Key Takeaways U.S. restaurant sales rose 0.1% in June and 3.8% year over year, reflecting resilient consumer spending.Higher gasoline costs pressured restaurants, while easing inflation may influence future Fed rate decisions.Value meals, promotions, digital focus help restaurant chains compete as budget-conscious demand stays firm. High energy costs have posed a massive challenge for the restaurant industry. However, the space has held its ground as consumers continue to spend lavishly on eating out, driving overall retail sales.
Given this situation, it would be ideal to invest in restaurant stocks with a strong online presence. We have selected four stocks, namely, Arcos Dorados Holdings Inc. (ARCO - Free Report) , Dutch Bros Inc. (BROS - Free Report) , The Cheesecake Factory Incorporated (CAKE - Free Report) and Yum China Holdings, Inc. (YUMC - Free Report) .
Restaurant Sales GrowSales at U.S. eating and drinking places totaled $104.5 billion, increasing 0.1% sequentially in June, the Commerce Department reported last week. Year over year, restaurant sales jumped 3.8% last month. Restaurant sales totaled $603.9 billion in the first half of the year, indicating robust spending.
This came as the report showed overall retail sales grew 0.2% in June on a month-over-month basis. Restaurant sales are the only services category in the report, and Economists view spending at restaurants as a key indicator of consumers' financial health.
Higher gasoline prices since the beginning of the U.S.-Iran war in late February have posed a major problem for restaurants. Energy prices eased in June after a temporary truce between the two warring nations. This somewhat helped restaurant owners.
However, hostilities have resumed over the past nine days, and oil prices have already started moving northward. Meanwhile, inflation eased substantially in June. The consumer price index (CPI) fell 0.4% sequentially in June, after rising 0.5% in May and surpassing analysts’ expectations of a decline of 0.2%. Year over year, CPI fell to 3.5% in June, beating analysts’ expectations of a reading of 3.8%.
The latest reading is likely to give the Federal Reserve some more time before deciding on the timing of the next rate hike. If inflation continues to ease substantially, the Federal Reserve could also not go for a rate hike.
Consumers’ Focus ChangingHigher prices have made it more difficult for restaurant owners, as customers grow more cautious about their spending and look for meals that provide better value. Quick-service restaurants, especially those recognized for their affordable prices, have fared better than many others during these challenging times.
As more budget-conscious diners seek inexpensive meal options, competition in the value segment has become more intense. To draw in and keep customers, restaurant brands are rolling out special promotions, discounts and value-focused combo meals.
Despite these challenges, demand for affordable dining remains solid. Many restaurant chains are stepping up their marketing campaigns, forming partnerships and adding new menu items to stay competitive and encourage repeat business.
4 Restaurant Stocks With UpsideArcos DoradosArcos Dorados Holdings Inc. operates as a franchisee of McDonald's, with its operations divided into Brazil, the North Latin America division, South Latin America and the Caribbean division. ARCO also runs quick-service restaurants in Latin America and the Caribbean.
Arcos Dorados’ expected earnings growth rate for the current year is more than 100%%. The Zacks Consensus Estimate for current-year earnings has improved 7.4% over the past 60 days. Currently, ARCO has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Dutch BrosDutch Bros Inc. is an operator and franchisor of drive-thru shops that focus on serving high-quality, hand-crafted beverages with unparalleled speed and superior service.
Dutch Bros’ expected earnings growth rate for the current year is 22.4%. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 60 days. BROS presently carries a Zacks Rank #2.
The Cheesecake FactoryThe Cheesecake Factory Incorporated owns and operates 370 restaurants throughout the United States and Canada under brands, including The Cheesecake Factory and North Italia, Flower Child and a collection within the Fox Restaurant Concepts subsidiary. Internationally, CAKE operates 36 Cheesecake Factory restaurants under licensing agreements. It operates two bakery production facilities as well.
The Cheesecake Factory’s expected earnings growth rate for the current year is 6.9%. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 60 days. CAKE currently has a Zacks Rank #2.
Yum China HoldingsYum China Holdings operates both company-owned and franchised restaurants. YUMC’s brands include KFC, Pizza Hut and Taco Bell. The company also owns East Dawning, Little Sheep and COFFii & JOY.
Yum China Holdings’ expected earnings growth rate for the current year is 17.1%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days. YUMC currently has a Zacks Rank #2.
SummaryYum China is rated Hold, with valuation upside limited to ~5% and a fair 13–15x forward earnings multiple.The PHC (Pizza Hut China) acquisition is strategically positive, enabling menu localization, cost synergies, and improved margins by eliminating royalty fees.Macro headwinds in China—weak consumption, layoffs, and cautious consumer sentiment—may constrain SSS growth and pricing power for KFC and PHC brands.YUMC’s valuation premium to domestic peers appears justified, but further upside is capped without new catalysts amid ongoing macro uncertainty. Wirestock/iStock Editorial via Getty Images
We are previewing YUM China’s (YUMC) upcoming Q2 results, which are scheduled for July 30th. Heading into the print, the consensus is largely bullish with a BUY rating and average target price of $61/share.
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, /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.
Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. However, it isn't easy to find a great growth stock.
In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.
However, it's pretty easy to find cutting-edge growth stocks with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.
Our proprietary system currently recommends Yum China Holdings (YUMC - Free Report) as one such stock. This company not only has a favorable Growth Score, but also carries a top Zacks Rank.
Research shows that stocks carrying the best growth features consistently beat the market. And for stocks that have a combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy), returns are even better.
While there are numerous reasons why the stock of this restaurant operator in China is a great growth pick right now, we have highlighted three of the most important factors below:
Earnings GrowthEarnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.
While the historical EPS growth rate for Yum China is 21.9%, investors should actually focus on the projected growth. The company's EPS is expected to grow 17.1% this year, crushing the industry average, which calls for EPS growth of 5.7%.
Impressive Asset Utilization RatioAsset utilization ratio -- also known as sales-to-total-assets (S/TA) ratio -- is often overlooked by investors, but it is an important indicator in growth investing. This metric exhibits how efficiently a firm is utilizing its assets to generate sales.
Right now, Yum China has an S/TA ratio of 1.11, which means that the company gets $1.11 in sales for each dollar in assets. Comparing this to the industry average of 1.04, it can be said that the company is more efficient.
In addition to efficiency in generating sales, sales growth plays an important role. And Yum China looks attractive from a sales growth perspective as well. The company's sales are expected to grow 9.4% this year versus the industry average of 2.6%.
Promising Earnings Estimate RevisionsSuperiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
There have been upward revisions in current-year earnings estimates for Yum China. The Zacks Consensus Estimate for the current year has surged 0.1% over the past month.
Bottom LineYum China has not only earned a Growth Score of B based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #2 because of the positive earnings estimate revisions.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
This combination indicates that Yum China is a potential outperformer and a solid choice for growth investors.
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Yum China (YUMC - Free Report) . YUMC is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 16, which compares to its industry's average of 22.79. Over the last 12 months, YUMC's Forward P/E has been as high as 21.09 and as low as 14.45, with a median of 17.76.
Finally, investors should note that YUMC has a P/CF ratio of 11.87. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. YUMC's P/CF compares to its industry's average P/CF of 22.79. Over the past 52 weeks, YUMC's P/CF has been as high as 14.79 and as low as 10.47, with a median of 12.61.
These are only a few of the key metrics included in Yum China's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, YUMC looks like an impressive value stock at the moment.
, /PRNewswire/ -- Yum China Holdings, Inc. (NYSE: YUMC and HKEX: 9987, "Yum China" or the "Company") today announced that it will report its unaudited financial results for the second quarter ended June 30, 2026 before the U.S. market opens on Thursday, July 30, 2026 (after the trading hours of the Hong Kong Stock Exchange on Thursday, July 30, 2026).
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.
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.
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 over 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.
It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.
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Zacks Premium also includes the Zacks Style Scores.
What are the Zacks Style Scores? The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.
Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.
The Style Scores are broken down into four categories:
Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.
Growth ScoreGrowth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.
Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
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How Style Scores Work with the Zacks Rank The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.
It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +23.94% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
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That's where the Style Scores come in.
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The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.
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Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Yum China Holdings (YUMC - Free Report) Yum China Holdings, Inc., incorporated in Delaware on Apr 1, 2016, became an independent and publicly-traded company; post its spin-off from Yum! Brands, Inc. on Oct 31, 2016. Yum China’s U.S. operations are based in Texas. The company operates both company-owned and franchised restaurants.
YUMC is a #3 (Hold) on the Zacks Rank, with a VGM Score of B.
It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 14.54; value investors should take notice.
One analyst revised their earnings estimate upwards in the last 60 days for fiscal 2026. The Zacks Consensus Estimate has increased $0.01 to $2.94 per share. YUMC boasts an average earnings surprise of +4%.
With a solid Zacks Rank and top-tier Value and VGM Style Scores, YUMC should be on investors' short list.
For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.
The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.
It also includes access to the Zacks Style Scores.
What are the Zacks Style Scores? The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.
Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.
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Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.
Growth ScoreGrowth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.
Momentum ScoreMomentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.
VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.
How Style Scores Work with the Zacks Rank A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.
Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +24% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
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That's where the Style Scores come in.
To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.
As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.
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Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Yum China Holdings (YUMC - Free Report) Yum China Holdings, Inc., incorporated in Delaware on Apr 1, 2016, became an independent and publicly-traded company; post its spin-off from Yum! Brands, Inc. on Oct 31, 2016. Yum China’s U.S. operations are based in Texas. The company operates both company-owned and franchised restaurants.
YUMC is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.
It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 14.02; value investors should take notice.
Two analysts revised their earnings estimate upwards in the last 60 days for fiscal 2026. The Zacks Consensus Estimate has increased $0.02 to $2.96 per share. YUMC boasts an average earnings surprise of +4%.
With a solid Zacks Rank and top-tier Value and VGM Style Scores, YUMC should be on investors' short list.
Key Takeaways YUM will sell Pizza Hut China and ex-China operations in deals worth about $2.7B total.YUM expects roughly $2.3B in net proceeds and authorized a new $4B share repurchase program.Yum! Brands will maintain technology and strategic partnerships tied to the Pizza Hut business. Yum! Brands, Inc. (YUM - Free Report) has agreed to sell Pizza Hut in transactions valued at approximately $2.7 billion, concluding a strategic review of the business that began in November 2025.
Under the agreements, Yum China Holdings, Inc. (YUMC - Free Report) will acquire Pizza Hut China for roughly $1.2 billion, while private equity firm LongRange Capital will purchase Pizza Hut operations outside Mainland China for approximately $1.5 billion. The transaction also includes a potential earn-out payment of up to $75 million for Yum! Brands by 2030.
The deal marks one of the most significant portfolio changes in Yum! Brands' history and highlights management's efforts to sharpen its strategic focus while enhancing long-term shareholder value.
Why YUM Chose to Sell Pizza HutFollowing a comprehensive review of strategic alternatives, Yum! Brands' leadership team and board concluded that selling Pizza Hut represented the most effective path to maximizing shareholder value. The company determined that the brand would be better positioned under ownership structures tailored to the unique characteristics, competitive dynamics and growth opportunities of its respective markets.
The review also occurred against a backdrop of heightened competition across the quick-service restaurant industry and increasingly value-conscious consumer spending patterns. In this environment, YUM concluded that specialized owners with deep restaurant expertise could help Pizza Hut pursue market-specific growth strategies more effectively.
At the same time, the transaction enables Yum! Brands to simplify its portfolio and concentrate resources on growth initiatives, technology investments and operational priorities across its remaining brands. The move is expected to create a more focused organization with greater flexibility to pursue long-term opportunities.
Financial Benefits and Shareholder ReturnsThe transaction is expected to generate approximately $2.3 billion in net proceeds after taxes, transaction fees and closing adjustments. Although YUM anticipates about $85 million in one-time separation-related expenses during the remainder of 2026, the company stands to gain substantial financial flexibility from the deal.
Management intends to deploy the proceeds in accordance with its capital allocation strategy, balancing investments in the business with returns to shareholders. Demonstrating that commitment, the YUM board approved an additional $4 billion share repurchase authorization alongside the transaction announcement.
The expanded buyback program could support earnings-per-share growth over time while providing an attractive mechanism for returning excess capital to investors.
