Yum China Reports Second Quarter 2026 Results
Revenue Increased by 13%; Operating Profit Up 14%; Diluted EPS Grew 21%
Same-Store Sales Growth Improved Sequentially to 1%; OP Margin Expanded Year Over Year for the 9 th Consecutive Quarter
Acquisition of the Pizza Hut Brand in Mainland China Expected to Close in August 2026
On Track to Return $1.5 Billion to Shareholders in 2026, ~10% of Current Market Capitalization
SHANGHAI, July 30, 2026 /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) today reported unaudited results for the second quarter ended June 30, 2026.
Second Quarter Highlights
CEO Comments
Joey Wat, CEO of Yum China, commented, "We delivered strong results in the second quarter. For the ninth consecutive quarter, we simultaneously grew system sales, operating profit and OP margin. While the operating environment remains dynamic, our topline growth continued to outperform the industry in Q2. Same-store sales growth improved sequentially to 1%, led by the 14 th consecutive quarter of same-store transaction growth, while store openings continued to accelerate year over year across both company-owned and franchise stores. KFC delivered strong results, with 7% system sales growth and restaurant margin expansion. Pizza Hut's same-store sales returned to positive growth and net new openings nearly doubled from last year."
Wat continued, "Our menu innovations and breakthrough side-by-side modules are helping us broaden into new occasions and new customer segments. As we rapidly roll out KCOFFEE cafe, KPRO and car-side pickup services to more KFC locations, Pizza Hut has also built a Pizza Hut Burger Bar to drive incremental sales and profit. At the same time, our KFC Small Town and Pizza Hut WOW models are helping us deepen penetration in lower-tier cities. With our multiple growth drivers, we are confident in our ability to lead the catering industry and deliver on our full-year growth targets, even as we face tougher comparisons in the second half of the year following last year's delivery platform subsidies."
Wat concluded, "We are about to reach a major breakthrough by becoming the owner of the Pizza Hut brand in Mainland China, after operating the brand in the market for 36 years. In the near term, we expect the savings in license fees to support margin expansion, with Pizza Hut's restaurant margin approaching KFC's. More potential new stores are expected to meet our payback requirements of two to three years. Over the longer term, brand ownership will give us greater strategic flexibility to capture new opportunities and innovate more nimbly across our menu, store formats, new business modules and operations. We expect this to accelerate Pizza Hut's growth trajectory and generate sustainable long-term value for our shareholders."
(1) Refers to a 4 cents favorable F/X impact, and a lower mark-to-market loss of 2 cents in the second quarter of 2026, compared with a loss of 4 cents in the second quarter of 2025.
Key Financial Results
Second Quarter
First Half (Year to Date Ended 6/30)
%/ppts Change
%/ppts Change
2026
2025
Reported
Ex F/X
2026
2025
Reported
Ex F/X
System Sales Growth (2) (%)
6
4
NM
NM
5
3
NM
NM
Same-Store Sales Growth (2) (%)
1
1
NM
NM
1
Even
NM
NM
Operating Profit ($mn)
348
304
+14
+7
795
703
+13
+7
Adjusted Operating Profit (3) ($mn)
348
304
+14
+7
795
703
+13
+7
Core Operating Profit (3) (4) ($mn)
328
304
NM
+7
751
703
NM
+7
OP Margin (5) (%)
11.1
10.9
+0.2
+0.2
12.4
12.2
+0.2
+0.2
Core OP Margin (3) (6) (%)
11.1
10.9
NM
+0.2
12.4
12.2
NM
+0.2
Net Income ($mn)
244
215
+14
+6
553
507
+9
+3
Adjusted Net Income (3) ($mn)
244
215
+14
+6
553
507
+9
+3
Diluted Earnings
Per Common Share ($)
0.70
0.58
+21
+14
1.57
1.35
+16
+10
Adjusted Diluted Earnings
Per Common Share (3) ($)
0.70
0.58
+21
+14
1.57
1.35
+16
+10
(2) System sales and same-store sales percentages exclude the impact of F/X. Effective January 1, 2018, temporary store closures are normalized in the same-store sales calculation by excluding the period during which stores are temporarily closed.
(3) See "Reconciliation of Reported GAAP Results to Non-GAAP Measures" included in the accompanying tables of this release for further details.
(4) Core operating profit is defined as operating profit adjusted for special items, further excluding items affecting comparability and the impact of F/X. The Company uses core operating profit for the purposes of evaluating the performance of its core operations. Current period amounts are derived by translating results at the average exchange rates of the prior year period.
