hut stores.

At its 300th location in Wuhan, Hubei Province, Pizza Hut Burger Bar introduced a limited-edition burger inspired by local flavors: the Crayfish Crispy Lotus Root Cheeseburger. The burger combines crayfish and crispy lotus root for a savory, crunchy contrast designed to reflect local tastes.

The brand is targeting 500 to 600 Burger Bar locations by the end of 2026, representing around 10% of Pizza Hut's nearly 5,000-store portfolio in China. Pizza Hut's burger category, including sales from Pizza Hut stores and Burger Bar locations, is expected to exceed RMB 1 billion in 2026, accounting for around 5% to 6% of Pizza Hut China's sales.

In addition to the rapid rollout of Pizza Hut Burger Bar, Pizza Hut is also accelerating its new store openings in China, following Yum China's acquisition of the Pizza Hut brand ownership in Mainland China on August 7. Pizza Hut now targets more than 800 net new openings in each of 2027 and 2028, up from the previous target of over 600.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements relating to future strategies, growth, business plans, restaurant expansion plans and operating profit targets, the expected benefits and impact of the acquisition of ownership of the Pizza Hut brand in Mainland China from Yum! Brands, Inc. (the "Transaction") and related financing (including plans for long-term financing), including expected license-fee savings, expected margin benefits, expected EPS accretion, and potential long-term value creation. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "project," "likely," "will," "continue," "should," "forecast," "outlook," "commit" or similar terminology. These statements are based on current estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable under the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Forward-looking statements include, without limitation, statements regarding the Company's future strategies, growth, business plans, restaurant expansion plans, operating profit targets, the expected benefits and impact of the Transaction and related financing (including plans for long-term financing), including expected license-fee savings, expected margin benefits, expected EPS accretion, and potential long-term value creation. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks and uncertainties that are difficult to predict and could cause our actual results or events to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or assumptions will be achieved. The forward-looking statements included in this press release are only made as of the date of this press release, and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. Numerous factors could cause our actual results or events to differ materially from those expressed or implied by forward-looking statements. Factors that could cause actual results to differ materially include, among others, risks related to the ability to realize the anticipated benefits of the Transaction, including the risk that the transition of brand ownership disrupts operations; risks related to the availability, terms and cost of long-term debt financing to refinance the bridge loan, including interest rate and currency exchange fluctuations; transaction costs, tax and accounting treatment, changes in consumer demand or competitive conditions, failure to achieve anticipated license-fee savings, margin benefits, or EPS accretion; risks related to the ability to open new restaurants at the anticipated pace and achieve targeted payback periods; and risks that the Transaction may not result in the anticipated long-term value creation. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q) for additional detail about factors that could affect our financial and other results.

About Yum China Holdings, Inc.

Yum China is the largest restaurant company in China with a mission to make every life taste beautiful. The Company operates over 19,000 restaurants under six brands across over 2,700 cities in China. KFC and Pizza Hut are the leading brands in the quick-service and casual dining restaurant spaces in China, respectively. The Pizza Hut brand in Mainland China is now owned by Yum China. In addition, Yum China has partnered with Lavazza to develop the Lavazza coffee concept in China. Little Sheep and Huang Ji Huang specialize in Chinese cuisine. Taco Bell offers innovative Mexican-inspired food. Yum China has a world-class, digitalized supply chain, which includes an extensive network of logistics centers nationwide and an in-house supply chain management system. Its strong digital capabilities and loyalty program enable the Company to reach customers faster and serve them better. Yum China is a Fortune 500 company with the vision to be the world's most innovative pioneer in the restaurant industry. For more information, please visit https://ir.yumchina.com/.

Contacts

Investor Relations Contact:
Tel: +86 21 2407 7556
[email protected] 

Media Contact:
Tel: +86 21 2407 3824
[email protected]

SOURCE Yum China Holdings, Inc.

Key Takeaways YUM expects about $2.3 billion in net proceeds for debt repayment and potential share repurchases.Pizza Hut's sales and profit declines weighed on YUM, while transition services add execution risk.KFC posted 7% unit growth, while Taco Bell delivered 7% same-store sales and 19% profit growth. Yum! Brands, Inc. (YUM - Free Report) is preparing to exit Pizza Hut through transactions valued at $2.7 billion. The move could simplify the portfolio, release capital and place greater emphasis on KFC, Taco Bell and Habit Burger & Grill.

The strategic logic is clear, but the investment case still depends on closing the deals smoothly, reducing near-term borrowing pressure and proving that the remaining brands can support higher-quality growth.

YUM’s Pizza Hut Exit Sharpens Its Brand PortfolioLongRange Capital is set to acquire Pizza Hut outside Mainland China, while Yum China Holdings, Inc. (YUMC - Free Report) will purchase the Mainland China operations. The transactions are expected to separate a weaker-performing business from YUM’s faster-growing brands.

Pizza Hut’s second-quarter system sales declined 2% excluding foreign currency effects, same-store sales fell 1% and operating profit dropped 14% on the same basis. Removing that drag could make YUM’s operating profile easier to evaluate.

YUM Could Put $2.3 Billion of Proceeds to WorkManagement expects approximately $2.3 billion in net proceeds from the divestiture. Part of the cash is intended for repayment of revolver borrowings, while most of the remainder is expected to be reserved for share repurchases, subject to market conditions.

That plan gives YUM two potential uses of capital. Debt repayment could improve near-term flexibility, while repurchases could reduce the share count if completed at attractive prices.

Debt Reduction Could Strengthen YUM’s FlexibilityShort-term borrowings increased to $2.81 billion at June 30, 2026, from $38 million at the end of 2025. Total borrowings also rose to about $12.28 billion from $11.91 billion over that period.

Applying transaction proceeds to the revolver would reduce the concentration of near-term obligations. It could also give management more room to balance shareholder returns with investment in restaurant development, digital capabilities and brand support.

YUM Still Faces a Complicated Separation ProcessThe transaction does not remove Pizza Hut from YUM immediately. The company expects to provide enterprise technology and finance services after closing, with most transition services phased out during 2027.

Those arrangements create execution risk. Delays, added separation costs or weaker operating leverage after the services end could reduce the expected benefits of the portfolio change.

KFC and Taco Bell Must Lead YUM’s Next ChapterKFC delivered 7% unit growth and opened 660 gross new restaurants across 55 markets in the second quarter. Taco Bell generated 7% same-store sales growth and 19% operating profit growth, making both brands central to YUM’s post-separation outlook.

Domino’s Pizza, Inc. (DPZ - Free Report) offers a useful industry comparison because its largely franchised model also relies on brand strength, digital ordering and restaurant-level execution. For YUM, sustained comparable sales, franchisee economics and digital engagement will determine whether a streamlined portfolio produces better earnings quality.

YUM’s Scores Suggest Waiting for Deal ProgressThe Pizza Hut exit could improve YUM’s focus and capital allocation, but the benefits remain partly dependent on transaction completion and post-close execution. That balance supports monitoring deal progress rather than treating the announced sale as a fully realized catalyst.