Maintaining Strategic PartnershipsWhile Pizza Hut is changing ownership, Yum! Brands will continue to maintain several important relationships tied to the business. The company will keep providing its proprietary Byte by Yum! technology platform to Pizza Hut Ex-China and will offer transition services to facilitate an orderly separation. Management expects the associated fees to offset corporate expenses previously allocated to Pizza Hut.
Yum! Brands also strengthened its relationship with Yum China through agreements that create incentives linked to future acceleration in KFC China system sales growth. In addition, both companies intend to continue collaborating on Taco Bell's long-term expansion plans in Mainland China.
Upon completion of the transactions, Pizza Hut will no longer be included among YUM’s reportable operating segments, reflecting its transition toward a more streamlined business structure.
YUM's Price Performance, Valuation and EstimatesBeyond the strategic implications of the transaction, investors may also want to examine YUM's stock performance and valuation.
YUM’s shares have gained 14% over the past year, outperforming the restaurant industry's decline of 4.2%. During the same period, the stock also delivered stronger returns than Yum China, McDonald's Corporation (MCD - Free Report) and Domino's Pizza, Inc. (DPZ - Free Report) .
Price Performance
Image Source: Zacks Investment Research
Despite the stock's recent advance, YUM continues to trade at a reasonable valuation relative to the industry. The company currently has a forward 12-month price-to-earnings ratio of 22.27X, below the industry average. In comparison, Yum China, McDonald's and Domino's trade at 13.9X, 21.37X and 16.12X, respectively.
P/E (F12M)
Image Source: Zacks Investment Research
Investor sentiment has also improved in recent months. The Zacks Consensus Estimate for YUM's 2026 and 2027 earnings per share has moved higher over the past 60 days, indicating optimism regarding its earnings outlook.
Image Source: Zacks Investment Research
The Bottom LineThe Pizza Hut divestiture is less about exiting a globally recognized brand and more about repositioning Yum! Brands for its next phase of growth. By placing Pizza Hut under owners focused on its regional opportunities and operational needs, YUM believes the brand can pursue growth more effectively while the parent company concentrates on its highest-priority initiatives.
With approximately $2.3 billion in expected net proceeds, a newly authorized $4 billion share repurchase program and a simplified corporate structure, YUM appears well positioned to strengthen shareholder returns and enhance financial flexibility. If the transactions close as expected in the third quarter of 2026, the deal could represent a meaningful step toward improving the company's long-term growth profile and creating sustainable value for investors.
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Yum! Brands Inc (NYSE:YUM) announced on Tuesday that it has entered into definitive agreements to sell Pizza Hut for a combined value of approximately $2.7 billion, as the restaurant operator sharpens its focus on its remaining brands, which include KFC and Taco Bell, and capital allocation priorities.
Under the agreements, private equity firm LongRange Capital will acquire Pizza Hut operations outside Mainland China for about $1.5 billion, while Yum China Holdings (NYSE: YUMC) will purchase Pizza Hut China for approximately $1.2 billion.
The transactions are subject to customary closing conditions and regulatory approvals and are expected to close in the third quarter of 2026.
The sale follows a strategic review of Pizza Hut that began in November 2025. Yum! said its leadership team and board concluded that separate ownership structures would provide the best path for the pizza chain's future growth while maximizing value for shareholders.
“These transactions enable Yum! to be a more focused company that continues to leverage scale, technology and talent to accelerate our raising the B.A.R. priorities and deliver sustained value for our stakeholders,” Yum! CEO Chris Turner said in a statement.
Turner added that Pizza Hut would be positioned for future growth under owners with restaurant industry expertise and described the brand as one of the most iconic restaurant chains in the world.
As part of the transaction with LongRange, Yum! may receive an additional earn-out payment of up to $75 million by 2030. Excluding that potential payment, the company expects to receive approximately $2.3 billion in net proceeds after taxes, closing adjustments and transaction-related fees.
Yum! said it expects to incur about $85 million in one-time expenses during the remainder of 2026 related to separating the business.
The company will continue providing its proprietary Byte by Yum! technology platform to Pizza Hut Ex-China and will also offer certain corporate services under a transition agreement to support the separation process.
Yum! and Yum China said they will maintain their partnership following the transaction. The companies agreed to financial incentives tied to future growth in KFC China's system sales and will continue collaborating on long-term expansion plans for Taco Bell in Mainland China.
Alongside the sale announcement, Yum!'s board authorized an additional $4 billion share repurchase program. The company said the net proceeds from the transactions will be used in line with its capital allocation strategy, including investments in the business and returning excess capital to shareholders.
Yum! plans to provide additional details regarding the financial impact of the sale and any updates to its 2026 outlook during its second-quarter earnings conference call on July 30.
, /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) today announced that it has entered into a definitive agreement with Yum! Brands, Inc. ("Yum! Brands") (NYSE: YUM) to acquire ownership of the Pizza Hut brand in Mainland China at a cash consideration of $1.2 billion. Upon closing, Pizza Hut China will no longer be subject to the license fees previously payable to Yum! Brands.
Pizza Hut is the largest casual dining restaurant brand in China[1] and continues to capture significant growth opportunities in the market. In 2025, Pizza Hut reported segment revenue of $2.3 billion and segment operating profit of $183 million, and in the first quarter of 2026, it delivered its 13th consecutive quarter of same-store transaction growth and its eighth consecutive quarter of restaurant margin and operating profit expansion. With 4,375 restaurants across more than 1,100 cities[2], Yum China is targeting the expansion of Pizza Hut's footprint to over 6,000 stores by 2028 and the doubling of its operating profit by 2029 compared with that for 2024, as previously outlined at Yum China's Investor Day in November 2025.
"Moving from the exclusive licensee to the brand owner of Pizza Hut in Mainland China represents a transformative milestone for us, demonstrating our conviction and long-term commitment to the China market. We see tremendous opportunities ahead, and we are still only at the early stage of our planned growth trajectory for Pizza Hut China," said Joey Wat, CEO of Yum China. "Becoming the brand owner will give the Company greater strategic flexibility to drive innovation across the menu, store formats, new modules, and operations. In addition, the elimination of the license fee payments to Yum! Brands are expected to enhance store economics and lower store-opening thresholds, which support Pizza Hut's margin expansion, growth acceleration and market leadership in China. As always, we remain fully committed to delivering an exceptional experience for our customers."
As the Company embarks on the next chapter of Pizza Hut's growth in China, going forward, Yum China and Yum! Brands remain fully committed to a strong partnership to unlock growth in the KFC brand. KFC will continue to be the key growth engine for Yum China and has a long runway to further expand into underserved markets, strengthen its market leadership and deliver sustainable long-term growth. KFC China is well positioned to pursue its target of expanding from its current footprint of 13,4542 stores to over 17,000 stores by 2028. In addition, concurrent to the transaction, KFC China will be eligible to receive a decade-long financial incentive from Yum! Brands upon achieving certain system sales growth targets, supporting and rewarding the higher future growth of KFC China.
Yum China's Board of Directors approved the transaction after a thorough review with the management team. The transaction is expected to close in the third quarter of 2026, subject to customary closing conditions. On a like-for-like basis, Yum China's 2026 full year financial guidance remains unchanged. With the elimination of license fee payments to Yum! Brands for the Pizza Hut brand, the Company expects the transaction to immediately enhance Pizza Hut China's and therefore Yum China's restaurant margins and OP margins. It is also expected to be immediately accretive to diluted EPS starting in 2026 following closing, and mid-single-digit accretive to diluted EPS in 2027 and 2028.
Yum China plans to fund the acquisition through a combination of cash and debt financing. The Company's financing plan is designed to support the transaction while maintaining its long-term commitment to shareholder value creation. Yum China remains committed to its previously announced capital return plans, which includes $1.5 billion in 2026, and approximately 100% of annual free cash flow after subsidiaries' dividend payments to non-controlling interests beginning in 2027. This is expected to translate to an average annual return of approximately $900 million to over $1 billion in 2027 and 2028, and to exceed $1 billion in 2028.
Transaction Consideration
The transaction consideration represents an implied last-twelve-month (LTM) P/E multiple of 19.5x[3], which compares favorably with the trading multiples of comparable global and China-based catering and beverage companies that are brand owners with franchising as a key business model. This represents a 17% discount to the median of the peer group's[4] latest LTM P/E (23.5x)[5] as of market close on June 12, 2026, and a 24% discount to the median of the peer group's average LTM P/E over the past one year (25.7x)[6]. Additionally, it also stands at a discount to the intrinsic value range derived from various valuation methodologies, taking into account historical performance and future prospects of Pizza Hut in Mainland China, reinforcing long-term value creation for shareholders.
Management will provide additional information regarding the transaction during Yum China's second-quarter earnings conference call scheduled for July 30, 2026.
Lazard acted as financial advisor, Sidley Austin LLP acted as legal counsel, and Fangda Partners acted as PRC counsel to Yum China in the transaction.
[1] In terms of 2025 system sales and number of restaurants.
[2] As of March 31, 2026.
[3] The multiple is calculated by dividing the transaction consideration of $1.2 billion by the license fees payable to Yum! Brands from Yum China for operating Pizza Hut in Mainland China for the last twelve months ended March 31, 2026 (net of tax) which amounted to approximately $62 million.
[4] The peer group consists of seven comparable global and China-based catering and beverage companies, including Yum! Brands, McDonald's, Restaurant Brands International, Domino's Pizza, Starbucks, Mixue and Guming.
[5] Latest LTM P/E refers to closing price of each comparable company on June 12, 2026 divided by LTM EPS, sourced from FactSet.
[6] Average LTM P/E over the past one year is calculated as the average of daily LTM P/E ratios over the past one year ended June 12, 2026. Daily LTM P/E ratios are calculated in the same way as footnote 5 above, where LTM EPS and closing prices on each of the trading days in the past one year are sourced from FactSet.
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, projected capital returns, the pending acquisition of ownership of the Pizza Hut brand in Mainland China from Yum! Brands, Inc. (the "Pending Transaction") and related financing, the expected timing, benefits and impact of the Pending Transaction, expected license-fee savings, expected margin benefits, expected EPS accretion, implied multiples, peer group comparisons, intrinsic value range and potential long-term value creation, and potential future financial incentives from Yum! Brands. 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, capital allocation strategy, capital return plans (including dividend and share repurchase plans), restaurant expansion plans, and operating profit targets, as well as statements about the benefits, timing, and impact of the Pending Transaction and the potential KFC financial incentive. 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 relating to the consummation of the Pending Transaction, including the possibility that the conditions to the consummation of the Pending Transaction will not be satisfied in the anticipated timeframe or at all, risks related to the ability to realize the anticipated benefits of the Pending Transaction, risks related to the availability, terms and cost of debt financing, transaction costs, tax and accounting treatment, changes in consumer demand or competitive conditions, failure to achieve anticipated license-fee savings, margin benefits, EPS accretion or KFC financial incentives, risks that the assumptions underlying the implied multiple calculations, P/E ratios and peer group comparisons and intrinsic value range may prove inaccurate or incomplete, and risks that the Pending Transaction may not result in the anticipated long-term value creation and negative effects of the announcement or failure to consummate the Pending Transaction on the Company's operating results or market price of its securities. Our plan of capital returns to shareholders (including dividend and share repurchase plans) 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 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 over 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 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/.
Yum! Brands said Tuesday it is selling Pizza Hut for $2.7 billion, after years of lagging sales at the pizza chain.
Private-equity firm LongRange Capital has agreed to acquire Pizza Hut’s operations, excluding mainland China, for roughly $1.5 billion. Yum China Holdings will purchase operations in mainland China in a separate deal worth $1.2 billion.
Yum! Brands on Tuesday announced it is selling Pizza Hut for $2.7 billion. Christopher Sadowski The deals – which are expected to close in the third quarter – come as little surprise after Yum! launched a strategic review last November while Pizza Hut continually churned out weaker results than sister brands Taco Bell and KFC.
Shares in Louisville, Ky.-based Yum! jumped 1.9% Tuesday after it said the sales will provide it with “the strongest path to maximize shareholder value” and allow it to focus on its stronger brands.
With US sales at Pizza Hut falling for about two years, the chain has consistently lost market share to Domino’s Pizza – which snagged its title as the largest pizza-restaurant operator in the country in 2017.