(5) OP margin refers to operating profit as a percentage of total revenues.
(6) Core OP margin refers to core operating profit as a percentage of total revenues excluding F/X.
Note: All comparisons are versus the same period a year ago.
Percentages may not recompute due to rounding.
NM refers to not meaningful.
Capital Returns to Shareholders
KFC
Second Quarter
First Half (Year to Date Ended 6/30)
%/ppts Change
%/ppts Change
2026
2025
Reported
Ex F/X
2026
2025
Reported
Ex F/X
Restaurants
13,789
12,238
+13
NM
13,789
12,238
+13
NM
System Sales Growth (%)
7
5
NM
NM
6
4
NM
NM
Same-Store Sales Growth (%)
1
1
NM
NM
1
Even
NM
NM
Total Revenues ($mn)
2,338
2,096
+12
+5
4,791
4,342
+10
+4
Operating Profit ($mn)
332
292
+14
+7
749
678
+10
+5
Core Operating Profit ($mn)
313
292
NM
+7
709
678
NM
+5
OP Margin (%)
14.2
14.0
+0.2
+0.2
15.6
15.6
—
—
Restaurant Margin (%)
17.1
16.9
+0.2
+0.2
18.1
18.4
(0.3)
(0.3)
Pizza Hut
Second Quarter
First Half (Year to Date Ended 6/30)
%/ppts Change
%/ppts Change
2026
2025
Reported
Ex F/X
2026
2025
Reported
Ex F/X
Restaurants
4,549
3,864
+18
NM
4,549
3,864
+18
NM
System Sales Growth (%)
6
3
NM
NM
5
3
NM
NM
Same-Store Sales Growth (%)
1
2
NM
NM
Even
1
NM
NM
Total Revenues ($mn)
613
554
+11
+4
1,248
1,149
+9
+3
Operating Profit ($mn)
51
46
+11
+5
122
106
+15
+9
Core Operating Profit ($mn)
48
46
NM
+5
115
106
NM
+9
OP Margin (%)
8.3
8.3
—
+0.1
9.8
9.2
+0.6
+0.6
Restaurant Margin (%)
12.9
13.3
(0.4)
(0.4)
14.0
13.9
+0.1
+0.1
2026 Outlook
The Company targets:
Other Update
Note on Non-GAAP Measures
Reported GAAP results include items that are excluded from non-GAAP measures. See "Reconciliation of Reported GAAP Results to Non-GAAP Measures" and "Segment Results" within this release for non-GAAP reconciliation details.
Conference Call
Yum China's management will hold an earnings conference call at 7:00 a.m. U.S. Eastern Time on Thursday, July 30, 2026 (7:00 p.m. Beijing/Hong Kong Time on Thursday, July 30, 2026).
A live webcast of the call may be accessed at https://edge.media-server.com/mmc/p/zubr6dix.
To join by phone, please register in advance through the link provided below. Upon registering, you will be provided with participant dial-in numbers and a unique access PIN.
Pre-registration Link: https://register-conf.media-server.com/register/BI611346d62d61456ca32d90b61aca7523
A replay of the webcast will be available two hours after the event and will remain accessible until July 29, 2027. Earnings release and accompanying slides will be available at the Company's Investor Relations website http://ir.yumchina.com.
For important news and information regarding Yum China, including our filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange, visit Yum China's Investor Relations website at http://ir.yumchina.com. Yum China uses this website as a primary channel for disclosing key information to its investors, some of which may contain material and previously non-public information.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements under the section titled "2026 Outlook." We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "project," "likely," "will," "continue," "should," "forecast," "outlook," "commit" or similar terminology. These statements are based on current estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable under the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Forward-looking statements include, without limitation, statements regarding the future strategies, growth, business plans, investments, store openings, net new stores, franchise mix of net new stores, capital expenditures, capital returns, dividend and share repurchase plans, CAGR for system sales, operating profit and EPS, earnings, performance and returns, anticipated effects of population and macroeconomic trends, execution of the Company's RGM 3.0 strategy, the anticipated effects of our innovation, digital and delivery capabilities and investments on growth and beliefs regarding the long-term drivers of Yum China's business. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks and uncertainties that are difficult to predict and could cause our actual results or events to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or assumptions will be achieved. The forward-looking statements included in this press release are only made as of the date of this press release, and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. Numerous factors could cause our actual results or events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: whether we are able to achieve development goals at the times and in the amounts currently anticipated, if at all, the success of our marketing campaigns and product innovation, our ability to maintain food safety and quality control systems, changes in public health conditions, our ability to control costs and expenses, including tax costs, as well as changes in political, economic, trade relations, regulatory conditions in China and the U.S., and those set forth under the caption "Risk Factors" in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Our plan of capital returns to shareholders is based on current expectations, which may change based on market conditions, capital needs or otherwise. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q) for additional detail about factors that could affect our financial and other results.