The stock currently carries a Zacks Rank #3 (Hold). Its Growth Score of C is accompanied by a Value Score of D, Momentum Score of F and VGM Score of D. The Hold rank supports a measured stance, while the weaker Value, Momentum and combined VGM readings indicate that the stock does not currently offer a broadly favorable style profile.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways YUMC trades at 14.55X forward earnings, below industry, sector and its five-year median valuation.Yum China posted Q2 revenue up 13%, adjusted EPS up 21% and a ninth straight margin expansion.YUMC plans 1,900 new stores in 2026 while returning $1.5 billion to shareholders. Yum China Holdings (YUMC - Free Report) offers investors a mixed but potentially attractive setup after its second-quarter 2026 earnings beat, better profitability and continued store expansion.

The question is whether earnings momentum and a lower valuation are enough to offset limited upside to the six-to-12-month $49 price target, delivery-cost pressure and risks tied to consumer demand in China.

YUMC Trades Below Key Valuation BenchmarksYUMC traded at 14.55X forward 12-month earnings, below the restaurant sub-industry at 22.96X, the broader Zacks Retail-Wholesale sector at 22.52X and the S&P 500 at 20.1X.

That discount is notable against the stock’s own history. The current multiple sits below its five-year median of 19.35X but above the five-year low of 12.52X, suggesting the valuation is cheaper than normal without being deeply distressed.

Yum China Delivers Improving EarningsAdjusted earnings per share were 70 cents, up 21% year over year and above the Zacks Consensus Estimate of 69 cents. Revenues rose 13% to $3.14 billion and topped the consensus mark of $3.06 billion.

Operating profit increased 14% to a second-quarter record of $348 million. Operating margin widened 20 basis points to 11.1%, marking the ninth consecutive quarter of expansion.

YUMC Offers Growth Beyond Existing StoresYum China’s investment case also rests on a larger store base. The company plans more than 1,900 net new store openings in 2026 and expects its total count to exceed 20,000 units during the year.

Franchisees are expected to account for 40-50% of net new openings at both KFC and Pizza Hut. That mix can bring local capital and resources into lower-tier cities and remote markets, although franchise locations represented only 18% of total stores at the end of the second quarter.

Yum China Supports Shareholder ReturnsCash generation adds another layer to the investment case. Net cash provided by operating activities reached $976 million in the first half of 2026, up from $864 million in the prior-year period.

Yum China plans to return $1.5 billion to shareholders in 2026. It returned $718 million in the first half and intends to distribute 100% of annual free cash flow after minority dividend payments beginning in 2027.

YUMC Faces Limits to Its Upside CaseThe valuation case is not open-ended. The $49 price target implies only modest upside from the $46.47 share price cited as of July 30, 2026.

Risks remain visible. KFC’s average ticket fell 3% in the second quarter, while Pizza Hut’s declined 11%. Delivery represented about 54% of company sales, lifting rider-cost pressure, while uneven Chinese consumer spending and intense competition continue to limit pricing power.

The planned acquisition of the Pizza Hut brand in Mainland China adds another financial consideration. Yum China expects to fund the deal primarily through a $1.2 billion offshore bridge loan with a term of up to 12 months.

Yum China Shows a Constructive but Mixed SetupYUMC has a constructive near-term profile, but the stock still depends on execution. Earnings growth, margin expansion, lower valuation and capital returns are positives, while the modest price-target gap and delivery economics keep the setup balanced.

The stock currently carries a Zacks Rank #2 (Buy). It also has a VGM Score of A, with a Value Score of B, Growth Score of B and Momentum Score of B. That mix points to favorable near-term investment characteristics across valuation, growth and price trends. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Restaurant peers such as Chipotle Mexican Grill (CMG - Free Report) and Darden Restaurants (DRI - Free Report) offer useful context for investors comparing traffic, pricing and margin execution across the industry. Against that backdrop, Yum China’s longer-term appeal depends on sustaining transactions, protecting margins and keeping earnings estimates supportive.

Revenue Increased by 13%; Operating Profit Up 14%; Diluted EPS Grew 21%
Same-Store Sales Growth Improved Sequentially to 1%; OP Margin Expanded Year Over Year for the 9th Consecutive Quarter
Acquisition of the Pizza Hut Brand in Mainland China Expected to Close in August 2026
On Track to Return $1.5 Billion to Shareholders in 2026, ~10% of Current Market Capitalization

, /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) today reported unaudited results for the second quarter ended June 30, 2026.

Second Quarter Highlights

Total system sales grew 6% year over year ("YoY"), excluding foreign currency translation ("F/X"). Same-store sales grew 1% YoY. Same-store transactions grew 5% YoY, the 14th consecutive quarter of growth. Total revenues increased 13% YoY to $3.1 billion, or a 6% increase excluding F/X. Opened 560 net new stores, a second-quarter record high and 67% higher than the openings in the same quarter last year, with 41% opened by franchisees. As of June 30, 2026, total store count reached 19,297, with 18% of stores operated by franchisees. Operating profit grew 14% YoY to $348 million, a second-quarter record high. Core operating profit grew 7% YoY. OP margin was 11.1%, an increase of 20 basis points YoY, the ninth consecutive quarter of OP margin expansion. Restaurant margin was 16.1%, flat YoY, primarily due to increased rider cost from a higher delivery mix, offset by streamlined operations. Diluted EPS increased 21% YoY to $0.70, or up 14% excluding F/X, and up 10% further excluding the impact(1) of the mark-to-market equity investments. Returned $402 million to shareholders through $301 million in share repurchases and $101 million in cash dividends. Delivery sales grew 26% YoY. Delivery contributed approximately 54% of total Company sales, up from 45% in the same quarter last year. Active Members of KFC or Pizza Hut, defined as those who transacted in the past 12 months, exceeded 270 million, representing a 6% YoY increase. CEO Comments 

Joey Wat, CEO of Yum China, commented, "We delivered strong results in the second quarter. For the ninth consecutive quarter, we simultaneously grew system sales, operating profit and OP margin. While the operating environment remains dynamic, our topline growth continued to outperform the industry in Q2. Same-store sales growth improved sequentially to 1%, led by the 14th consecutive quarter of same-store transaction growth, while store openings continued to accelerate year over year across both company-owned and franchise stores. KFC delivered strong results, with 7% system sales growth and restaurant margin expansion. Pizza Hut's same-store sales returned to positive growth and net new openings nearly doubled from last year."

Wat continued, "Our menu innovations and breakthrough side-by-side modules are helping us broaden into new occasions and new customer segments. As we rapidly roll out KCOFFEE cafe, KPRO and car-side pickup services to more KFC locations, Pizza Hut has also built a Pizza Hut Burger Bar to drive incremental sales and profit. At the same time, our KFC Small Town and Pizza Hut WOW models are helping us deepen penetration in lower-tier cities. With our multiple growth drivers, we are confident in our ability to lead the catering industry and deliver on our full-year growth targets, even as we face tougher comparisons in the second half of the year following last year's delivery platform subsidies."

Wat concluded, "We are about to reach a major breakthrough by becoming the owner of the Pizza Hut brand in Mainland China, after operating the brand in the market for 36 years. In the near term, we expect the savings in license fees to support margin expansion, with Pizza Hut's restaurant margin approaching KFC's. More potential new stores are expected to meet our payback requirements of two to three years. Over the longer term, brand ownership will give us greater strategic flexibility to capture new opportunities and innovate more nimbly across our menu, store formats, new business modules and operations. We expect this to accelerate Pizza Hut's growth trajectory and generate sustainable long-term value for our shareholders."