“Under LongRange and Yum China, Pizza Hut will be well positioned for future growth with ownership that brings deep expertise in the restaurant industry,” said Yum! CEO Chris Turner, who took the helm last October and argued for a sale of the pizza segment.
Fast-food pizza chains have been ailing as cash-strapped consumers cut back and third-party delivery apps eat into profits. US sales across the category dropped 0.3% last year from 2024, according to market-research firm Technomic.
As of 2025, Pizza Hut operated about 6,300 stores in the US, its largest market. It has nearly 20,000 locations worldwide across 108 countries.
Earlier this year, Yum! announced it was closing around 250 underperforming US Pizza Huts. Papa John’s has been shuttering dozens of locations, too.
In a last-ditch effort to turn around sales, Pizza Hut added flashy items to its US menus, including a Crispy Parm Pan Pizza, and launched new deals and a membership program.
Pizza Hut has continually churned out weaker results than sister brands Taco Bell and KFC. NurPhoto via Getty Images It also attempted to lean into fans’ nostalgia, bringing back its Book It! reading program. That rewards elementary schoolers with a free personal pan pizza for hitting reading goals.
China, its second-largest market, has been a bright spot for Pizza Hut – which is the biggest casual dining brand in the country. It operates 4,375 restaurants in China, selling steak and pasta in addition to the mainstay of pizza.
Yum! said it expects to rake in about $2.3 billion in net proceeds from both deals. It also anticipates one-time expenses of roughly $85 million through the rest of 2026 tied to the sales.
LongRange, the private-equity firm acquiring Pizza Hut, earlier this year agreed to buy 24 Hour Fitness. It and also owns Batesville, a company that makes caskets and cremation urns.
Yum! announced earlier this year it was closing around 250 underperforming US Pizza Hut stores. Christopher Sadowski Pizza Hut was founded by brothers Dan and Frank Carney in 1958 in Wichita, Kan.
It quickly grew into the largest pizza chain in the world, and in 1977, it was bought by PepsiCo.
The soda giant spun off its restaurant business in 1997, combining Pizza Hut under the same holding company as Taco Bell and KFC.
Over the past few years, Pizza Hut has moved away from its traditional, sit-down layout with a salad bar to focus more on delivery services – but has failed to win back customers en masse.
Pizza Hut is getting a new owner: Private equity firm LongRange buys chain in $1.5 billion deal By You're currently following this author! Want to unfollow? Unsubscribe via the link in your email.
Yum! Brands has sold Pizza Hut in a $2.7 billion deal that will split the property between two buyers: PE firm LongRange Capital and Yum China Holdings. Klaudia Radecka/NurPhoto via Getty Images Pizza Hut is getting a new owner after years of weak sales and growing questions about the future of one of America's best-known pizza brands.
Yum! Brands said Tuesday it entered into agreements to sell Pizza Hut for $2.7 billion, splitting the business between two buyers. LongRange Capital, a private equity firm, will acquire Pizza Hut outside mainland China for about $1.5 billion, while Yum China Holdings will buy the chain's mainland China business for about $1.2 billion.
The sale follows Yum's strategic review of Pizza Hut, which began last year after the chain posted its eighth consecutive quarter of same-store sales declines, Business Insider previously reported. At the time, Yum CEO Chris Turner said Pizza Hut needed "additional action" to unlock its full value and suggested that work "may be better executed outside Yum! Brands."
The deal is unlikely to come as a complete surprise to employees, said Kim Cerda, managing director and organizational change and culture practice lead at HudsonLake, a MikeWorldWide company that advises companies during mergers and organizational changes.
"This is really not the beginning, but a continuation of changes already underway," she said. For years, she added, employees have likely "been living under lots of change and pressure" as the chain has struggled.
LongRange is pitching itself as a hands-on operator rather than a financial buyer. In a statement announcing the deal, the firm said it plans to invest in Pizza Hut's growth and build on its franchise system and global footprint. Yum said Pizza Hut would be "well positioned for future growth" under LongRange and Yum China.
That message will be critical for workers and franchisees evaluating the chain's new owner.
"People know it's being bought by private equity, so they already know that means things are going to have to change," Cerda said. The challenge for LongRange, she said, will be balancing those changes with a convincing case that the investment is meant to "re-energize and revitalize the brand."
Across the two transactions, Yum expects to receive about $2.3 billion in net proceeds after taxes, closing adjustments, and transaction-related fees, excluding a potential $75 million earn-out by 2030. The company said it expects roughly $85 million in one-time costs to complete the separation.
The deal comes as Pizza Hut faces challenges beyond slowing sales. Business Insider previously reported that Yum planned to close 250 underperforming Pizza Hut locations during the first half of 2026. In May, a Pizza Hut franchisee sued the chain over its Dragontail restaurant management system, alleging it caused operational disruptions and customer service problems. Pizza Hut said at the time it was reviewing the claims and would respond through the appropriate legal channels.
For Yum, the sale sharpens its focus on its other brands: KFC, Taco Bell, and Habit Burger & Grill. For LongRange, it is a bet that operational improvements can revive a chain whose red roof remains iconic while its business has struggled to keep pace with rivals.
Have a tip? Contact this reporter via email at Katherine Tangalakis-Lippert at [email protected] or Signal at byktl.50. Use a personal email address, a nonwork WiFi network, and a nonwork device; here's our guide to sharing information securely.
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Katherine Tangalakis-Lippert is a senior reporter on Business Insider's West Coast team. When she's not writing about trending business and tech news, from the latest supply chain snarls or advancements in AI, she covers the food and restaurant industries, specifically companies such as Starbucks and McDonald's.Some of her prior areas of focus have included coverage of the Supreme Court and emerging technologies such as quantum computing.Katherine has worked on award-nominated projects and has appeared on Good Morning America, NBC, CNN, and other outlets to discuss her reporting.Prior to joining Business Insider, she covered retail, hospitality, and nonprofits at the San Fernando Valley Business Journal and received a master's degree in investigative reporting from the University of Southern California.Reach outDo you have feedback or a story tip? Contact Katherine on Signal at byktl.50, or email her at [email protected] her on Twitter and Instagram @scrawlgirl.Some of her recent scoops, exclusives, and original stories include: Starbucks set up a new office. It's a 5-minute drive from the CEO's California home.Inside Starbucks' crackdown on cup notesEndless Shrimp was Red Lobster's rock bottom. Now it's clawing back.Chipotle's new PAC signals a change in how the company engages in politicsKFC lost its footing in the Chicken Wars. Now it's gunning for a 'Kentucky Fried Comeback.'A few other highlights include: Clarence Thomas raised him 'as a son.' Now he's facing 25-plus years on weapons and drug charges.Call her Ivanka Kushner'Maybe I'll just resign:' Federal workers react to DOGE productivity emailSpaceX launches cause late-night booms that rattle windows, set off car alarms, and may damage property. Locals are pushing back.The US-China tech race is moving from chips to the raw materials they're made of
The Zacks Retail – Restaurants industry is under pressure from high menu prices and tight consumer budgets, which are weighing on traffic. Rising labor, food and occupancy costs are further squeezing margins. However, the industry is benefiting from steady demand for convenience, growth in digital ordering, ongoing unit expansion and a focus on convenience-led formats. Stocks like Starbucks Corporation (SBUX - Free Report) , Yum China Holdings, Inc. (YUMC - Free Report) and Dutch Bros Inc. (BROS - Free Report) are well-poised to benefit from the factors mentioned above.
Industry Description The Zacks Retail-Restaurants industry comprises several owners and operators of casual, upscale casual, fine dining, full-service and fast-casual restaurants. Some industry participants operate as roasters, marketers and retailers of specialty coffee. Some companies develop, operate and franchise quick-service restaurants worldwide. A few restaurant operators offer cooked-to-order dishes, including noodles and pasta, soups, salads and appetizers. Some industry players develop, own, operate, manage and license restaurants and lounges worldwide. A few companies also run technology-enabled Japanese restaurants in the United States and provide Japanese cuisine through a revolving sushi service model.
4 Trends Shaping the Future of the Restaurant Industry Challenging Market Landscape: The industry is grappling with a macroeconomic environment marked by persistent inflation and reduced consumer purchasing power. The restaurant industry has been facing declining traffic for quite some time. A rapid increase in menu prices is the primary reason behind traffic erosion. This decline highlights the ongoing challenges that the industry faces in maintaining customer counts, especially as consumers grow frustrated with rising prices.
Intense competition and high wages are concerning. The industry continues to bear increased expenses, which have been affecting margins. Higher pre-opening costs, marketing expenses and costs related to sales-boosting initiatives are exerting pressure on the company’s margins.
U.S. Restaurant Industry Outlook 2026: According to the National Restaurant Association, the U.S. restaurant industry is expected to post steady yet modest growth in 2026, with total sales projected to reach roughly $1.55 trillion. The outlook indicates resilient consumer demand for convenience, off-premise dining and on-the-go options, but the operating environment remains challenging. Elevated labor, food and occupancy costs continue to pressure margins, while price-sensitive consumers are limiting traffic growth. As a result, much of the industry’s expansion is likely to be driven by pricing and average check increases rather than a sharp rebound in customer visits, keeping the overall tone cautiously optimistic.
Convenience Trends and Digital Adoption Support Demand: Consumers are increasingly prioritizing speed and ease, leading to stronger demand for drive-thru, takeaway and delivery services. Restaurants are investing heavily in mobile apps, loyalty programs and AI-powered tools to streamline ordering, reduce wait times and offer personalized promotions. These initiatives not only improve the customer experience but also encourage repeat visits and higher spending, helping brands maintain demand even in a cautious spending environment.
Unit Expansion and Strategic Pricing Drive Sales Growth: Restaurant operators are accelerating expansion through new store openings, smaller formats and entry into untapped markets to capture incremental demand. At the same time, they are using targeted pricing strategies, such as premium menu items, bundled offerings and limited-time deals, to increase average check sizes. This combination of footprint growth and smarter pricing is enabling the industry to sustain revenue growth, even as overall traffic recovery remains gradual.
The Zacks Industry Rank Indicates Dull Prospects The Zacks Restaurant industry is grouped within the broader Retail-Wholesale sector. The industry carries a Zacks Industry Rank #175, which places it in the bottom 28% of more than 244 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s position in the bottom 50% of the Zacks-ranked industries results from a negative earnings outlook for the constituent companies in aggregate. Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms the S&P 500 and the Sector The Zacks Retail-Restaurants industry has underperformed the Zacks S&P 500 composite and its sector over the past year.
Over this period, the industry has gained 1.2% compared with the Zacks S&P 500 composite’s rise of 37.3%. The sector has increased 21.8%.
1-Year Price PerformanceRestaurant Industry's Valuation Based on the forward 12-month P/E, a commonly used multiple for valuing restaurant stocks, the industry is currently trading at 24.01X compared with the S&P 500’s 21.91X. It is down from the sector’s forward 12-month P/E ratio of 25.05X.
Over the past five years, the industry traded as high as 30.52X and as low as 22.08X, the median being 25.03X.
3 Key Restaurant Picks Starbucks: The company is benefiting from solid international momentum, improved operational discipline and steady progress under its “Back to Starbucks” turnaround strategy. Strength across key global markets such as China, Japan and the United Kingdom, along with advancements in digital platforms and delivery capabilities, is supporting performance. Looking ahead, Starbucks is focused on enhancing efficiency, optimizing the store portfolio and driving menu innovation to reinforce its competitive positioning.
Shares of this Zacks Rank #2 (Buy) company have gained 16.4% in the past six months. SBUX’s fiscal 2026 sales and earnings are anticipated to rise 3.2% and 8.5%, respectively, year over year.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: SBUX
Yum China: The company is gaining from solid growth in systemwide and same-store sales, supported by strong delivery momentum and contributions from new store openings. Continued focus on menu innovation, expansion of the store base and ongoing digital initiatives is expected to further support growth and strengthen Yum China’s market position.
Shares of this Zacks Rank #2 company have gained 8.2% in the past six months. YUMC’s 2026 sales and earnings are anticipated to rise 7.8% and 15.9%, respectively, year over year.