About Yum China Holdings, Inc.
Yum China is the largest restaurant company in China with a mission to make every life taste beautiful. The Company operates over 19,000 restaurants under six brands across over 2,700 cities in China. KFC and Pizza Hut are the leading brands in the quick-service and casual dining restaurant spaces in China, respectively. In addition, Yum China has partnered with Lavazza to develop the Lavazza coffee concept in China. Little Sheep and Huang Ji Huang specialize in Chinese cuisine. Taco Bell offers innovative Mexican-inspired food. Yum China has a world-class, digitalized supply chain, which includes an extensive network of logistics centers nationwide and an in-house supply chain management system. Its strong digital capabilities and loyalty program enable the Company to reach customers faster and serve them better. Yum China is a Fortune 500 company with the vision to be the world's most innovative pioneer in the restaurant industry. For more information, please visit http://ir.yumchina.com.
Contacts
Investor Relations Contact:
Tel: +86 21 2407 7556
[email protected]
Media Contact:
Tel: +86 21 2407 3824
[email protected]
Yum China Holdings, Inc.
Condensed Consolidated Statements of Income
(in US$ million, except per share data)
(unaudited)
Quarter Ended
% Change
Year to Date Ended
% Change
6/30/2026
6/30/2025
B/(W)
6/30/2026
6/30/2025
B/(W)
Revenues
Company sales
$ 2,910
$ 2,613
11
$ 5,957
$ 5,414
10
Franchise fees and income
29
24
18
59
51
15
Revenues from transactions with franchisees
155
115
35
311
236
32
Other revenues
44
35
27
82
67
23
Total revenues
3,138
2,787
13
6,409
5,768
11
Costs and Expenses, Net
Company restaurants
Food and paper
918
810
(13)
1,881
1,684
(12)
Payroll and employee benefits
804
712
(13)
1,617
1,431
(13)
Occupancy and other operating expenses
719
669
(7)
1,437
1,357
(6)
Company restaurant expenses
2,441
2,191
(11)
4,935
4,472
(10)
General and administrative expenses
139
131
(7)
276
269
(3)
Franchise expenses
12
10
(24)
24
21
(18)
Expenses for transactions with franchisees
148
110
(35)
298
227
(31)
Other operating costs and expenses
38
30
(26)
69
59
(18)
Closures and impairment expenses, net
12
12
(7)
12
18
32
Other income, net
—
(1)
NM
—
(1)
NM
Total costs and expenses, net
2,790
2,483
(12)
5,614
5,065
(11)
Operating Profit
348
304
14
795
703
13
Interest income, net
12
25
(52)
28
51
(48)
Investment loss
(6)
(18)
65
(17)
(15)
(6)
Income Before Income Taxes and
Equity in Net Earnings (Losses) from
Equity Method Investments
354
311
14
806
739
9
Income tax provision
(92)
(80)
(14)
(215)
(199)
(8)
Equity in net earnings (losses) from
equity method investments
2
2
23
4
6
(15)
Net income – including noncontrolling interests
264
233
14
595
546
9
Net income – noncontrolling interests
20
18
(11)
42
39
(7)
Net Income – Yum China Holdings, Inc.
$ 244
$ 215
14
$ 553
$ 507
9
Effective tax rate
26.0 %
25.8 %
(0.2)
ppts.
26.6 %
26.9 %
0.3
ppts.
Basic Earnings Per Common Share
$ 0.70
$ 0.58
$ 1.58
$ 1.36
Weighted-average shares outstanding
(in millions)
348
373
350
374
Diluted Earnings Per Common Share
$ 0.70
$ 0.58
$ 1.57
$ 1.35
Weighted-average shares outstanding
(in millions)
349
374
351
376
OP margin
11.1 %
10.9 %
0.2
ppts.
12.4 %
12.2 %
0.2
ppts.
Company sales
100.0 %
100.0 %
100.0 %
100.0 %
Food and paper
31.5
31.0
(0.5)
ppts.