(1) Refers to a 4 cents favorable F/X impact, and a lower mark-to-market loss of 2 cents in the second quarter of 2026, compared with a loss of 4 cents in the second quarter of 2025.

Key Financial Results

Second Quarter

First Half (Year to Date Ended 6/30)

%/ppts Change

%/ppts Change

2026

2025

Reported

Ex F/X

2026

2025

Reported

Ex F/X

System Sales Growth (2) (%)

6

4

NM

NM

5

3

NM

NM

Same-Store Sales Growth (2) (%)

1

1

NM

NM

1

Even

NM

NM

Operating Profit ($mn)

348

304

+14

+7

795

703

+13

+7

Adjusted Operating Profit (3) ($mn)

348

304

+14

+7

795

703

+13

+7

Core Operating Profit (3) (4) ($mn)

328

304

NM

+7

751

703

NM

+7

OP Margin (5) (%)

11.1

10.9

+0.2

+0.2

12.4

12.2

+0.2

+0.2

Core OP Margin (3) (6) (%)

11.1

10.9

NM

+0.2

12.4

12.2

 NM

+0.2

Net Income ($mn)

244

215

+14

+6

553

507

+9

+3

Adjusted Net Income (3) ($mn)

244

215

+14

+6

553

507

+9

+3

Diluted Earnings
  Per Common Share ($)

0.70

0.58

+21

+14

1.57

1.35

+16

+10

Adjusted Diluted Earnings
  Per Common Share (3) ($)

0.70

0.58

+21

+14

1.57

1.35

+16

+10

(2) System sales and same-store sales percentages exclude the impact of F/X. Effective January 1, 2018, temporary store closures are normalized in the same-store sales calculation by excluding the period during which stores are temporarily closed.

(3) See "Reconciliation of Reported GAAP Results to Non-GAAP Measures" included in the accompanying tables of this release for further details.

(4) Core operating profit is defined as operating profit adjusted for special items, further excluding items affecting comparability and the impact of F/X. The Company uses core operating profit for the purposes of evaluating the performance of its core operations. Current period amounts are derived by translating results at the average exchange rates of the prior year period.

(5) OP margin refers to operating profit as a percentage of total revenues.

(6) Core OP margin refers to core operating profit as a percentage of total revenues excluding F/X.

Note: All comparisons are versus the same period a year ago.

Percentages may not recompute due to rounding.

NM refers to not meaningful.

Capital Returns to Shareholders

The Company is on track to return $1.5 billion each year from 2024 to 2026, which is annually around 10% of our market capitalization as of July 29, 2026. In the first half of 2026, the Company returned $718 million in capital to shareholders through $515 million in share repurchases and $203 million in cash dividends. The Board declared a cash dividend of $0.29 per share on Yum China's common stock, payable on September 17, 2026, to shareholders of record as of the close of business on August 27, 2026. Starting in 2027, the Company plans to return approximately 100% of annual free cash flow after subsidiaries' dividend payments to non-controlling interests. This is anticipated to translate into an average annual return of approximately $900 million to over $1 billion in 2027 and 2028, and to exceed $1 billion in 2028. KFC

Second Quarter

First Half (Year to Date Ended 6/30)

%/ppts Change

%/ppts Change

2026

2025

Reported 

Ex F/X 

2026

2025

Reported 

Ex F/X 

Restaurants

13,789

12,238

+13

NM 

13,789

12,238

+13

NM 

System Sales Growth (%)

7

5

NM 

NM 

6

4

NM 

NM 

Same-Store Sales Growth (%)

1

1

NM 

NM 

1

Even 

NM 

NM 

Total Revenues ($mn)

2,338

2,096

+12

+5

4,791

4,342

+10

+4

Operating Profit ($mn)

332

292

+14

+7

749

678

+10

+5

Core Operating Profit ($mn)

313

292

NM 

+7

709

678

NM 

+5

OP Margin (%)

14.2

14.0

+0.2

+0.2

15.6

15.6

—

—

Restaurant Margin (%)

17.1

16.9

+0.2

+0.2

18.1

18.4

(0.3)

(0.3)

System sales for KFC grew 7% YoY, improving sequentially from 5% in the first quarter. Same-store sales increased 1% YoY, the fifth consecutive quarter of growth. Same-store transactions grew 4% YoY. Ticket average was 3% lower YoY, mainly due to incremental smaller orders from new customer segments and occasions, including KCOFFEE and KPRO. Delivery sales grew 26% YoY, contributing approximately 54% of KFC's Company sales, up from 45% in the same quarter last year. KFC opened 335 net new stores during the quarter, including 152 opened by franchisees, representing 45% of net new store openings. Total store count reached 13,789 as of June 30, 2026, with 17% of stores operated by franchisees. Operating profit increased 14% YoY to $332 million. Core operating profit increased 7% YoY. OP margin was 14.2%, an increase of 20 basis points YoY. Restaurant margin was 17.1%, an increase of 20 basis points YoY, primarily due to streamlined operations and favorable commodity prices, partially offset by the impact of increased rider cost resulting from higher delivery mix and value-for-money offerings. Pizza Hut

Second Quarter

First Half (Year to Date Ended 6/30)

%/ppts Change

%/ppts Change

2026

2025

Reported 

Ex F/X 

2026

2025

Reported

Ex F/X 

Restaurants

4,549

3,864

+18

NM 

4,549

3,864

+18

NM 

System Sales Growth (%)

6

3

NM 

NM 

5

3

NM 

NM 

Same-Store Sales Growth (%)

1

2

NM 

NM 

Even 

1

NM 

NM 

Total Revenues ($mn)

613

554

+11

+4

1,248

1,149

+9

+3

Operating Profit ($mn)

51

46

+11

+5

122

106

+15

+9

Core Operating Profit ($mn)

48

46

NM 

+5

115

106

NM 

+9

OP Margin (%)

8.3

8.3

—

+0.1

9.8

9.2

+0.6

+0.6

Restaurant Margin (%)

12.9

13.3

(0.4)

(0.4)

14.0

13.9

+0.1

+0.1

System sales for Pizza Hut grew 6% YoY, improving sequentially from 4% in the first quarter. Same-store sales growth returned to positive at 1%. Same-store transactions grew 13% YoY, marking the 14th consecutive quarter of growth, and more than offset the 11% decline in ticket average. In line with our mass-market strategy, ticket average moved closer to our target range, primarily driven by value-for-money offerings and incremental smaller orders such as those from solo diners. Delivery sales grew 26% YoY, contributing approximately 52% of Pizza Hut's Company sales, up from 43% in the same quarter last year. Pizza Hut opened 174 net new stores during the quarter, nearly double the net openings in the same quarter last year, including 70 opened by franchisees, representing 40% of net new store openings. Total store count reached 4,549 as of June 30, 2026, with 11% of stores operated by franchisees. Operating profit grew 11% YoY to $51 million. Core operating profit increased 5% YoY. OP margin was 8.3%, flat YoY. OP margin expanded by 60 bps YoY in the first half of the year. Restaurant margin was 12.9%, a decrease of 40 basis points YoY, primarily due to the impact of increased costs associated with higher delivery sales mix, value-for-money offerings and investment in Pizza Hut Burger Bar, partially offset by streamlined operations, automation and favorable commodity prices. Restaurant margin increased by 10 basis points YoY in the first half of the year. 2026 Outlook

The Company targets:

Total stores of over 20,000, or more than 1,900 net new stores. 40-50% franchise mix of net new stores for both KFC and Pizza Hut. Capital expenditures of approximately $600 million to $700 million. $1.5 billion capital return to shareholders. Other Update

The Company is on track to close the acquisition of the Pizza Hut brand in Mainland China in August and plans to secure an approximately $1.2 billion equivalent offshore bridge loan to finance the transaction. Note on Non-GAAP Measures

Reported GAAP results include items that are excluded from non-GAAP measures. See "Reconciliation of Reported GAAP Results to Non-GAAP Measures" and "Segment Results" within this release for non-GAAP reconciliation details.

