Yum China Reports Second Quarter 2025 Results

• Total system sales grew 4% year over year ("YoY"), excluding foreign currency translation ("F/X"). The growth sequentially improved from the first quarter and was primarily attributable to 4% of net new unit contribution and 1% same-store sales growth.
• Same-store sales growth turned positive at 1%. Same-store transactions grew 2% YoY, the tenth consecutive quarter of growth.
• Total revenues increased 4% YoY to $2.8 billion, also a 4% increase excluding F/X.
• The Company opened 336 net new stores in the quarter, with 89 net new stores opened by franchisees, accounting for 26%.
• Total store count reached 16,978 as of June 30, 2025, including 12,238 KFC stores and 3,864 Pizza Hut stores.
• Operating profit grew 14% YoY to $304 million, a second-quarter record high. Core operating profit grew 14% YoY.
• OP margin was 10.9%, an increase of 100 basis points YoY and also record high for the second quarter, supported by restaurant margin expansion and G&A savings.
• Restaurant margin was 16.1%, an increase of 60 basis points YoY, driven primarily by savings in Food and Paper cost and Occupancy and Other Operating expenses.
• Diluted EPS increased 5% YoY to $0.58, another second-quarter record-high, also a 5% increase excluding F/X. Excluding the negative impact of $0.04 from the mark-to-market equity investments in the 2025 and 2024 second quarters and F/X, Diluted EPS increased 15% YoY.
• Returned $274 million to shareholders in the second quarter through $184 million in share repurchases and $90 million in cash dividends.
• Delivery sales grew 22% YoY. Delivery contributed approximately 45% of total Company sales.
• Digital sales reached $2.4 billion, with digital ordering accounting for approximately 94% of total Company sales.
• Total membership of KFC and Pizza Hut was approximately 560 million, up 13% versus the prior year. Member sales accounted for approximately 64% of KFC and Pizza Hut's system sales in aggregate.

CEO Comments 

Joey Wat, CEO of Yum China, commented, "I am pleased to announce that we achieved solid results in the second quarter. We turned same-store sales growth positive while expanding our store portfolio to nearly 17,000 locations. We delivered double-digit growth in operating profit and substantially expanded our margins. KFC stayed resilient and Pizza Hut sustained its momentum. Our dual focus on innovation and operational efficiency enabled us to deliver compelling value and experiences to our customers. We sparked cravings with innovative and great-tasting food, including the Crazy Spicy Zinger at KFC and the upgraded hand-crafted thin-crust pizza at Pizza Hut. In addition to great value for money, our meal sets with IP-themed toys brought emotional value to our customers and helped us set a new 2025 daily sales record on Children's Day."

Wat continued, "We are always exploring ways to broaden our addressable market. KFC has expanded KCOFFEE cafes to over 1,300 locations, leveraging KFC's store space, various in-store resources and membership. Pizza Hut's new menu has widened our price ranges, reaching previously underserved customer segments and contributing to double-digit same-store transactions growth for the quarter. At the same time, we are reinforcing our strategic moat via our membership programs and Super Apps, and enhancing the in-store experience, while capturing additional traffic on delivery platforms. We are also fortifying our end-to-end digitalization to streamline operations and elevate our customer experience. With the strength of our brands and our strategies, we are confident in delivering sustainable, long-term value for our shareholders."

Key Financial Results

Capital Returns to Shareholders

• The Company is on track to return a total of $3 billion to shareholders in 2025 through 2026, in addition to the $1.5 billion delivered to shareholders in 2024. The average annual amount of capital return over the three years is around 9% of our market capitalization as of August 4, 2025.
• In the first half of 2025, the Company returned $536 million in capital to shareholders through $356 million in share repurchases and $180 million in cash dividends. Including the previously announced $510 million share repurchase agreements for the second half of 2025 and assuming a quarterly dividend of $0.24 per share, the Company expects the total return of capital for 2025 to be at least $1.2 billion.  
• As of June 30, 2025, approximately $936 million remained available for future share repurchases under the current authorization program.
• The Board declared a cash dividend of $0.24 per share on Yum China's common stock, payable on September 23, 2025 to shareholders of record as of the close of business on September 2, 2025.