Price and Consensus: YUMC
Dutch Bros: The company is benefiting from robust traffic trends, driven by strong customer loyalty and growing digital engagement. The stock has outperformed the broader industry over the past six months, reflecting solid execution. Dutch Bros continues to expand in a disciplined manner, supported by attractive store-level economics. Meanwhile, ongoing innovation and its expanding food offerings are opening up additional avenues for revenue growth.
Shares of this Zacks Rank #2 company have declined 9.8% in the past six months. BROS’ 2026 sales and earnings are anticipated to rise 24.5% and 18.4%, respectively, year over year.
Key Takeaways Hormuz disruption has slashed oil flows, sending crude to $120 and shaking global energy markets.Supply shocks are driving inflation, straining supply chains, and complicating Fed rate cut plans.E, SHEL, TIMB and YUMC stand out with strong shareholder yield via dividends, buybacks and debt reduction. An updated edition of the March 10, 2026, article.
The escalation of the Iran war in 2026 has culminated in a severe disruption of the Strait of Hormuz, a critical artery for global energy trade. The waterway, which typically carries nearly 20% of global oil flows, has faced near-total closure amid military conflict and naval blockades.
According to a Reuters article, Iran’s actions and the subsequent military response effectively blocked a significant portion of global oil shipments, forcing producers to shut in supply, creating a sharp mismatch between physical and futures oil markets.
The scale of disruption is unprecedented in modern energy markets, rivaling historical oil crises and introducing a new layer of geopolitical risk premium into commodity pricing.
In such conditions, companies that consistently return cash to shareholders can offer a valuable layer of protection.
Stocks with strong shareholder yield not only provide income through dividends but also support valuations through buybacks and disciplined capital allocation. As geopolitical risks and macro uncertainty persist in 2026, these companies may serve as an important anchor for investor portfolios navigating turbulent markets.
Among companies offering attractive shareholder yields are Eni (E - Free Report) , Shell (SHEL - Free Report) , TIM (TIMB - Free Report) and Yum China (YUMC - Free Report) . These stocks also have a favorable Zacks Rank and Style Scores, indicating potential upside in share prices this year and, in turn, supporting investor wealth creation.
Oil Prices Surge Amid Supply ShockThe supply disruption has triggered a sharp spike in crude prices. Physical crude benchmarks have surged to $120 per barrel, reflecting acute shortages in available supply.
Even as diplomatic efforts intermittently ease tensions, oil markets remain volatile. Per Reuters reports, Brent crude continues to trade near elevated levels due to persistent uncertainty around supply flows and constrained shipping activity through Hormuz.
This Bloomberg report has also described the current episode as the largest oil supply shock in history, with shortages already spreading across Asian markets and global inventories tightening.
Supply-Chain Disruptions Amplify Inflation RisksBeyond energy markets, the Hormuz disruption has triggered widespread supply-chain bottlenecks.
Shipping constraints and reduced tanker traffic have limited the flow of crude and refined products, with Reuters noting that tanker activity remains well below pre-war levels.
The impact extends beyond oil, as the crisis has disrupted fertilizers, food supply chains and industrial inputs, increasing costs across multiple sectors. The broader economic fallout is evident in rising transportation and logistics expenses, shortages of key commodities, and increased insurance and freight premiums, all of which are adding to inflationary pressures and straining global supply chains.
Per this article from Al Habtoor Research Center, economists estimate that sustained oil prices near $100 per barrel could add 0.6-1.3 percentage points to inflation, reinforcing concerns of a renewed inflation cycle.
The higher energy prices have already begun complicating the inflation outlook, raising concerns among policymakers and investors alike.
Inflation Threat Complicates Fed Rate PathThe resurgence of inflation risks has direct implications for monetary policy.
Federal Reserve officials are increasingly cautious about the timing and scale of rate cuts. According to a Reuters article, expectations for aggressive easing are likely to be scaled back, with policymakers potentially having fewer rate cuts as inflation remains above target levels.
Markets are adjusting accordingly, with interest rates expected to remain elevated for longer as inflation concerns persist. This environment is putting pressure on equity valuations, as higher discount rates reduce the present value of future earnings. Volatility is rising across asset classes, reflecting heightened uncertainty and shifting investor expectations.
Analysts warn that a prolonged disruption in the Strait of Hormuz could create a stagflation-like environment, combining slower growth with persistent inflation, which is historically one of the biggest setbacks for equity investors.
Why Shareholder Yield Offers StabilityShareholder yield has emerged as a compelling defensive investment framework, combining dividend payouts, net share buybacks and debt reduction to capture total capital returned to investors. Companies with strong shareholder yield typically exhibit robust free cash flow, solid balance sheets and disciplined capital allocation — traits that become especially valuable during periods of macroeconomic uncertainty.
Dividends provide a steady income cushion in volatile markets, while buybacks support earnings per share and valuations. Consistent capital returns signal financial discipline, as such firms tend to avoid excessive leverage and aggressive expansion.
A Defensive Playbook for 2026The Hormuz crisis underscores how geopolitical risks can rapidly cascade into global markets through energy prices, inflation and monetary policy.
Amid persistent oil supply disruptions, strained supply chains and increasing uncertainty around rate cuts, investors face a complex macroeconomic environment.
In such conditions, stocks with strong shareholder yield offer a critical advantage. By combining income generation, capital return and financial resilience, these companies provide a buffer against volatility while maintaining long-term return potential.
As the Iran war continues to reshape global energy dynamics, shareholder yield strategies may serve as a reliable anchor for portfolios navigating one of the most uncertain environments in recent years.
Our Shareholder Yield Screen makes it easy to identify high-potential stocks at any given time — just like the ones mentioned above.
Ready to uncover more transformative thematic investment ideas? Explore 37 cutting-edge investment themes with Zacks Thematic Screens and discover your next big opportunity.
4 Stocks With Strong Shareholders’ YieldEni stands out as a strong candidate for high shareholder yield due to its attractive dividend payments, consistent share buybacks and effective debt management. The company offers a good dividend yield of around 3.07%.
E has increased its dividend payout 10 times in the past five years, reflecting an annualized dividend growth rate of 7.9%. The payout ratio of 48% indicates that the company is paying less than its income, which is sustainable over the long term. This also reflects that Eni is keeping funds for better investment opportunities.
Eni has also repurchased shares worth EUR 1.9 billion in 2025. The company completed the 2025 buy-back program in February 2026. It also reduced its long-term debt from $28.06 billion (in 2021) to $22.79 billion (as of December 2025-end).
Eni’s shareholder yield remains impressive, making it a compelling choice for investors seeking a combination of income and capital appreciation while benefiting from disciplined capital allocation.
E currently sports a Zacks Rank #1 (Strong Buy) and a Zacks VGM Score of A, implying strong potential for continued uptrend. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shell is one of the leading oil supermajors — a group of U.S. and Europe-based energy multinationals with operations spanning nearly every corner of the globe — and can offer stability to investors’ portfolios through its strong shareholder yield. The company offers a moderate dividend yield of around 3.31%.
SHEL has increased its dividend payout eight times in the past five years, reflecting an annualized dividend growth rate of 13.8%. The payout ratio of 46% indicates that the company is paying less than its income, which is sustainable over the long term. This also reflects that SHEL is keeping funds for better investment opportunities. The company also repurchased shares worth $13.9 billion in 2025. It has also reduced its long-term debt from $80.87 billion in 2021 to $66.52 billion as of 2025-end.
Shell’s shareholder yield remains impressive, making it a compelling choice for investors seeking a combination of income and capital appreciation while benefiting from disciplined capital allocation.
SHEL currently flaunts a Zacks Rank of 1 and a Zacks VGM Score of B, implying strong upside potential.
Tim is one of leading mobile cellular service in Brazil, with potential to offer stability amid rising volatility through its attractive dividend payments, share buybacks and effective debt management. The company offers a moderate dividend yield of around 3.98%.
TIMB has increased its dividend payout 13 times in the past five years, reflecting an annualized dividend growth rate of 23.83%. The payout ratio of 88% indicates that the company is paying less than its income, which is sustainable over the long term. This also reflects that TIM is keeping funds for better investment opportunities.
The company repurchased 33.5 million shares in 2025. It has also reduced its long-term debt from $2.77 billion in 2022 to $2.49 billion as of 2025-end.
TIM’s shareholder yield remains impressive, making it a compelling choice for investors seeking a combination of income and capital appreciation while benefiting from disciplined capital allocation.
TIMB currently carries a Zacks Rank #2 (Buy) and a Zacks VGM Score of A, implying continued upside potential.
Yum China is another strong candidate for high shareholder yield due to its attractive dividend payments, share buybacks and effective debt management. The company offers a moderate dividend yield of around 2.35%.
YUMC has increased its dividend payout four times over the past five years, reflecting an annualized dividend growth rate of 20.44%. The payout ratio of 38% indicates that the company is paying less than its income, which is sustainable over the long term. This also reflects that SPG is keeping funds for better investment opportunities. YUMC has returned $353 million to shareholders through dividends and another $1.14 billion through share repurchases in 2025.
The company plans to repurchase shares worth of $460 million in the first half of 2026. The program is part of the broader plan to return $1.5 billion to shareholders through dividends and share repurchases in 2026.
In 2025, YUMC announced plans to return approximately $900 million annually to shareholders, increasing to over $1 billion in 2027 and 2028. The company had $51 million in long-term debt as of December 2025-end.
YUMC’s shareholder yield remains impressive, making it a compelling choice for investors seeking a combination of income and capital appreciation while benefiting from disciplined capital allocation.
YUMC currently carries a Zacks Rank of 2 and a Zacks VGM Score of C, implying moderate upside potential for the stock.
Wall Street expects a year-over-year increase in earnings on higher revenues when Yum China Holdings (YUMC - Free Report) reports results for the quarter ended March 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.
The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on April 29. On the other hand, if they miss, the stock may move lower.
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.
Zacks Consensus EstimateThis restaurant operator in China is expected to post quarterly earnings of $0.87 per share in its upcoming report, which represents a year-over-year change of +13%.
Revenues are expected to be $3.25 billion, up 8.9% from the year-ago quarter.
Estimate Revisions TrendThe consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.
Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.
Price, Consensus and EPS Surprise
Earnings WhisperEstimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core.
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.
Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.
A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.
Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).
How Have the Numbers Shaped Up for Yum China?For Yum China, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -1.43%.
On the other hand, the stock currently carries a Zacks Rank of #3.
So, this combination makes it difficult to conclusively predict that Yum China will beat the consensus EPS estimate.
Does Earnings Surprise History Hold Any Clue?Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.
For the last reported quarter, it was expected that Yum China would post earnings of $0.35 per share when it actually produced earnings of $0.40, delivering a surprise of +14.29%.
Over the last four quarters, the company has beaten consensus EPS estimates two times.
Bottom LineAn earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.
That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
Yum China doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Key Takeaways Yum China is set to report Q1 2026 results on April 29 with EPS seen up 13% and revenues rising 8.9%.YUMC growth likely driven by strong traffic, value pricing, store expansion and digital initiatives.Margins may benefit from cost controls and efficiency, but ESP of -1.43% signals uncertainty in beating odds. Yum China Holdings, Inc. (YUMC - Free Report) is scheduled to report first-quarter 2026 results on April 29. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 14.3%.
How Are Estimates Placed?The Zacks Consensus Estimate for the first quarter’s earnings per share is pegged at 87 cents, up 13% year over year. In the past 30 days, earnings estimates have witnessed a downward revision of 1.1%. For revenues, the consensus mark is pegged at $3.25 billion, indicating an increase of 8.9% from the prior-year quarter’s figure of $2.98 billion.
Key Factors to Consider Ahead of YUMC’s Q1 ResultsYum China’s top-line performance in first-quarter 2026 is likely to have been supported by sustained momentum in same-store sales and transaction growth, driven by its strong value positioning and traffic-focused strategy. The company has been targeting continued growth in transactions, backed by attractive pricing, promotional campaigns and a consistent emphasis on affordability, which resonates well in a value-conscious consumer environment. Additionally, steady improvements in consumer sentiment and robust trading during key periods like the Chinese New Year, supported by targeted offerings, festive bundles and signature products, are likely to have driven higher customer traffic and sales volumes.