Conference Call

Yum China's management will hold an earnings conference call at 7:00 a.m. U.S. Eastern Time on Thursday, July 30, 2026 (7:00 p.m. Beijing/Hong Kong Time on Thursday, July 30, 2026).

A live webcast of the call may be accessed at https://edge.media-server.com/mmc/p/zubr6dix.

To join by phone, please register in advance through the link provided below. Upon registering, you will be provided with participant dial-in numbers and a unique access PIN.

Pre-registration Link: https://register-conf.media-server.com/register/BI611346d62d61456ca32d90b61aca7523

A replay of the webcast will be available two hours after the event and will remain accessible until July 29, 2027. Earnings release and accompanying slides will be available at the Company's Investor Relations website http://ir.yumchina.com.

For important news and information regarding Yum China, including our filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange, visit Yum China's Investor Relations website at http://ir.yumchina.com. Yum China uses this website as a primary channel for disclosing key information to its investors, some of which may contain material and previously non-public information.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements under the section titled "2026 Outlook." We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "project," "likely," "will," "continue," "should," "forecast," "outlook," "commit" or similar terminology. These statements are based on current estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable under the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Forward-looking statements include, without limitation, statements regarding the future strategies, growth, business plans, investments, store openings, net new stores, franchise mix of net new stores, capital expenditures, capital returns, dividend and share repurchase plans, CAGR for system sales, operating profit and EPS, earnings, performance and returns, anticipated effects of population and macroeconomic trends, execution of the Company's RGM 3.0 strategy, the anticipated effects of our innovation, digital and delivery capabilities and investments on growth and beliefs regarding the long-term drivers of Yum China's business. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks and uncertainties that are difficult to predict and could cause our actual results or events to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or assumptions will be achieved. The forward-looking statements included in this press release are only made as of the date of this press release, and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. Numerous factors could cause our actual results or events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: whether we are able to achieve development goals at the times and in the amounts currently anticipated, if at all, the success of our marketing campaigns and product innovation, our ability to maintain food safety and quality control systems, changes in public health conditions, our ability to control costs and expenses, including tax costs, as well as changes in political, economic, trade relations, regulatory conditions in China and the U.S., and those set forth under the caption "Risk Factors" in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Our plan of capital returns to shareholders is based on current expectations, which may change based on market conditions, capital needs or otherwise. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q) for additional detail about factors that could affect our financial and other results.

About Yum China Holdings, Inc.

Yum China is the largest restaurant company in China with a mission to make every life taste beautiful. The Company operates over 19,000 restaurants under six brands across over 2,700 cities in China. KFC and Pizza Hut are the leading brands in the quick-service and casual dining restaurant spaces in China, respectively. In addition, Yum China has partnered with Lavazza to develop the Lavazza coffee concept in China. Little Sheep and Huang Ji Huang specialize in Chinese cuisine. Taco Bell offers innovative Mexican-inspired food. Yum China has a world-class, digitalized supply chain, which includes an extensive network of logistics centers nationwide and an in-house supply chain management system. Its strong digital capabilities and loyalty program enable the Company to reach customers faster and serve them better. Yum China is a Fortune 500 company with the vision to be the world's most innovative pioneer in the restaurant industry. For more information, please visit http://ir.yumchina.com.

Contacts

Investor Relations Contact:

Tel: +86 21 2407 7556

[email protected] 

Media Contact:

Tel: +86 21 2407 3824

[email protected]

Yum China Holdings, Inc.

Condensed Consolidated Statements of Income

(in US$ million, except per share data)

(unaudited)

Quarter Ended

% Change

Year to Date Ended

% Change

6/30/2026

6/30/2025

B/(W)

6/30/2026

6/30/2025

B/(W)

Revenues

Company sales

$       2,910

$       2,613

11

$       5,957

$       5,414

10

Franchise fees and income

29

24

18

59

51

15

Revenues from transactions with franchisees

155

115

35

311

236

32

Other revenues

44

35

27

82

67

23

Total revenues

3,138

2,787

13

6,409

5,768

11

Costs and Expenses, Net

Company restaurants

Food and paper

918

810

(13)

1,881

1,684

(12)

Payroll and employee benefits

804

712

(13)

1,617

1,431

(13)

Occupancy and other operating expenses

719

669

(7)

1,437

1,357

(6)

Company restaurant expenses

2,441

2,191

(11)

4,935

4,472

(10)

General and administrative expenses

139

131

(7)

276

269

(3)

Franchise expenses

12

10

(24)

24

21

(18)

Expenses for transactions with franchisees

148

110

(35)

298

227

(31)

Other operating costs and expenses

38

30

(26)

69

59

(18)

Closures and impairment expenses, net

12

12

(7)

12

18

32

Other income, net

—

(1)

 NM 

—

(1)

 NM 

Total costs and expenses, net

2,790

2,483

(12)

5,614

5,065

(11)

Operating Profit

348

304

14

795

703

13

Interest income, net

12

25

(52)

28

51

(48)

Investment loss

(6)

(18)

65

(17)

(15)

(6)

Income Before Income Taxes and
  Equity in Net Earnings (Losses) from
  Equity Method Investments

354

311

14

806

739

9

Income tax provision

(92)

(80)

(14)

(215)

(199)

(8)

Equity in net earnings (losses) from
   equity method investments

2

2

23

4

6

(15)

Net income – including noncontrolling interests

264

233

14

595

546

9

Net income – noncontrolling interests

20

18

(11)

42

39

(7)

Net Income – Yum China Holdings, Inc.

$          244

$          215

14

$          553

$          507

9

Effective tax rate

26.0 %

25.8 %

(0.2)

 ppts. 

26.6 %

26.9 %

0.3

 ppts. 

Basic Earnings Per Common Share

$         0.70

$         0.58

$         1.58

$         1.36

Weighted-average shares outstanding
    (in millions)

348

373

350

374

Diluted Earnings Per Common Share

$         0.70

$         0.58

$         1.57

$         1.35

Weighted-average shares outstanding
    (in millions)

349

374

351

376

OP margin

11.1 %

10.9 %

0.2

ppts.

12.4 %

12.2 %

0.2

ppts.

Company sales

100.0 %

100.0 %

100.0 %

100.0 %

Food and paper

31.5

31.0

(0.5)

 ppts. 

31.6

31.1

(0.5)

ppts.

Payroll and employee benefits

27.6

27.2

(0.4)

 ppts. 

27.1

26.4

(0.7)

ppts.