KFC

• System sales for KFC grew 5% YoY. Same-store sales increased 1% YoY, with flat same-store transactions. Ticket average was 1% higher YoY, driven mainly by increased delivery mix.
• Delivery sales grew 25% YoY, contributing approximately 45% of KFC's Company sales.
• KFC opened 295 net new stores during the quarter, with 119 net new stores opened by franchisees, accounting for 40%. Total store count reached 12,238 as of June 30, 2025.
• Operating profit grew 11% YoY to $292 million, a record level for the second quarter. Core operating profit increased 10% YoY.
• OP margin was 14.0%, an increase of 90 basis points YoY.
• Restaurant margin was 16.9%, expanding 70 basis points YoY, primarily due to favorable commodity prices and streamlined operations, partially offset by the impact of higher rider cost due to the increased delivery mix, increased value-for-money offerings and wage inflation.

Pizza Hut

• System sales for Pizza Hut grew 3% YoY. Same-store sales increased 2% YoY. Same-store transactions grew 17% YoY, the tenth consecutive quarter of growth. Ticket average was 13% lower YoY, consistent with our strategy and driven mainly by better value-for-money.
• Pizza Hut opened 95 net new stores during the quarter, with 21 net new stores opened by franchisees, accounting for 22%. Total store count reached 3,864 as of June 30, 2025.
• Delivery sales grew 15% YoY, contributing approximately 43% of Pizza Hut's Company sales.
• Operating profit grew 16% to $46 million, a record level for the second quarter. Core operating profit increased 15% YoY.
• OP margin was 8.3%, an increase of 90 basis points YoY and a record level for the second quarter.
• Restaurant margin was 13.3%, expanding 10 basis points YoY, primarily due to favorable commodity prices, streamlined operations and automation, partially offset by the impact of increased value-for-money offerings, increased cost associated with higher delivery sales mix and wage inflation.

Outlook

• The Company targets:

• • Approximately 1,600 to 1,800 net new stores in 2025.
  • The franchise mix of net new stores to reach 40-50% for KFC and 20-30% for Pizza Hut in 2025, ahead of schedule and to moderately increase the mix within the guided range over the next few years.
  • Capital expenditures in the range of approximately $600 million to $700 million for the 2025 fiscal year, revised down from the initial target of $700 million to $800 million, mainly due to lower capital expenditures per store.

• The Company plans to return $3 billion to shareholders in 2025 through 2026, adding to the $1.5 billion it delivered to shareholders in 2024.

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 Tuesday, August 5, 2025 (7:00 p.m. Beijing/Hong Kong Time on Tuesday, August 5, 2025).  

A live webcast of the call may be accessed at https://edge.media-server.com/mmc/p/kij3u6kb.

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

Pre-registration Link: https://register-conf.media-server.com/register/BIb7706c47c6cf42db8f213a8ac7f0329c

A replay of the webcast will be available two hours after the event and will remain accessible until August 4, 2026. Additionally, 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 relating to our projected capital return for 2025 and those set forth under the section titled "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, franchise mix of net new stores, capital expenditures, dividend and share repurchase plans, CAGR for system sales, operating profit and EPS, earnings, performance and returns of Yum China, anticipated effects of population and macroeconomic trends, pace of recovery of Yum China's business, 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, changes in political, economic and regulatory conditions in China, as well as changes in political, business, economic and trade relations between the U.S. and China, and those set forth under the caption "Risk Factors" in our 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 16,000 restaurants under six brands across over 2,400 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 
        IR@YumChina.com   

Media Contact:
        Tel: +86 21 2407 8288 / +852 2267 5807 
        Media@YumChina.com