Another key driver of top-line growth is Yum China’s aggressive store expansion and format innovation strategy. The company has been rapidly adding new stores, entering lower-tier cities and leveraging flexible formats such as WOW stores, Gemini models and side-by-side modules to broaden its reach. Menu innovation, including frequent product launches and a focus on hero items, continues to encourage repeat purchases and attract younger consumers. Meanwhile, digital initiatives like AI-powered ordering tools and strong growth in delivery channels, along with partnerships and marketing collaborations, are likely to have further enhanced customer engagement and boosted overall system sales.
For the to-be-reported quarter, our model predicts KFC revenues to be $2.4 billion, indicating growth of 7.1% year over year. Moreover, we expect Pizza Hut’s revenues to be $631.6 million, indicating a 6.1% increase from the year-ago period. Also, we anticipate same-store sales of the company to increase 1% compared with the prior-year quarter.
On the bottom-line front, profitability in the first quarter is likely to have benefited from operational efficiency gains and cost optimization initiatives. Improvements in supply-chain efficiency, better procurement and some residual benefits from commodity cost management are likely to have supported margins. In addition, sales leverage from higher volumes, streamlined store operations and resource-sharing models across brands might have aided cost control. The company’s increasing use of technology and automation, along with disciplined cost management across labor and occupancy expenses, is also expected to have contributed positively to earnings despite ongoing headwinds from higher delivery-related costs.
What the Zacks Model UnveilsOur proven model doesn’t conclusively predict an earnings beat for Yum China this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Yum China has an Earnings ESP of -1.43% and a Zacks Rank #3.
Stocks With the Favorable CombinationHere are some companies in the Zacks restaurants sector that, according to our model, have the right combination of elements to post an earnings beat in the quarter to be reported.
CAVA Group, Inc. (CAVA - Free Report) currently has an Earnings ESP of +9.78% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the to-be-reported quarter, CAVA’s earnings are expected to decline 22.7%. CAVA’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average surprise being 26.5%.
The Cheesecake Factory Incorporated (CAKE - Free Report) currently has an Earnings ESP of +1.20% and a Zacks Rank of 3.
In the to-be-reported quarter, Cheesecake Factory’s earnings are expected to register a 7.5% year-over-year rise. Cheesecake Factory’s earnings surpassed estimates in each of the trailing four quarters, with an average beat of 9.9%.
Chipotle Mexican Grill, Inc. (CMG - Free Report) has an Earnings ESP of +1.80% and a Zacks Rank of 3 at present.
In the to-be-reported quarter, Chipotle’s earnings are expected to register a 17.2% year-over-year decline. Chipotle’s earnings surpassed estimates in each of the trailing four quarters, with an average beat of 3.6%.
Delivered 10% Revenue Growth and 12% Operating Profit Growth with Record Quarterly Net New Store Openings
OP Margin Expanded Year Over Year for the Eighth Consecutive Quarter
Diluted EPS Up 13%, or 11% Excluding Mark-to-Market and F/X Impact
On Track to Return $1.5 Billion to Shareholders in 2026, Around 9% 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 first quarter ended March 31, 2026.
First Quarter Highlights
Total system sales grew 4% year over year ("YoY"), excluding foreign currency translation ("F/X"). Same-store sales reached 100% of the prior year's level. Same-store transactions grew 2% YoY, the 13th consecutive quarter of growth. Total revenues increased 10% YoY to $3.3 billion, or a 4% increase excluding F/X. Opened 636 net new stores, an all-time quarterly high and more than double the openings in the same quarter last year, with 39% opened by franchisees. Total store count reached 18,737 as of March 31, 2026. Operating profit grew 12% YoY to $447 million, a first-quarter record high. Core operating profit grew 6% YoY. OP margin was 13.7%, an increase of 30 basis points YoY, the 8th consecutive quarter of OP margin expansion. Restaurant margin was 18.2%, a decrease of 40 basis points YoY, primarily due to increased rider cost from a higher delivery mix, partially offset by streamlined operations. Diluted EPS increased 13% YoY to $0.87, or up 7% excluding F/X, and up 11% further excluding the impact1 of the mark-to-market equity investments. Returned $316 million to shareholders through $214 million in share repurchases and $102 million in cash dividends. Delivery sales grew 31% YoY. Delivery contributed approximately 54% of total Company sales, up from 42% 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 9% YoY increase. CEO Comments
Joey Wat, CEO of Yum China, commented, "We delivered solid results in a dynamic environment, and remain encouraged by early signs of improving consumer sentiment. The late timing of Chinese New Year and the extra April spring break affected gathering patterns and same-store sales growth in Q1. However, combined March and April trading has so far been in line with our expectations. In Q1, we accelerated store openings to a record level to capture significant market opportunities. At the same time, we drove system sales growth, operating profit growth and OP margin expansion for the eighth consecutive quarter, thanks to our teams' dedication."
Wat continued, "Importantly, same–store transactions increased for the 13th consecutive quarter for both Yum China and Pizza Hut. KFC achieved positive same–store sales growth for the fourth consecutive quarter and continued to capture new occasions through the rapid rollout of KCOFFEE cafe and KPRO side-by-side modules, and car-side pickup services. Pizza Hut delivered 18% operating profit growth on top of last year's 27% increase and further improved its restaurant and OP margins, while entering more than 100 new cities in Q1, with WOW as the key driver."
Wat concluded, "Looking ahead, we will fuel further growth through front-end segmentation and back-end consolidation. With our strong foundation, dual focus on innovation and operational efficiency, and a more rational delivery platform competition, we are confident in delivering our full-year targets and creating sustainable long–term value for our shareholders."
1 Refers to a 4 cents favorable F/X impact, an unfavorable impact from a mark-to-market loss of 3 cents in the first quarter of 2026 and a mark-to-market gain of 0.4 cent in the first quarter of 2025.
Key Financial Results
First Quarter
%/ppts Change
2026
2025
Reported
Ex F/X
System Sales Growth (2) (%)
4
2
NM
NM
Same-Store Sales Growth (2) (%)
Even
Even
NM
NM
Operating Profit ($mn)
447
399
+12
+6
Adjusted Operating Profit (3) ($mn)
447
399
+12
+6
Core Operating Profit (3) (4) ($mn)
423
399
NM
+6
OP Margin (5) (%)
13.7
13.4
+0.3
+0.2
Core OP Margin (3) (6) (%)
13.6
13.4
NM
+0.2
Net Income ($mn)
309
292
+6
Even
Adjusted Net Income (3) ($mn)
309
292
+6
Even
Diluted Earnings Per Common Share ($)
0.87
0.77
+13
+7
Adjusted Diluted Earnings Per Common Share (3) ($)
0.87
0.77
+13
+7
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 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 9% of our market capitalization as of April 28, 2026. In the first quarter of 2026, the Company returned $316 million in capital to shareholders through $214 million in share repurchases and $102 million in cash dividends. The Company repurchased 4.1 million shares of common stock during the quarter. The Board declared a cash dividend of $0.29 per share on Yum China's common stock, payable on June 17, 2026 to shareholders of record as of the close of business on May 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 $1 billion in 2028. KFC
First Quarter
%/ppts Change
2026
2025
Reported
Ex F/X
Restaurants
13,454
11,943
+13
NM
System Sales Growth (%)
5
3
NM
NM
Same-Store Sales Growth (%)
1
Even
NM
NM
Total Revenues ($mn)
2,453
2,246
+9
+4
Operating Profit ($mn)
417
386
+8
+3
Core Operating Profit ($mn)
396
386
NM
+3
OP Margin (%)
17.0
17.2
(0.2)
(0.2)
Restaurant Margin (%)
19.1
19.8
(0.7)
(0.7)
System sales for KFC grew 5% YoY. Same-store sales increased 1% YoY, the fourth consecutive quarter of growth. Same-store transactions also grew 1% YoY. Ticket average was 1% lower YoY, driven mainly by the rapid growth of smaller orders, partially offset by increased delivery mix, which carries a relatively higher ticket average. Delivery sales grew 33% YoY, contributing approximately 55% of KFC's Company sales, up from 43% in the same quarter last year. KFC opened 457 net new stores during the quarter, 55% higher than the openings in the same quarter last year, with 172 net new stores opened by franchisees, accounting for 38%. Total store count reached 13,454 as of March 31, 2026. Operating profit increased 8% YoY to $417 million. Core operating profit increased 3% YoY. OP margin was 17.0%, a decrease of 20 basis points YoY. Restaurant margin was 19.1%, a decrease of 70 basis points YoY, primarily due to the impact of increased rider cost resulting from higher delivery mix and value-for-money offerings, partially offset by streamlined operations and favorable commodity prices. Pizza Hut
First Quarter
%/ppts Change
2026
2025
Reported
Ex F/X
Restaurants
4,375
3,769
+16
NM
System Sales Growth (%)
4
2
NM
NM
Same-Store Sales Growth (%)
(1)
Even
NM
NM
Total Revenues ($mn)
635
595
+7
+2
Operating Profit ($mn)
71
60
+18
+12
Core Operating Profit ($mn)
67
60
NM
+12
OP Margin (%)
11.2
10.1
+1.1
+1.0
Restaurant Margin (%)
15.0
14.4
+0.6
+0.6
System sales for Pizza Hut grew 4% YoY. Same-store sales reached 99% of the prior year's level. Same-store transactions grew 5% YoY, the 13th consecutive quarter of growth. Ticket average was 5% lower YoY, consistent with our mass-market strategy and driven mainly by better value-for-money offerings. Delivery sales grew 25% YoY, contributing approximately 51% of Pizza Hut's Company sales, up from 42% in the same quarter last year. Pizza Hut opened 207 net new stores during the quarter, close to half of its full–year 2025 openings, with 105 net new stores opened by franchisees, accounting for 51%. Total store count reached 4,375 as of March 31, 2026. Operating profit grew 18% YoY to $71 million. Core operating profit increased 12% YoY. OP margin was 11.2%, an increase of 110 basis points YoY, the eighth consecutive quarter of OP margin expansion. Restaurant margin was 15.0%, expanding 60 basis points YoY despite a lower ticker average, primarily due to streamlined operations and automation and favorable commodity prices, partially offset by the impact of value-for-money offerings and increased cost associated with higher delivery sales mix. 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. 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 Wednesday, April 29, 2026 (7:00 p.m. Beijing/Hong Kong Time on Wednesday, April 29, 2026).
A live webcast of the call may be accessed at https://edge.media-server.com/mmc/p/hkitwxns.
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.
A replay of the webcast will be available two hours after the event and will remain accessible until April 28, 2027. Earnings release 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 and 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 18,000 restaurants under six brands across over 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 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
3/31/2026
3/31/2025
B/(W)
Revenues
Company sales
$ 3,047
$ 2,801
9
Franchise fees and income
30
27
12
Revenues from transactions with franchisees
156
121
28
Other revenues
38
32
18
Total revenues
3,271
2,981
10
Costs and Expenses, Net
Company restaurants
Food and paper
963
874
(10)
Payroll and employee benefits
813
719
(13)
Occupancy and other operating expenses
718
688
(4)
Company restaurant expenses
2,494
2,281
(9)
General and administrative expenses
137
138
—
Franchise expenses
12
11
(13)
Expenses for transactions with franchisees
150
117
(28)
Other operating costs and expenses
31
29
(10)
Closures and impairment expenses, net
—
6
NM
Total costs and expenses, net
2,824
2,582
(9)
Operating Profit
447
399
12
Interest income, net
16
26
(44)
Investment (loss) gain
(11)
3
NM
Income Before Income Taxes and
Equity in Net Earnings (Losses) from
Equity Method Investments
452
428
5
Income tax provision
(123)
(119)
(3)
Equity in net earnings (losses) from
equity method investments
2
4
(34)
Net income – including noncontrolling interests
331
313
6
Net income – noncontrolling interests
22
21
(4)
Net Income – Yum China Holdings, Inc.
$ 309
$ 292
6
Effective tax rate
27.2 %
27.8 %
0.6
ppts.
Basic Earnings Per Common Share
$ 0.88
$ 0.78
Weighted-average shares outstanding
(in millions)
353
376
Diluted Earnings Per Common Share
$ 0.87
$ 0.77
Weighted-average shares outstanding
(in millions)
354
378
OP margin
13.7 %
13.4 %
0.3
ppts.
Company sales
100.0 %
100.0 %
Food and paper
31.6
31.2
(0.4)
ppts.