Occupancy and other operating expenses

24.8

25.7

0.9

 ppts. 

24.1

25.1

1.0

ppts.

Restaurant margin

16.1 %

16.1 %

—

 ppts. 

17.2 %

17.4 %

(0.2)

ppts.

Percentages may not recompute due to rounding. NM refers to not meaningful.

Yum China Holdings, Inc.

KFC Operating Results

(in US$ million)

(unaudited)

Quarter Ended

% Change

Year to Date Ended

% Change

6/30/2026

6/30/2025

B/(W)

6/30/2026

6/30/2025

B/(W)

Revenues

Company sales

$        2,294

$        2,059

11

$        4,704

$        4,267

10

Franchise fees and income

24

19

23

47

40

20

Revenues from transactions with franchisees

19

17

18

38

33

16

Other revenues

1

1

(5)

2

2

(4)

Total revenues

2,338

2,096

12

4,791

4,342

10

Costs and Expenses, Net

Company restaurants

Food and paper

710

631

(12)

1,456

1,316

(11)

Payroll and employee benefits

630

556

(13)

1,273

1,110

(15)

Occupancy and other operating expenses

563

523

(8)

1,123

1,055

(6)

Company restaurant expenses

1,903

1,710

(11)

3,852

3,481

(11)

General and administrative expenses

67

61

(9)

128

120

(6)

Franchise expenses

10

9

(22)

21

19

(18)

Expenses for transactions with franchisees

15

15

(3)

30

29

(4)

Other operating costs and expenses

1

1

53

1

2

58

Closures and impairment expenses, net

10

8

(30)

10

13

27

Total costs and expenses, net

2,006

1,804

(11)

4,042

3,664

(10)

Operating Profit

$           332

$           292

14

$           749

$           678

10

OP margin

14.2 %

14.0 %

0.2

ppts.

15.6 %

15.6 %

—

ppts.

Company sales

100.0 %

100.0 %

100.0 %

100.0 %

Food and paper

30.9

30.7

(0.2)

ppts.

31.0

30.9

(0.1)

ppts.

Payroll and employee benefits

27.5

27.0

(0.5)

ppts.

27.1

26.0

(1.1)

ppts.

Occupancy and other operating expenses

24.5

25.4

0.9

ppts.

23.8

24.7

0.9

ppts.

Restaurant margin

17.1 %

16.9 %

0.2

ppts.

18.1 %

18.4 %

(0.3)

ppts.

Percentages may not recompute due to rounding.

Yum China Holdings, Inc.

Pizza Hut Operating Results

(in US$ million)

(unaudited)

Quarter Ended

% Change

Year to Date Ended

% Change

6/30/2026

6/30/2025

B/(W)

6/30/2026

6/30/2025

B/(W)

Revenues

Company sales

$           604

$           545

11

$        1,231

$        1,129

9

Franchise fees and income

3

2

47

6

4

41

Revenues from transactions with franchisees

3

1

52

5

3

44

Other revenues

3

6

(41)

6

13

(51)

Total revenues

613

554

11

1,248

1,149

9

Costs and Expenses, Net

Company restaurants

Food and paper

204

177

(15)

417

363

(15)

Payroll and employee benefits

171

154

(11)

339

317

(7)

Occupancy and other operating expenses

151

141

(7)

303

292

(4)

Company restaurant expenses

526

472

(11)

1,059

972

(9)

General and administrative expenses

28

26

(11)

54

52

(6)

Franchise expenses

2

1

(43)

3

2

(37)

Expenses for transactions with franchisees

2

1

(37)

4

3

(25)

Other operating costs and expenses

3

5

41

5

11

53

Closures and impairment expenses, net

1

3

52

1

3

56

Total costs and expenses, net

562

508

(10)

1,126

1,043

(8)

Operating Profit

$             51

$             46

11

$           122

$           106

15

OP margin

8.3 %

8.3 %

—

ppts.

9.8 %

9.2 %

0.6

ppts.

Company sales

100.0 %

100.0 %

100.0 %

100.0 %

Food and paper

33.8

32.5

(1.3)

ppts.

33.9

32.1

(1.8)

ppts.

Payroll and employee benefits

28.3

28.3

—

ppts.

27.5

28.1

0.6

ppts.

Occupancy and other operating expenses

25.0

25.9

0.9

ppts.

24.6

25.9

1.3

ppts.

Restaurant margin

12.9 %

13.3 %

(0.4)

ppts.

14.0 %

13.9 %

0.1

ppts.

Percentages may not recompute due to rounding. 

Yum China Holdings, Inc.

Condensed Consolidated Balance Sheets

(in US$ million)

6/30/2026

12/31/2025

(Unaudited)

ASSETS

Current Assets

Cash and cash equivalents

$             485

$             506

Short-term investments

901

878

Accounts receivable, net

115

95

Inventories, net

459

438

Prepaid expenses and other current assets

390

440

Total Current Assets

2,350

2,357

Property, plant and equipment, net

2,623

2,543

Operating lease right-of-use assets

2,114

2,189

Goodwill

2,021

1,963

Intangible assets, net

151

148

Long-term bank deposits and notes

688

678

Equity investments

382

387

Deferred income tax assets

168

156

Other assets

374

362

Total Assets

10,871

10,783

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

Current Liabilities

Accounts payable and other current liabilities

2,263

2,127

Short-term borrowings

66

30

Income taxes payable

107

89

Total Current Liabilities

2,436

2,246

Non-current operating lease liabilities

1,747

1,823

Non-current finance lease liabilities

50

51

Deferred income tax liabilities

418

406

Other liabilities

159

158

Total Liabilities

4,810

4,684

Redeemable Noncontrolling Interest

—

—

Equity

Common stock, $0.01 par value; 1,000 million shares authorized; 345 million shares
      and 355 million shares issued at June 30, 2026 and December 31, 2025, respectively;
      345 million shares and 354 million shares outstanding at June 30, 2026 and December 31,
      2025, respectively.

3

4

Treasury stock

(13)

(28)

Additional paid-in capital

3,696

3,796

Retained earnings

1,696

1,764

Accumulated other comprehensive loss

(25)

(157)

Total Yum China Holdings, Inc. Stockholders' Equity

5,357

5,379

Noncontrolling interests

704

720

Total Equity

6,061

6,099

Total Liabilities, Redeemable Noncontrolling Interest and Equity

$        10,871

$         10,783

Yum China Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(in US$ million)

(unaudited)

Year to Date Ended

6/30/2026

6/30/2025

Cash Flows – Operating Activities

Net income – including noncontrolling interests

$                    595

$                    546

Depreciation and amortization

237

219

Non-cash operating lease cost

211

199

Closures and impairment expenses

12

18

Investment loss

17

15

Equity in net (earnings) losses from equity method investments

(4)

(6)

Distributions of income received from equity method investments

8

9

Deferred income taxes

(9)

(3)

Share-based compensation expense

23

22

Changes in accounts receivable

(17)

(13)

Changes in inventories

(8)

52

Changes in prepaid expenses, other current assets and value-added tax assets

72

(8)

Changes in accounts payable and other current liabilities

39

(53)

Changes in income taxes payable

15

24

Changes in non-current operating lease liabilities

(187)

(200)

Other, net

(28)