31.6
31.1
(0.5)
ppts.
Payroll and employee benefits
27.6
27.2
(0.4)
ppts.
27.1
26.4
(0.7)
ppts.
Occupancy and other operating expenses
24.8
25.7
0.9
ppts.
24.1
25.1
1.0
ppts.
Restaurant margin
16.1 %
16.1 %
—
ppts.
17.2 %
17.4 %
(0.2)
ppts.
Percentages may not recompute due to rounding. NM refers to not meaningful.
Yum China Holdings, Inc.
KFC Operating Results
(in US$ million)
(unaudited)
Quarter Ended
% Change
Year to Date Ended
% Change
6/30/2026
6/30/2025
B/(W)
6/30/2026
6/30/2025
B/(W)
Revenues
Company sales
$ 2,294
$ 2,059
11
$ 4,704
$ 4,267
10
Franchise fees and income
24
19
23
47
40
20
Revenues from transactions with franchisees
19
17
18
38
33
16
Other revenues
1
1
(5)
2
2
(4)
Total revenues
2,338
2,096
12
4,791
4,342
10
Costs and Expenses, Net
Company restaurants
Food and paper
710
631
(12)
1,456
1,316
(11)
Payroll and employee benefits
630
556
(13)
1,273
1,110
(15)
Occupancy and other operating expenses
563
523
(8)
1,123
1,055
(6)
Company restaurant expenses
1,903
1,710
(11)
3,852
3,481
(11)
General and administrative expenses
67
61
(9)
128
120
(6)
Franchise expenses
10
9
(22)
21
19
(18)
Expenses for transactions with franchisees
15
15
(3)
30
29
(4)
Other operating costs and expenses
1
1
53
1
2
58
Closures and impairment expenses, net
10
8
(30)
10
13
27
Total costs and expenses, net
2,006
1,804
(11)
4,042
3,664
(10)
Operating Profit
$ 332
$ 292
14
$ 749
$ 678
10
OP margin
14.2 %
14.0 %
0.2
ppts.
15.6 %
15.6 %
—
ppts.
Company sales
100.0 %
100.0 %
100.0 %
100.0 %
Food and paper
30.9
30.7
(0.2)
ppts.
31.0
30.9
(0.1)
ppts.
Payroll and employee benefits
27.5
27.0
(0.5)
ppts.
27.1
26.0
(1.1)
ppts.
Occupancy and other operating expenses
24.5
25.4
0.9
ppts.
23.8
24.7
0.9
ppts.
Restaurant margin
17.1 %
16.9 %
0.2
ppts.
18.1 %
18.4 %
(0.3)
ppts.
Percentages may not recompute due to rounding.
Yum China Holdings, Inc.
Pizza Hut Operating Results
(in US$ million)
(unaudited)
Quarter Ended
% Change
Year to Date Ended
% Change
6/30/2026
6/30/2025
B/(W)
6/30/2026
6/30/2025
B/(W)
Revenues
Company sales
$ 604
$ 545
11
$ 1,231
$ 1,129
9
Franchise fees and income
3
2
47
6
4
41
Revenues from transactions with franchisees
3
1
52
5
3
44
Other revenues
3
6
(41)
6
13
(51)
Total revenues
613
554
11
1,248
1,149
9
Costs and Expenses, Net
Company restaurants
Food and paper
204
177
(15)
417
363
(15)
Payroll and employee benefits
171
154
(11)
339
317
(7)
Occupancy and other operating expenses
151
141
(7)
303
292
(4)
Company restaurant expenses
526
472
(11)
1,059
972
(9)
General and administrative expenses
28
26
(11)
54
52
(6)
Franchise expenses
2
1
(43)
3
2
(37)
Expenses for transactions with franchisees
2
1
(37)
4
3
(25)
Other operating costs and expenses
3
5
41
5
11
53
Closures and impairment expenses, net
1
3
52
1
3
56
Total costs and expenses, net
562
508
(10)
1,126
1,043
(8)
Operating Profit
$ 51
$ 46
11
$ 122
$ 106
15
OP margin
8.3 %
8.3 %
—
ppts.
9.8 %
9.2 %
0.6
ppts.
Company sales
100.0 %
100.0 %
100.0 %
100.0 %
Food and paper
33.8
32.5
(1.3)
ppts.
33.9
32.1
(1.8)
ppts.
Payroll and employee benefits
28.3
28.3
—
ppts.