Payroll and employee benefits
26.7
25.7
(1.0)
ppts.
Occupancy and other operating expenses
23.5
24.5
1.0
ppts.
Restaurant margin
18.2 %
18.6 %
(0.4)
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
3/31/2026
3/31/2025
B/(W)
Revenues
Company sales
$ 2,410
$ 2,208
9
Franchise fees and income
23
21
17
Revenues from transactions with franchisees
19
16
15
Other revenues
1
1
(2)
Total revenues
2,453
2,246
9
Costs and Expenses, Net
Company restaurants
Food and paper
746
685
(9)
Payroll and employee benefits
643
554
(16)
Occupancy and other operating expenses
560
532
(5)
Company restaurant expenses
1,949
1,771
(10)
General and administrative expenses
61
59
(4)
Franchise expenses
11
10
(14)
Expenses for transactions with franchisees
15
14
(5)
Other operating costs and expenses
—
1
61
Closures and impairment expenses, net
—
5
NM
Total costs and expenses, net
2,036
1,860
(9)
Operating Profit
$ 417
$ 386
8
OP margin
17.0 %
17.2 %
(0.2)
ppts.
Company sales
100.0 %
100.0 %
Food and paper
31.0
31.1
0.1
ppts.
Payroll and employee benefits
26.7
25.1
(1.6)
ppts.
Occupancy and other operating expenses
23.2
24.0
0.8
ppts.
Restaurant margin
19.1 %
19.8 %
(0.7)
ppts.
Percentages may not recompute due to rounding. NM refers to not meaningful.
Yum China Holdings, Inc.
Pizza Hut Operating Results
(in US$ million)
(unaudited)
Quarter Ended
% Change
3/31/2026
3/31/2025
B/(W)
Revenues
Company sales
$ 627
$ 584
7
Franchise fees and income
3
2
36
Revenues from transactions with franchisees
2
2
36
Other revenues
3
7
(62)
Total revenues
635
595
7
Costs and Expenses, Net
Company restaurants
Food and paper
213
186
(15)
Payroll and employee benefits
168
163
(3)
Occupancy and other operating expenses
152
151
(1)
Company restaurant expenses
533
500
(7)
General and administrative expenses
26
26
—
Franchise expenses
1
1
(31)
Expenses for transactions with franchisees
2
2
(15)
Other operating costs and expenses
2
6
64
Total costs and expenses, net
564
535
(5)
Operating Profit
$ 71
$ 60
18
OP margin
11.2 %
10.1 %
1.1
ppts.
Company sales
100.0 %
100.0 %
Food and paper
33.9
31.8
(2.1)
ppts.
Payroll and employee benefits
26.7
27.9
1.2
ppts.
Occupancy and other operating expenses
24.4
25.9
1.5
ppts.
Restaurant margin
15.0 %
14.4 %
0.6
ppts.
Percentages may not recompute due to rounding.
Yum China Holdings, Inc.
Condensed Consolidated Balance Sheets
(in US$ million)
3/31/2026
12/31/2025
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$ 473
$ 506
Short-term investments
956
878
Accounts receivable, net
103
95
Inventories, net
414
438
Prepaid expenses and other current assets
373
440
Total Current Assets
2,319
2,357
Property, plant and equipment, net
2,570
2,543
Operating lease right-of-use assets
2,175
2,189
Goodwill
1,990
1,963
Intangible assets, net
149
148
Long-term bank deposits and notes
707
678
Equity investments
398
387
Deferred income tax assets
160
156
Other assets
369
362
Total Assets
10,837
10,783
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
Current Liabilities
Accounts payable and other current liabilities
2,126
2,127
Short-term borrowings
20
30
Income taxes payable
158
89
Total Current Liabilities
2,304
2,246
Non-current operating lease liabilities
1,802
1,823
Non-current finance lease liabilities
50
51
Deferred income tax liabilities
412
406
Other liabilities
162
158
Total Liabilities
4,730
4,684
Redeemable Noncontrolling Interest
—
—
Equity
Common stock, $0.01 par value; 1,000 million shares authorized; 351 million shares
and 355 million shares issued at March 31, 2026 and December 31, 2025, respectively;
351 million shares and 354 million shares outstanding at March 31, 2026 and December 31,
2025, respectively.
4
4
Treasury stock
(13)
(28)
Additional paid-in capital
3,752
3,796
Retained earnings
1,788
1,764
Accumulated other comprehensive loss
(98)
(157)
Total Yum China Holdings, Inc. Stockholders' Equity
5,433
5,379
Noncontrolling interests
674
720
Total Equity
6,107
6,099
Total Liabilities, Redeemable Noncontrolling Interest and Equity
$ 10,837
$ 10,783
Yum China Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(in US$ million)
(unaudited)
Quarter Ended
3/31/2026
3/31/2025
Cash Flows – Operating Activities
Net income – including noncontrolling interests
$ 331
$ 313
Depreciation and amortization
117
109
Non-cash operating lease cost
106
99
Closures and impairment expenses
—
6
Investment loss (gain)
11
(3)
Equity in net (earnings) losses from equity method investments
(2)
(4)
Distributions of income received from equity method investments
3
4
Deferred income taxes
(3)
2
Share-based compensation expense
10
9
Changes in accounts receivable
(7)
(2)
Changes in inventories
30
78
Changes in prepaid expenses, other current assets and value-added tax assets
68
25
Changes in accounts payable and other current liabilities
(68)
(179)
Changes in income taxes payable
68
61
Changes in non-current operating lease liabilities
(102)
(101)
Other, net
(12)
35
Net Cash Provided by Operating Activities
550
452
Cash Flows – Investing Activities
Capital spending
(144)
(137)
Purchases of short-term investments, long-term bank deposits and notes
(1,867)
(1,838)
Maturities of short-term investments, long-term bank deposits and notes
1,777
1,916
Acquisition of equity investment
—
(14)
Other, net
1
1
Net Cash Used in Investing Activities
(233)
(72)
Cash Flows – Financing Activities
Proceeds from short-term borrowings
20
—
Repayment of short-term borrowings
(30)
—
Repurchase of shares of common stock
(218)
(173)
Cash dividends paid on common stock
(102)
(90)
Dividends paid to noncontrolling interests
(15)
(13)
Other, net
(8)
(4)
Net Cash Used in Financing Activities
(353)
(280)
Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash
3
2
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash
(33)
102
Cash, Cash Equivalents, and Restricted Cash - Beginning of Period
506
723
Cash, Cash Equivalents, and Restricted Cash - End of Period
$ 473
$ 825
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
3/31/2026
Company-owned
11,032
355
(70)
11,317
Franchisees
1,965
182
(10)
2,137
Total
12,997
537
(80)
13,454
Pizza Hut
12/31/2025
New Builds
Closures
3/31/2026
Company-owned
3,830
154
(52)
3,932
Franchisees
338
107
(2)
443
Total
4,168
261
(54)
4,375
Others
12/31/2025
New Builds
Closures
3/31/2026
Company-owned
198
12
(11)
199
Franchisees
738
33
(62)
709
Total
936
45
(73)
908
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
3/31/2026
3/31/2025
Reconciliation of Operating Profit to Adjusted Operating Profit
Operating Profit
$ 447
$ 399
Special Items, Operating Profit
—
—
Adjusted Operating Profit
$ 447
$ 399
Reconciliation of Net Income to Adjusted Net Income
Net Income – Yum China Holdings, Inc.
$ 309
$ 292
Special Items, Net Income –Yum China Holdings, Inc.
—
—
Adjusted Net Income – Yum China Holdings, Inc.
$ 309
$ 292
Reconciliation of EPS to Adjusted EPS
Basic Earnings Per Common Share
$ 0.88
$ 0.78
Special Items, Basic Earnings Per Common Share
—
—
Adjusted Basic Earnings Per Common Share
$ 0.88
$ 0.78
Diluted Earnings Per Common Share
$ 0.87
$ 0.77
Special Items, Diluted Earnings Per Common Share
—
—
Adjusted Diluted Earnings Per Common Share
$ 0.87
$ 0.77
Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate
Effective tax rate
27.2 %
27.8 %
Impact on effective tax rate as a result of Special Items
—
—
Adjusted effective tax rate
27.2 %
27.8 %
Net income, along with the reconciliation to Adjusted EBITDA, is presented below:
Quarter Ended
3/31/2026
3/31/2025
Net Income – Yum China Holdings, Inc.
$ 309
$ 292
Net income – noncontrolling interests
22
21
Equity in net (earnings) losses from equity method investments
(2)
(4)
Income tax provision
123
119
Interest income, net
(16)
(26)
Investment loss (gain)
11
(3)
Operating Profit
447
399
Special Items, Operating Profit
—
—
Adjusted Operating Profit
447
399
Depreciation and amortization
117
109
Store impairment charges
4
6
Adjusted EBITDA
$ 568
$ 514
Operating Profit, along with the reconciliation to Core Operating Profit, is presented below:
Quarter ended
% Change
3/31/2026
3/31/2025
B/(W)
Operating Profit
$ 447
$ 399
12
Special Items, Operating Profit
—
—
Adjusted Operating Profit
$ 447
$ 399
12
Items Affecting Comparability
—
—
F/X impact
(24)
—
Core Operating Profit
$ 423
$ 399
6
Total revenues
3,271
2,981
10
F/X impact
(159)
—
Total revenues, excluding the impact of F/X
$ 3,112
$ 2,981
4
Core OP margin
13.6 %
13.4 %
0.2
ppts.
Yum China Holdings, Inc.
Segment Results
(in US$ million)
(unaudited)
Quarter Ended 3/31/2026
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated(1)
Elimination
Total
Company sales
$ 2,410
$ 627
$ 10
$ —
$ —
$ 3,047
Franchise fees and income
23
3
4
—
—
30
Revenues from transactions with franchisees(2)
19
2
26
109
—
156
Other revenues
1
3
248
22
(236)
38
Total revenues
$ 2,453
$ 635
$ 288
$ 131
$ (236)
$ 3,271
Company restaurant expenses
1,949
533
13
—
(1)
2,494
General and administrative expenses
61
26
6
44
—
137
Franchise expenses
11
1
—
—
—
12
Expenses for transactions with franchisees(2)
15
2
25
108
—
150
Other operating costs and expenses
—
2
243
21
(235)
31
Total costs and expenses, net
2,036
564
287
173
(236)
2,824
Operating Profit (Loss)
$ 417
$ 71
$ 1
$ (42)
$ —
$ 447
Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:
Quarter Ended 3/31/2026
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated(1)
Elimination
Total
GAAP Operating Profit (Loss)
$ 417
$ 71
$ 1
$ (42)
$ —
$ 447
Less:
Franchise fees and income
23
3
4
—
—
30
Revenues from transactions with franchisees(2)
19
2
26
109
—
156
Other revenues
1
3
248
22
(236)
38
Add:
General and administrative expenses
61
26
6
44
—
137
Franchise expenses
11
1
—
—
—
12
Expenses for transactions with franchisees(2)
15
2
25
108
—
150
Other operating costs and expenses
—
2
243
21
(235)
31
Restaurant profit (loss)
$ 461
$ 94
$ (3)
$ —
$ 1
$ 553
Company sales
2,410
627
10
—
—
3,047
Restaurant margin
19.1 %
15.0 %
(14.9) %
N/A
N/A
18.2 %
Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:
Quarter Ended 3/31/2026
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated(1)
Elimination
Total
GAAP Operating Profit (Loss)
$ 417
$ 71
$ 1
$ (42)
$ —
$ 447
Special Items, Operating Profit
—
—
—
—
—
—
Adjusted Operating Profit (Loss)
$ 417
$ 71
$ 1
$ (42)
$ —
$ 447
Items Affecting Comparability
—
—
—
—
—
—
F/X impact
(21)
(4)
—
1
—
(24)
Core Operating Profit (Loss)
$ 396
$ 67
$ 1
$ (41)
$ —
$ 423
Quarter Ended 3/31/2025
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated(1)
Elimination
Total
Company sales
$ 2,208
$ 584
$ 9
$ —
$ —
$ 2,801
Franchise fees and income
21
2
4
—
—
27
Revenues from transactions with franchisees(2)
16
2
19
84
—
121
Other revenues
1
7
170
17
(163)
32
Total revenues
$ 2,246
$ 595
$ 202
$ 101
$ (163)
$ 2,981
Company restaurant expenses
1,771
500
11
—
(1)
2,281
General and administrative expenses
59
26
8
45
—
138
Franchise expenses
10
1
—
—
—
11
Expenses for transactions with franchisees(2)
14
2
17
84
—
117
Other operating costs and expenses
1
6
167
17
(162)
29
Closures and impairment expenses, net
5
—
1
—
—
6
Total costs and expenses, net
1,860
535
204
146
(163)
2,582
Operating Profit (Loss)
$ 386
$ 60
$ (2)
$ (45)
$ —
$ 399
Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:
Quarter Ended 3/31/2025
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated(1)
Elimination
Total
GAAP Operating Profit (Loss)
$ 386
$ 60
$ (2)
$ (45)
$ —
$ 399
Less:
Franchise fees and income
21
2
4
—
—
27
Revenues from transactions with franchisees(2)
16
2
19
84
—
121
Other revenues
1
7
170
17
(163)
32
Add:
General and administrative expenses
59
26
8
45
—
138
Franchise expenses
10
1
—
—
—
11
Expenses for transactions with franchisees(2)
14
2
17
84
—
117
Other operating costs and expenses
1
6
167
17
(162)
29
Closures and impairment expenses, net
5
—
1
—
—
6
Restaurant profit (loss)
$ 437
$ 84
$ (2)
$ —
$ 1
$ 520
Company sales
2,208
584
9
—
—
2,801
Restaurant margin
19.8 %
14.4 %
(20.9) %
N/A
N/A
18.6 %
Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:
Quarter Ended 3/31/2025
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated(1)
Elimination
Total
GAAP Operating Profit (Loss)
$ 386
$ 60
$ (2)
$ (45)
$ —
$ 399
Special Items, Operating Profit
—
—
—
—
—
—
Adjusted Operating Profit (Loss)
$ 386
$ 60
$ (2)
$ (45)
$ —
$ 399
Items Affecting Comparability
—
—
—
—
—
—
F/X impact
—
—
—
—
—
—
Core Operating Profit (Loss)
$ 386
$ 60
$ (2)
$ (45)
$ —
$ 399
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.