43

Net Cash Provided by Operating Activities

976

864

Cash Flows – Investing Activities

Capital spending

(271)

(259)

Purchases of short-term investments, long-term bank deposits and notes

(3,777)

(3,924)

Maturities of short-term investments, long-term bank deposits and notes

3,781

3,905

Acquisition of equity investment

—

(14)

Other, net

2

2

Net Cash Used in Investing Activities

(265)

(290)

Cash Flows – Financing Activities

Proceeds from short-term borrowings

65

—

Repayment of short-term borrowings

(30)

(129)

Repurchase of shares of common stock

(530)

(368)

Cash dividends paid on common stock

(203)

(180)

Dividends paid to noncontrolling interests

(32)

(25)

Other, net

(9)

(7)

Net Cash Used in Financing Activities

(739)

(709)

Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash

7

4

Net Decrease in Cash, Cash Equivalents and Restricted Cash

(21)

(131)

Cash, Cash Equivalents, and Restricted Cash - Beginning of Period

506

723

Cash, Cash Equivalents, and Restricted Cash - End of Period

$                    485

$                    592

In this press release:

Certain performance metrics and non-GAAP measures are presented excluding the impact of foreign currency translation ("F/X"). These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the F/X impact provides better year-to-year comparability without the distortion of foreign currency fluctuations. System sales growth reflects the results of all restaurants regardless of ownership, including Company-owned and franchise restaurants that operate our restaurant concepts, except for non-Company-owned restaurants for which we do not receive a sales-based royalty. Sales of franchise restaurants typically generate ongoing franchise fees for the Company at an average rate of approximately 6% of system sales. Franchise restaurant sales are not included in Company sales in the Condensed Consolidated Statements of Income; however, the franchise fees are included in the Company's revenues. We believe system sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates all of our revenue drivers, Company and franchise same-store sales as well as net unit growth. Effective January 1, 2018, the Company revised its definition of same-store sales growth to represent the estimated percentage change in sales of food of all restaurants in the Company system that have been open prior to the first day of our prior fiscal year, excluding the period during which stores are temporarily closed. We refer to these as our "base" stores. Previously, same-store sales growth represented the estimated percentage change in sales of all restaurants in the Company system that have been open for one year or more, including stores temporarily closed, and the base stores changed on a rolling basis from month to month. This revision was made to align with how management measures performance internally and focuses on trends of a more stable base of stores. Unit Count by Brand

KFC

12/31/2025

New Builds

Closures

Refranchised

6/30/2026

Company-owned

11,032

657

(181)

(8)

11,500

Franchisees

1,965

338

(22)

8

2,289

Total

12,997

995

(203)

—

13,789

Pizza Hut

12/31/2025

New Builds

Closures

6/30/2026

Company-owned

3,830

315

(109)

4,036

Franchisees

338

180

(5)

513

Total

4,168

495

(114)

4,549

Others

12/31/2025

New Builds

Closures

6/30/2026

Company-owned

198

61

(19)

240

Franchisees

738

95

(114)

719

Total

936

156

(133)

959

Reconciliation of Reported GAAP Results to Non-GAAP Measures
(in millions, except per share data)
(unaudited)

In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") in this press release, the Company provides the following non-GAAP measures:

Measures adjusted for Special Items, which include Adjusted Operating Profit, Adjusted Net Income, Adjusted Earnings Per Common Share ("EPS"), Adjusted Effective Tax Rate and Adjusted EBITDA; Company Restaurant Profit ("Restaurant profit") and Restaurant margin; Core Operating Profit and Core OP margin, which exclude Special Items, and further adjusted for Items Affecting Comparability and the impact of F/X; These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measures provides additional information to investors to facilitate the comparison of past and present results, excluding those items that the Company does not believe are indicative of our core operations.

With respect to non-GAAP measures adjusted for Special Items, the Company excludes impact from Special Items for the purpose of evaluating performance internally and uses them as factors in determining compensation for certain employees. Special Items are not included in any of our segment results.

Adjusted EBITDA is defined as net income including noncontrolling interests adjusted for equity in net earnings (losses) from equity method investments, income tax, interest income, net, investment gain or loss, depreciation and amortization, store impairment charges, and Special Items. Store impairment charges included as an adjustment item in Adjusted EBITDA primarily resulted from our semi-annual impairment evaluation of long-lived assets of individual restaurants, and additional impairment evaluation whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. If these restaurant-level assets were not impaired, depreciation of the assets would have been recorded and included in EBITDA. Therefore, store impairment charges were a non-cash item similar to depreciation and amortization of our long-lived assets of restaurants. The Company believes that investors and analysts may find it useful in measuring operating performance without regard to such non-cash items.

Restaurant Profit is defined as Company sales less expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, restaurant-level payroll and employee benefits, rent, depreciation and amortization of restaurant-level assets, advertising expenses, and other operating expenses. Company restaurant margin percentage is defined as Restaurant profit divided by Company sales. We also use Restaurant profit and Restaurant margin for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe they provide useful information to investors as to the profitability of our Company-owned restaurants.

Core Operating Profit is defined as Operating Profit adjusted for Special Items, and further excluding Items Affecting Comparability and the impact of F/X. We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Items such as charges, gains and accounting changes which are viewed by management as significantly impacting the current period or the comparable period, due to changes in policy or other external factors, or non-cash items pertaining to underlying activities that are different from or unrelated to our core operations, are generally considered "Items Affecting Comparability." Examples of Items Affecting Comparability include, but are not limited to: temporary relief from landlords and government agencies; VAT deductions due to tax policy changes; and amortization of reacquired franchise rights recognized upon acquisitions. We believe presenting Core Operating Profit provides additional information to further enhance comparability of our operating results and we use this measure for purposes of evaluating the performance of our core operations. Core OP margin is defined as Core Operating Profit divided by Total revenues, excluding the impact of F/X.

The following tables set forth the reconciliation of the most directly comparable GAAP financial measures to the non-GAAP financial measures. The reconciliation of GAAP Operating Profit to Restaurant Profit and Core Operating Profit by segment is presented in Segment Results within this release.

Quarter Ended

Year to Date Ended

6/30/2026

6/30/2025

6/30/2026

6/30/2025

Reconciliation of Operating Profit to Adjusted Operating Profit

Operating Profit

$               348

$              304

$           795

$           703

Special Items, Operating Profit 

—

—

—

—

Adjusted Operating Profit

$               348

$              304

$           795

$           703

Reconciliation of Net Income to Adjusted Net Income

Net Income – Yum China Holdings, Inc.

$               244

$              215

$           553

$           507

Special Items, Net Income –Yum China Holdings, Inc.

—

—

—

—

Adjusted Net Income – Yum China Holdings, Inc.

$               244

$              215

$           553

$           507

Reconciliation of EPS to Adjusted EPS

Basic Earnings Per Common Share

$              0.70

$             0.58

$          1.58

$          1.36

Special Items, Basic Earnings Per Common Share

—

—

—

—

Adjusted Basic Earnings Per Common Share

$              0.70

$             0.58

$          1.58

$          1.36

Diluted Earnings Per Common Share

$              0.70

$             0.58

$          1.57

$          1.35

Special Items, Diluted Earnings Per Common Share

—

—

—

—

Adjusted Diluted Earnings Per Common Share

$              0.70

$             0.58

$          1.57

$          1.35

Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate

Effective tax rate

26.0 %

25.8 %

26.6 %

26.9 %

Impact on effective tax rate as a result of Special Items

—

—

—

—

Adjusted effective tax rate

26.0 %

25.8 %

26.6 %

26.9 %

Net income, along with the reconciliation to Adjusted EBITDA, is presented below:

Quarter Ended

Year to Date Ended

6/30/2026

6/30/2025

6/30/2026

6/30/2025

Net Income – Yum China Holdings, Inc.