For the quarter ended March 2026, Yum China Holdings (YUMC - Free Report) reported revenue of $3.27 billion, up 9.7% over the same period last year. EPS came in at $0.87, compared to $0.77 in the year-ago quarter.
The reported revenue represents a surprise of +0.73% over the Zacks Consensus Estimate of $3.25 billion. With the consensus EPS estimate being $0.87, the EPS surprise was -0.29%.
While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.
Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance.
Here is how Yum China performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:
No of Restaurants - Total: 18,737 compared to the 18,487 average estimate based on four analysts.No of Restaurants - Others: 908 versus the four-analyst average estimate of 924.No of Restaurants - Pizza Hut: 4,375 versus 4,264 estimated by four analysts on average.No of Restaurants - KFC: 13,454 versus the four-analyst average estimate of 13,298.Revenues- Other revenues: $38 million compared to the $34.17 million average estimate based on four analysts. The reported number represents a change of +18.8% year over year.Revenues- Revenues from transactions with franchisees: $156 million compared to the $143.38 million average estimate based on four analysts. The reported number represents a change of +28.9% year over year.Revenues- Franchise fees and income: $30 million versus the four-analyst average estimate of $30.97 million. The reported number represents a year-over-year change of +11.1%.Revenues- Company sales: $3.05 billion versus the four-analyst average estimate of $3.04 billion. The reported number represents a year-over-year change of +8.8%.Revenues- KFC- Other revenues: $1 million versus $2.52 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a 0% change.Revenues- Pizza Hut- Company sales: $627 million compared to the $629.4 million average estimate based on three analysts. The reported number represents a change of +7.4% year over year.Revenues- Pizza Hut- Franchise fees and income: $3 million compared to the $2.82 million average estimate based on three analysts. The reported number represents a change of +50% year over year.Revenues- Pizza Hut- Revenues from transactions with franchisees: $2 million versus the three-analyst average estimate of $1.91 million. The reported number represents a year-over-year change of 0%.View all Key Company Metrics for Yum China here>>>
Shares of Yum China have returned -3% over the past month versus the Zacks S&P 500 composite's +12.2% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.
Growth in delivery, loyal customer base expansion and continued store development reinforced confidence in the company's long-term strategy.
• Yum Brands stock is building positive momentum. Why is YUM stock advancing?
Quarterly MetricsThe company reported first-quarter adjusted earnings per share of 87 cents, beating the analyst consensus estimate of 86 cents. Quarterly sales of $3.271 billion (plus 10% year over year) outpaced the Street view of $3.235 billion.
Total system sales grew 4% year over year, excluding foreign currency translation.
“The late timing of Chinese New Year and the extra April spring break affected gathering patterns and same-store sales growth in Q1,” said CEO Joey Wat.
Same-store transactions grew 2% year over year, the 13th consecutive quarter of growth.
Core operating profit grew 6% year over year. Operating margin was 13.7%, an increase of 30 basis points year over year.
Restaurant margin came in at 18.2%, declining 40 basis points year over year. The decrease was driven by higher rider costs from increased delivery mix, partly offset by operational efficiencies.
Delivery sales increased 31% year over year, accounting for about 54% of total company sales, up from 42% a year earlier. Active members of KFC or Pizza Hut surpassed 270 million, marking a 9% increase from the prior year.
As of March 31, the company had cash and equivalents worth $473 million.
DividendThe board declared a cash dividend of 29 cents per share on Yum China’s common stock, payable on June 17, 2026, to shareholders of record as of the close of business on May 27, 2026.
OutlookYum China expects to surpass 20,000 total stores in 2026, with more than 1,900 net new openings. The company aims for a 40%–50% franchise mix for new KFC and Pizza Hut locations.
Capital expenditures are projected to range between $600 million and $700 million. Yum China also plans to return approximately $1.5 billion to shareholders.
YUMC Price Action: Yum China shares are trading higher by 1.95% to $48.29 at publication on Wednesday.
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On April 29, 2026, Mondrian Investment Partners LTD disclosed in a Securities and Exchange Commission filing that it sold shares of Yum China (YUMC +2.04%).
What happenedAccording to a filing with the Securities and Exchange Commission dated April 29, 2026, Mondrian Investment Partners LTD reduced its stake in Yum China (YUMC +2.04%) by 5,496,699 shares. The estimated value of the transaction is $284.58 million, based on the mean unadjusted closing price for the first quarter. At quarter end, the fund held 2,357,499 shares valued at $908.58 million, down from its previous holding.
What else to knowThis was a sell, leaving Yum China at 13.6% of Mondrian's reportable U.S. equity AUM after the trade.Top five holdings post-filing:NYSE: YUMC: $908.58 million (14% of AUM)NYSE: GSK: $275.25 million (4.1% of AUM)NYSE: LYG: $260.90 million (3.9% of AUM)NYSE: SAN: $251.91 million (3.8% of AUM)NYSE: SONY: $251.49 million (3.8% of AUM)As of April 28, 2026, shares were priced at $47.34, up 1.5% over the past year, lagging the S&P 500 by 27.6 percentage points.Company overviewMetricValueRevenue (TTM)$11.29 billionNet income (TTM)$946.00 millionDividend yield2.09%Price (as of market close April 28, 2026)$47.34Company snapshotOffers quick-service and casual dining through brands including KFC, Pizza Hut, Taco Bell, Little Sheep, Lavazza, and others, focusing on chicken, pizza, hot pot, coffee, and ready meals.Generates revenue primarily from company-operated and franchised restaurants, as well as e-commerce sales via the V-Gold Mall platform.Targets mass-market consumers across China, operating over 12,000 restaurants in approximately 1,700 cities.The company leverages a multi-brand portfolio and scalable platform to capture consumer demand across diverse food categories in China.
What this transaction means for investorsMondrian’s sale of most of its Yum China holdings may create more questions than answers for investors.
Indeed, the company likely saw an opportunity in taking Yum’s restaurant brands into China, a market with over 1.4 billion people. Interestingly, it also held Yum China shares purchased in both New York and Hong Kong, with the recent sale unloading all shares in the U.S. and some in Hong Kong.
As previously mentioned, it unloaded the majority of its Yum China stake in the first quarter of 2026. However, despite that sale, it remains its largest holding at around 14% of Mondrian’s portfolio.
The stock had traded in a range, and that could indicate some possible frustration with the stock. The stock’s price also spiked to a peak of more than $58 per share in Q1 before retreating, so it is possible Mondrian used that as a selling opportunity.
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Nonetheless, even with the sale, Yum Brands is almost 14% of Mondrian’s portfolio, making it the only holding to make up a double-digit percentage of the portfolio. That percentage may indicate that the fund still has faith in Yum China’s growth despite this massive share sale.
Will Healy has no position in any of the stocks mentioned. The Motley Fool recommends GSK and Lloyds Banking Group Plc and recommends the following options: long January 2027 $47.50 calls on Yum China and short January 2027 $52.50 calls on Yum China. The Motley Fool has a disclosure policy.
I maintain a 'Buy' rating for Yum China based on my evaluation of its recent financial and operational disclosures. YUMC delivered a record Q1 2026 operating income of $447M, with its top-line and bottom-line also surpassing consensus expectations. The company is moving ahead of its 2025 Investor Day aims. Pizza Hut's Q1 margins have already exceeded the 2028 target, while KCOFFEE's 5,000-unit goal was pulled forward.
Investors with an interest in Retail - Restaurants stocks have likely encountered both Yum China Holdings (YUMC - Free Report) and Dutch Bros (BROS - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Yum China Holdings and Dutch Bros are both sporting a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
YUMC currently has a forward P/E ratio of 16.71, while BROS has a forward P/E of 60.81. We also note that YUMC has a PEG ratio of 1.38. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. BROS currently has a PEG ratio of 1.42.
Another notable valuation metric for YUMC is its P/B ratio of 2.89. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, BROS has a P/B of 10.14.
These are just a few of the metrics contributing to YUMC's Value grade of B and BROS's Value grade of F.
Both YUMC and BROS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that YUMC is the superior value option right now.
What happenedAccording to its SEC filing dated May 4, 2026, Matthews International Capital Management LLC purchased 242,785 additional shares of Yum China (YUMC +2.04%) in the first quarter.
The estimated value of this activity is $12.57 million, calculated using the average unadjusted closing price for the quarter. The fund’s position in Yum China was valued at $27.07 million at quarter-end, a $12.17 million increase from the previous filing, reflecting both trading and price movement.
What else to knowThe fund increased its Yum China position, which now represents 10.98% of its 13F reportable AUM.Top five holdings after the filing:NASDAQ:YUMC: $27.07 million (11.0% of AUM)NYSE:TSM: $21.12 million (8.6% of AUM)NASDAQ:PDD: $20.33 million (8.3% of AUM)NASDAQ:LEGN: $16.75 million (6.8% of AUM)NYSE:CYD: $12.48 million (5.1% of AUM)As of May 1, 2026, Yum China shares were priced at $48.80, up 15.1% over the past year, underperforming the S&P 500 by 14.0 percentage points.Company OverviewMetricValuePrice (as of market close 2026-05-01)$48.80Market Capitalization$16.91 billionRevenue (TTM)$11.80 billionNet Income (TTM)$929.00 millionCompany SnapshotYum China operates and franchises quick-service and casual dining restaurants in China under brands including KFC, Pizza Hut, Taco Bell, Little Sheep, Lavazza, and COFFii & JOY, offering chicken, pizza, hot pot, coffee, and other menu categories.It generates revenue primarily from company-operated restaurants, franchise fees, and sales from its V-Gold Mall e-commerce platform, leveraging a multi-brand portfolio and digital ordering channels.The company targets mass-market consumers across approximately 1,700 cities in China, serving a broad demographic through dine-in, delivery, and takeaway channels.Yum China has over 12,000 locations and a workforce of approximately 140,000 employees.
What this transaction means for investorsThe first quarter purchase of Yum China shares by Matthews International Capital Management is a noteworthy event because the San Francisco-based investment firm substantially increased its stake in the restaurant company. Yum China is now the top holding.