$           244

$           215

$           553

$           507

Net income – noncontrolling interests

20

18

42

39

Equity in net (earnings) losses from equity method investments

(2)

(2)

(4)

(6)

Income tax provision

92

80

215

199

Interest income, net

(12)

(25)

(28)

(51)

Investment loss

6

18

17

15

Operating Profit

348

304

795

703

Special Items, Operating Profit

—

—

—

—

Adjusted Operating Profit

348

304

795

703

Depreciation and amortization

120

110

237

219

Store impairment charges

14

13

18

19

Adjusted EBITDA

$           482

$           427

$        1,050

$           941

Operating Profit, along with the reconciliation to Core Operating Profit, is presented below:

Quarter ended

% Change

Year to Date Ended

% Change

6/30/2026

6/30/2025

B/(W)

6/30/2026

6/30/2025

B/(W)

Operating Profit

$          348

$          304

14

$            795

$          703

13

Special Items, Operating Profit 

—

—

—

—

Adjusted Operating Profit

$          348

$          304

14

$            795

$          703

13

Items Affecting Comparability

—

—

—

—

F/X impact

(20)

—

(44)

—

Core Operating Profit

$          328

$          304

7

$            751

$          703

7

Total revenues

3,138

2,787

13

6,409

5,768

11

F/X impact

(183)

—

(342)

—

Total revenues, excluding the impact of F/X

$       2,955

$       2,787

6

$          6,067

$       5,768

5

Core OP margin

11.1 %

10.9 %

0.2

ppts.

12.4 %

12.2 %

0.2

ppts.

Yum China Holdings, Inc.

Segment Results

(in US$ million)

(unaudited)

Quarter Ended 6/30/2026

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

Company sales

$        2,294

$           604

$                   12

$                   —

$               —

$        2,910

Franchise fees and income

24

3

2

—

—

29

Revenues from transactions with franchisees(2)

19

3

25

108

—

155

Other revenues

1

3

235

25

(220)

44

Total revenues

$        2,338

$           613

$                 274

$                 133

$            (220)

$        3,138

Company restaurant expenses

1,903

526

12

—

—

2,441

General and administrative expenses

67

28

8

36

—

139

Franchise expenses

10

2

—

—

—

12

Expenses for transactions with franchisees(2)

15

2

23

108

—

148

Other operating costs and expenses

1

3

231

23

(220)

38

Closures and impairment expenses, net

10

1

1

—

—

12

Total costs and expenses, net

2,006

562

275

167

(220)

2,790

Operating Profit (Loss)

$           332

$             51

$                   (1)

$                  (34)

$               —

$           348

Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:

Quarter Ended 6/30/2026

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           332

$             51

$                   (1)

$                  (34)

$               —

$           348

Less:

Franchise fees and income

24

3

2

—

—

29

Revenues from transactions with franchisees(2)

19

3

25

108

—

155

Other revenues

1

3

235

25

(220)

44

Add:

General and administrative expenses

67

28

8

36

—

139

Franchise expenses

10

2

—

—

—

12

Expenses for transactions with franchisees(2)

15

2

23

108

—

148

Other operating costs and expenses

1

3

231

23

(220)

38

Closures and impairment expenses, net

10

1

1

—

—

12

Restaurant profit

$           391

$             78

$                   —

$                   —

$               —

$           469

Company sales

2,294

604

12

—

—

2,910

Restaurant margin

17.1 %

12.9 %

(2.3) %

N/A

N/A

16.1 %

Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:

Quarter Ended 6/30/2026

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           332

$             51

$                   (1)

$                  (34)

$               —

$           348

Special Items, Operating Profit 

—

—

—

—

—

—

Adjusted Operating Profit (Loss)

$           332

$             51

$                   (1)

$                  (34)

$               —

$           348

Items Affecting Comparability

—

—

—

—

—

—

F/X impact

(19)

(3)

—

2

—

(20)

Core Operating Profit (Loss)

$           313

$             48

$                   (1)

$                  (32)

$               —

$           328

Quarter Ended 6/30/2025

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

Company sales

$        2,059

$           545

$                     9

$                   —

$               —

$        2,613

Franchise fees and income

19

2

3

—

—

24

Revenues from transactions with franchisees(2)

17

1

17

80

—

115

Other revenues

1

6

172

17

(161)

35

Total revenues

$        2,096

$           554

$                 201

$                   97

$            (161)

$        2,787

Company restaurant expenses

1,710

472

9

—

—

2,191

General and administrative expenses

61

26

8

36

—

131

Franchise expenses

9

1

—

—

—

10

Expenses for transactions with franchisees(2)

15

1

16

78

—

110

Other operating costs and expenses

1

5

168

17

(161)

30

Closures and impairment expenses, net

8

3

1

—

—

12

Other income, net

—

—

—

(1)

—

(1)

Total costs and expenses, net

1,804

508

202

130

(161)

2,483

Operating Profit (Loss)

$           292

$             46

$                   (1)

$                  (33)

$               —

$           304

Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:

Quarter Ended 6/30/2025

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           292

$             46

$                   (1)

$                  (33)

$               —

$           304

Less:

Franchise fees and income

19

2

3

—

—

24

Revenues from transactions with franchisees(2)

17

1

17

80

—

115

Other revenues

1

6

172

17

(161)

35

Add:

General and administrative expenses

61

26

8

36

—

131

Franchise expenses

9

1

—

—

—

10

Expenses for transactions with franchisees(2)

15

1

16

78

—

110

Other operating costs and expenses

1

5

168

17

(161)

30

Closures and impairment expenses, net

8

3

1

—

—

12

Other income, net

—

—

—

(1)

—

(1)

Restaurant profit

$           349

$             73

$                   —

$                   —

$               —

$           422

Company sales

2,059

545

9

—

—

2,613

Restaurant margin

16.9 %

13.3 %

(11.5) %

N/A

N/A

16.1 %

Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:

Quarter Ended 6/30/2025

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           292

$             46

$                   (1)

$                  (33)

$               —

$           304

Special Items, Operating Profit 

—

—

—

—

—

—

Adjusted Operating Profit (Loss)

$           292

$             46

$                   (1)

$                  (33)

$               —

$           304

Items Affecting Comparability

—

—

—

—

—

—

F/X impact

—

—

—

—

—

—

Core Operating Profit (Loss)

$           292

$             46

$                   (1)

$                  (33)

$               —

$           304

Year to Date Ended 6/30/2026

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

Company sales

$        4,704

$        1,231

$                   22

$                   —

$               —

$        5,957

Franchise fees and income

47

6

6

—

—

59

Revenues from transactions with franchisees(2)

38

5

51

217

—

311

Other revenues

2

6

483

47

(456)

82

Total revenues

$        4,791

$        1,248

$                 562

$                 264

$            (456)

$        6,409

Company restaurant expenses

3,852

1,059

25

—

(1)

4,935

General and administrative expenses

128

54

14

80

—

276

Franchise expenses

21

3

—

—

—

24

Expenses for transactions with franchisees(2)

30

4

48

216

—

298

Other operating costs and expenses

1

5

474

44

(455)

69

Closures and impairment expenses, net

10

1

1

—

—

12

Total costs and expenses, net

4,042

1,126

562

340

(456)

5,614

Operating Profit (Loss)

$           749

$           122

$               —

$                  (76)

$               —

$           795

Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:

Year to Date Ended 6/30/2026

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           749

$           122

$                   —

$                  (76)

$               —

$           795

Less:

Franchise fees and income

47

6

6

—

—

59

Revenues from transactions with franchisees(2)

38

5

51

217

—

311

Other revenues

2

6

483

47

(456)

82

Add:

General and administrative expenses

128

54

14

80

—

276

Franchise expenses

21

3

—

—

—

24

Expenses for transactions with franchisees(2)

30

4

48

216

—

298

Other operating costs and expenses

1

5

474

44

(455)

69

Closures and impairment expenses, net

10

1

1

—

—

12

Restaurant profit (loss)

$           852

$           172

$                   (3)

$                   —

$                 1

$        1,022

Company sales

4,704

1,231

22

—

—

5,957

Restaurant margin

18.1 %

14.0 %

(8.2) %

N/A

N/A

17.2 %

Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:

Year to Date Ended 6/30/2026

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           749

$           122

$                   —

$                  (76)

$               —

$           795

Special Items, Operating Profit 

—

—

—

—

—

—

Adjusted Operating Profit (Loss)

$           749

$           122

$                   —

$                  (76)

$               —

$           795

Items Affecting Comparability

—

—

—

—

—

—

F/X impact

(40)

(7)

—

3

—

(44)

Core Operating Profit (Loss)

$           709

$           115

$                   —

$                  (73)

$               —

$           751

Year to Date Ended 6/30/2025

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

Company sales

$        4,267

$        1,129

$                   18

$                   —

$               —

$        5,414

Franchise fees and income

40

4

7

—

—

51

Revenues from transactions with franchisees(2)

33

3

36

164

—

236

Other revenues

2

13

342

34

(324)

67

Total revenues

$        4,342

$        1,149

$                 403

$                 198

$            (324)

$        5,768

Company restaurant expenses

3,481

972

20

—

(1)

4,472

General and administrative expenses

120

52

16

81

—

269

Franchise expenses

19

2

—

—

—

21

Expenses for transactions with franchisees(2)

29

3

33

162

—

227

Other operating costs and expenses

2

11

335

34

(323)

59

Closures and impairment expenses, net

13

3

2

—

—

18

Other income, net

—

—

—

(1)

—

(1)

Total costs and expenses, net

3,664

1,043

406

276

(324)

5,065

Operating Profit (Loss)

$           678

$           106

$                   (3)

$                  (78)

$               —

$           703

Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:

Year to Date Ended 6/30/2025

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           678

$           106

$                   (3)

$                  (78)

$               —

$           703

Less:

Franchise fees and income

40

4

7

—

—

51

Revenues from transactions with franchisees(2)

33

3

36

164

—

236

Other revenues

2

13

342

34

(324)

67

Add:

General and administrative expenses

120

52

16

81

—

269

Franchise expenses

19

2

—

—

—

21

Expenses for transactions with franchisees(2)

29

3

33

162

—

227

Other operating costs and expenses

2

11

335

34

(323)

59

Closures and impairment expenses, net

13

3

2

—

—

18

Other income, net

—

—

—

(1)

—

(1)

Restaurant profit (loss)

$           786

$           157

$                   (2)

$                   —

$                 1

$           942

Company sales

4,267

1,129

18

—

—

5,414

Restaurant margin

18.4 %

13.9 %

(16.0) %

N/A

N/A

17.4 %

Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:

Year to Date Ended 6/30/2025

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           678

$           106

$                   (3)

$                  (78)

$               —

$           703

Special Items, Operating Profit 

—

—

—

—

—

—

Adjusted Operating Profit (Loss)

$           678

$           106

$                   (3)

$                  (78)

$               —

$           703

Items Affecting Comparability

—

—

—

—

—

—

F/X impact

—

—

—

—

—

—

Core Operating Profit (Loss)

$           678

$           106

$                   (3)

$                  (78)

$               —

$           703

The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Statements of Income. 

(1)    Amounts have not been allocated to any segment for purpose of making operating decision or assessing financial performance as the transactions are deemed corporate revenues and expenses in nature. 

(2)    Primarily includes revenues and associated expenses of transactions with franchisees derived from the Company's central procurement model whereby the Company centrally purchases substantially all food and paper products from suppliers and then sells and delivers to KFC and Pizza Hut restaurants, including franchisees.

SOURCE Yum China Holdings, Inc.

, /PRNewswire/ -- Yum China Holdings, Inc. (NYSE: YUMC and HKEX: 9987, "Yum China" or the "Company") today announced, in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "HKEX") which require advance notice of board meetings at which a dividend is expected to be declared, that its board of directors (the "Board") will consider the declaration and payment of a quarterly dividend (the "Dividend"). If the Board decides to proceed, the declaration will be adopted by Board resolution on or around July 30, 2026 (Beijing/Hong Kong Time) and will be promptly disclosed by the Company.

The Company makes available through the Investor Relations section of its internet website at http://ir.yumchina.com its filings with the HKEX as soon as reasonably practicable after electronically filing such materials with the HKEX. These filings may also be obtained by visiting the HKEX's website at http://www.hkex.com.hk.

As no Board resolution in relation to the Dividend has been adopted as of the date of this press release, there is no assurance that the Dividend will be declared.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "project," "likely," "will," "continue," "should," "forecast," "outlook" or similar terminology. These statements are based on current estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable under the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks and uncertainties that are difficult to predict and could cause our actual results or events to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or assumptions will be achieved. The forward-looking statements included in this press release are only made as of the date of this press release, and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. Numerous factors could cause our actual results or events to differ materially from those expressed or implied by forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q) for additional detail about factors that could affect our financial and other results.

About Yum China Holdings, Inc. 

Yum China is the largest restaurant company in China with a mission to make every life taste beautiful. The Company operates over 18,000 restaurants under six brands across around 2,600 cities in China. KFC and Pizza Hut are the leading brands in the quick-service and casual dining restaurant spaces in China, respectively. In addition, Yum China has also partnered with Lavazza to develop the Lavazza coffee concept in China. Little Sheep and Huang Ji Huang specialize in Chinese cuisine. Taco Bell offers innovative Mexican-inspired food. Yum China has a world-class, digitalized supply chain which includes an extensive network of logistics centers nationwide and an in-house supply chain management system. Its strong digital capabilities and loyalty program enable the Company to reach customers faster and serve them better. Yum China is a Fortune 500 company with the vision to be the world's most innovative pioneer in the restaurant industry. For more information, please visit http://ir.yumchina.com.

Investor Relations Contact
Tel: +86 21 2407 7556
E-mail: [email protected] 

Media Contact
Tel: +86 21 2407 3824
E-mail: [email protected] 

SOURCE Yum China Holdings, Inc.