Matthews focuses on Asian and emerging markets, so its interest in Yum China aligns with its investment strategy. Depending on when the firm bought the shares in Q1, it may have enjoyed significant gains, as the stock soared to a 52-week high of $58.39 on Feb. 6.
Yum China is doing well. It posted Q1 revenue growth of 10% year over year to $3.3 billion. It opened 636 new stores in Q1, helping to boost sales.
The company pays a good dividend, yielding 2.4% as of May 4. This makes it a compelling stock for income-focused investors. Yum China’s share price valuation, as measured by the price-to-earnings ratio, is down from a year ago, suggesting now may not be a bad time to buy.
Robert Izquierdo has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool recommends Legend Biotech and recommends the following options: long January 2027 $47.50 calls on Yum China and short January 2027 $52.50 calls on Yum China. The Motley Fool has a disclosure policy.
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Stock to Watch: Yum China Holdings (YUMC - Free Report) Yum China Holdings, Inc., incorporated in Delaware on Apr 1, 2016, became an independent and publicly-traded company; post its spin-off from Yum! Brands, Inc. on Oct 31, 2016. Yum China’s U.S. operations are based in Texas. The company operates both company-owned and franchised restaurants.
YUMC is a #3 (Hold) on the Zacks Rank, with a VGM Score of B.
It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 15.92; value investors should take notice.
Two analysts revised their earnings estimate higher in the last 60 days for fiscal 2026, while the Zacks Consensus Estimate has increased $0.01 to $2.95 per share. YUMC also boasts an average earnings surprise of +4%.
With a solid Zacks Rank and top-tier Value and VGM Style Scores, YUMC should be on investors' short list.
, /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) announced that it has entered into share repurchase agreements in the U.S. and Hong Kong for an aggregate repurchase amount of approximately US$512 million for the second half of 2026, commencing on July 1, 2026.
The share repurchase agreements include approximately US$384 million under the Rule 10b5-1 of the United States Securities Exchange Act of 1934 in the U.S. and approximately HK$1 billion for a similar program in Hong Kong. These agreements are in addition to the share repurchase agreements for the first half of 2026. We remain on track to return US$1.5 billion to shareholders in 2026, including approximately US$400 million in dividends and US$1.1 billion in share repurchases, through a mix of systematic and discretionary buybacks.
"Our target to return US$1.5 billion in capital to shareholders in 2026 represents approximately 9% of our current market capitalization[1]. Supported by our healthy balance sheet and strong cash generation, we remain dual-focused on driving business growth and delivering solid capital returns to shareholders," said Joey Wat, CEO of Yum China.
Beginning in 2027, Yum China intends 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 US$900 million to over US$1 billion in 2027 and 2028, and to exceed US$1 billion in 2028.
Since 2017, Yum China has returned US$6.4 billion to shareholders through dividends and share repurchases.
1. Market capitalization as of May 11, 2026
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 our projected capital returns from 2025 and 2026. 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, capital allocation strategy, capital return plans (including dividend and share repurchase plans). 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. Our plan of capital returns to shareholders (including dividend and share repurchase plans) 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 captions "Risk Factor" 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 over 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 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/.
, /PRNewswire/ -- Yum China Holdings, Inc. (NYSE: YUMC and HKEX: 9987, "Yum China" or the "Company") today announced that the Company has continued to be included in the Dow Jones Best-in-Class World Index (DJBIC World, formerly DJSI World) and the Dow Jones Best-in-Class Emerging Markets Index (DJBIC Emerging Markets, formerly DJSI Emerging Markets) for the sixth consecutive year. Notably, Yum China is the only consumer services company from mainland China to be included in the DJBIC World Index. This achievement underscores the Company's long-standing commitment and leading practices in environmental, social, and governance (ESG).
The Company's inclusion in the DJBIC indices is driven by its strong performance in the S&P Global Corporate Sustainability Assessment (CSA). Yum China achieved a record-high score of 81 in the 2025 S&P Global CSA, ranking first globally in the Restaurants & Leisure Facilities industry for the sixth consecutive year, and was also named to the S&P Global Sustainability Yearbook. Of the 25 CSA evaluation criteria, Yum China ranked in the top 1% in 13 criteria, and achieved the highest score in the industry in 8 criteria, including Sustainable Raw Materials, Labor Practices, Customer Relations, and Privacy Protection, among others.
Furthermore, Yum China's outstanding sustainability performance continues to be recognized by other leading ESG agencies. In March 2026, the Company maintained its AA MSCI ESG Rating for the fifth consecutive year, highlighting its continued leadership within the restaurant industry.
Together, these recognitions reflect Yum China's long-term commitment and continued dedication to sustainability. As Yum China looks ahead, its focus is clear: to grow with purpose, lead with responsibility and create long-term value across its ecosystem. Whether it is safeguarding food safety, empowering its employees, or driving decarbonization across the value chain, the Company strives to strengthen the connection between sustainable development and business performance. This alignment has been and will continue to be a core competitive advantage for Yum China. The Company is confident in its ability to deliver meaningful and lasting impact for its stakeholders and for society.
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," "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 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. 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 18,000 restaurants under six brands across over 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 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.
, /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) announced that KFC's light-meal concept, KPRO, has surpassed 300 locations in China and is on track to reach 600 locations by year–end, up from just over 200 in 2025.
KPRO has surpassed 300 locations in China and is on track to reach 600 locations by year‑end. In addition to its signature multigrain energy bowls and superfood yogurt smoothies, KPRO is introducing two new high-protein product categories: Energy PRO sandwiches and high-protein yogurt smoothies. The whole-wheat chia-seed sandwiches feature roasted chicken breast or tuna and egg, along with five types of fresh vegetables, offering balanced nutrition. The high-protein yogurt smoothies, set to launch in July, come in a range of new flavors.
KPRO targets the fast-growing demand for light meals at affordable price. With its Chinese name conveying the idea of self-discipline, KPRO offers delicious, hearty meals tailored to Chinese consumer preferences using a variety of ingredients for balanced nutrition while limiting the use of sugar and salt. The menu also features calorie labels to help consumers make more informed choices.
Opened as a side–by–side module within KFC stores, KPRO leverages KFC's in–store resources and requires lower investment and operating costs than a standalone format. This business model effectively cross–sells KFC members and customers, driving incremental sales and profit for the parent KFC stores.
Supported by Yum China's world–class supply chain management system and rigorous quality controls, KPRO upholds high food safety standards that differentiate it from the competition. These include using eggs safe for raw consumption, thoroughly cleaning produce, strictly separating raw and cooked foods, and closely monitoring ingredient conditions to ensure freshness. Combined with its innovative menu offerings and strong value for money, KPRO has generated strong consumer interest.
In April, Yum China raised its 2026 expansion target for KPRO from 400 locations to 600, focusing on tier–1, tier–2 and select tier–3 cities, particularly in eastern and southern China where the demand for light meals is stronger.
KPRO is just one of Yum China's many growth initiatives. The Company remains committed to driving innovation and operational efficiency to broaden its addressable market and meet the diverse needs of consumers.
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 our projected capital returns from 2025 and 2026. 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, capital allocation strategy, capital return plans (including dividend and share repurchase plans). 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. Our plan of capital returns to shareholders (including dividend and share repurchase plans) 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 captions "Risk Factor" 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 over 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 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/.
It has been about a month since the last earnings report for Yum China Holdings (YUMC - Free Report) . Shares have lost about 11.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Yum China due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Yum China Q1 Earnings Revenues Meet Estimates, Both Up Y/YYum China reported first-quarter 2026 results, with earnings meeting and revenues surpassing the Zacks Consensus Estimate. On a year-over-year basis, both top and bottom lines increased.
First-quarter results were supported by solid performance at both KFC and Pizza Hut, backed by growth in system sales and same-store transactions. Strong delivery momentum, rapid store expansion and operational efficiencies also aided performance during the quarter.
YUMC’s Q1 Earnings & Revenue DiscussionYum China reported adjusted earnings per share of 87 cents, in line with the Zacks Consensus Estimate. The bottom line increased 13% year over year.
Total revenues of $3.27 billion topped the consensus mark of $3.25 billion by 0.7% and rose 10% from the prior-year quarter.
System sales, excluding foreign currency impacts, increased 4% year over year. Same-store sales matched the prior-year level, while same-store transactions rose 2%, marking the 13th consecutive quarter of growth. Delivery sales jumped 31% year over year and accounted for nearly 54% of total company sales.
Operating Highlights of YUMCTotal costs and expenses increased 9% year over year to $2.82 billion. Restaurant margin declined 40 basis points year over year to 18.2%, mainly due to higher rider costs associated with increased delivery mix, partly offset by streamlined operations.
Operating profit rose 12% year over year to a first-quarter record of $447 million. Operating margin expanded 30 basis points year over year to 13.7%, marking the eighth consecutive quarter of expansion.
Adjusted EBITDA increased to $568 million from $514 million reported in the prior-year quarter.
Yum China also continued to expand aggressively during the quarter. The company opened 636 net new stores, more than double the prior-year level and an all-time quarterly high. Total store count reached 18,737 units as of March 31, 2026.
KFC Performance Aids Yum China ResultsKFC’s revenues increased 9% year over year to $2.45 billion. System sales grew 5%, while same-store sales rose 1%, marking the fourth consecutive quarter of growth.
Delivery sales at KFC climbed 33% year over year and contributed approximately 55% of segment sales, up from 43% in the year-ago quarter.
KFC opened 457 net new stores during the quarter, with franchisees accounting for 38% of openings. Total restaurant count reached 13,454 units.
Operating profit for the segment rose 8% year over year to $417 million. However, operating margin contracted 20 basis points year over year to 17%, while restaurant margin declined 70 basis points to 19.1%, owing to higher delivery-related costs and value-focused offerings.
Pizza Hut Supports YUMC Growth MomentumPizza Hut revenues increased 7% year over year to $635 million. System sales advanced 4%, while same-store transactions grew 5%, marking the 13th straight quarter of transaction growth.
Delivery sales rose 25% year over year and represented approximately 51% of Pizza Hut’s company sales compared with 42% in the prior-year quarter.
The segment opened 207 net new stores during the quarter, with franchisees contributing 51% of the additions. Total Pizza Hut store count reached 4,375 units.
Operating profit surged 18% year over year to $71 million. Operating margin expanded 110 basis points to 11.2%, while restaurant margin improved 60 basis points to 15%, supported by operational efficiencies, automation initiatives and favorable commodity prices.
Yum China’s Balance Sheet & Shareholder ReturnsAs of March 31, 2026, Yum China had cash and cash equivalents of $473 million compared with $506 million at 2025-end. Short-term investments totaled $956 million, while long-term bank deposits and notes were $707 million.
Net cash provided by operating activities increased to $550 million from $452 million reported in the prior-year quarter.
During the quarter, the company returned $316 million to its shareholders through $214 million in share repurchases and $102 million in dividends. Yum China repurchased 4.1 million shares during the period.
The board also declared a quarterly cash dividend of 29 cents per share, payable on June 17, 2026, to shareholders of record as of May 27.
YUMC Reaffirms 2026 OutlookFor 2026, Yum China continues to expect total store count to exceed 20,000 units, with more than 1,900 net new store openings planned.
The company maintained its expectation for capital expenditures between $600 million and $700 million. Yum China also reiterated plans to return $1.5 billion to shareholders in 2026.
Additionally, management highlighted that franchisees are expected to account for 40-50% of net new store openings at both KFC and Pizza Hut, reflecting the company’s ongoing focus on scalable expansion and efficiency.
How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a downward trend in estimates revision.
VGM ScoresAt this time, Yum China has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock has a score of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Yum China has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Stock to Watch: Yum China Holdings (YUMC - Free Report) Yum China Holdings, Inc., incorporated in Delaware on Apr 1, 2016, became an independent and publicly-traded company; post its spin-off from Yum! Brands, Inc. on Oct 31, 2016. Yum China’s U.S. operations are based in Texas. The company operates both company-owned and franchised restaurants.
YUMC is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.
It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 14.73; value investors should take notice.
For fiscal 2026, two analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.01 to $2.95 per share. YUMC boasts an average earnings surprise of +4%.
With a solid Zacks Rank and top-tier Value and VGM Style Scores, YUMC should be on investors' short list.