27.5
28.1
0.6
ppts.
Occupancy and other operating expenses
25.0
25.9
0.9
ppts.
24.6
25.9
1.3
ppts.
Restaurant margin
12.9 %
13.3 %
(0.4)
ppts.
14.0 %
13.9 %
0.1
ppts.
Percentages may not recompute due to rounding.
Yum China Holdings, Inc.
Condensed Consolidated Balance Sheets
(in US$ million)
6/30/2026
12/31/2025
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$ 485
$ 506
Short-term investments
901
878
Accounts receivable, net
115
95
Inventories, net
459
438
Prepaid expenses and other current assets
390
440
Total Current Assets
2,350
2,357
Property, plant and equipment, net
2,623
2,543
Operating lease right-of-use assets
2,114
2,189
Goodwill
2,021
1,963
Intangible assets, net
151
148
Long-term bank deposits and notes
688
678
Equity investments
382
387
Deferred income tax assets
168
156
Other assets
374
362
Total Assets
10,871
10,783
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
Current Liabilities
Accounts payable and other current liabilities
2,263
2,127
Short-term borrowings
66
30
Income taxes payable
107
89
Total Current Liabilities
2,436
2,246
Non-current operating lease liabilities
1,747
1,823
Non-current finance lease liabilities
50
51
Deferred income tax liabilities
418
406
Other liabilities
159
158
Total Liabilities
4,810
4,684
Redeemable Noncontrolling Interest
—
—
Equity
Common stock, $0.01 par value; 1,000 million shares authorized; 345 million shares
and 355 million shares issued at June 30, 2026 and December 31, 2025, respectively;
345 million shares and 354 million shares outstanding at June 30, 2026 and December 31,
2025, respectively.
3
4
Treasury stock
(13)
(28)
Additional paid-in capital
3,696
3,796
Retained earnings
1,696
1,764
Accumulated other comprehensive loss
(25)
(157)
Total Yum China Holdings, Inc. Stockholders' Equity
5,357
5,379
Noncontrolling interests
704
720
Total Equity
6,061
6,099
Total Liabilities, Redeemable Noncontrolling Interest and Equity
$ 10,871
$ 10,783
Yum China Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(in US$ million)
(unaudited)
Year to Date Ended
6/30/2026
6/30/2025
Cash Flows – Operating Activities
Net income – including noncontrolling interests
$ 595
$ 546
Depreciation and amortization
237
219
Non-cash operating lease cost
211
199
Closures and impairment expenses
12
18
Investment loss
17
15
Equity in net (earnings) losses from equity method investments
(4)
(6)
Distributions of income received from equity method investments
8
9
Deferred income taxes
(9)
(3)
Share-based compensation expense
23
22
Changes in accounts receivable
(17)
(13)
Changes in inventories
(8)
52
Changes in prepaid expenses, other current assets and value-added tax assets
72
(8)
Changes in accounts payable and other current liabilities
39
(53)
Changes in income taxes payable
15
24
Changes in non-current operating lease liabilities
(187)
(200)
Other, net
(28)
43
Net Cash Provided by Operating Activities
976
864
Cash Flows – Investing Activities
Capital spending
(271)
(259)
Purchases of short-term investments, long-term bank deposits and notes
(3,777)
(3,924)
Maturities of short-term investments, long-term bank deposits and notes
3,781
3,905
Acquisition of equity investment
—
(14)
Other, net
2
2
Net Cash Used in Investing Activities
(265)
(290)
Cash Flows – Financing Activities
Proceeds from short-term borrowings
65
—
Repayment of short-term borrowings
(30)
(129)
Repurchase of shares of common stock
(530)
(368)
Cash dividends paid on common stock
(203)
(180)
Dividends paid to noncontrolling interests
(32)
(25)
Other, net
(9)
(7)
Net Cash Used in Financing Activities
(739)
(709)
Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash
7
4
Net Decrease in Cash, Cash Equivalents and Restricted Cash
(21)
(131)
Cash, Cash Equivalents, and Restricted Cash - Beginning of Period
506
723
Cash, Cash Equivalents, and Restricted Cash - End of Period
$ 485
$ 592
In this press release:
Unit Count by Brand
KFC
12/31/2025
New Builds
Closures
Refranchised
6/30/2026
Company-owned
11,032
657
(181)
(8)
11,500
Franchisees
1,965
338
(22)
8
2,289
Total
12,997
995
(203)
—
13,789
Pizza Hut
12/31/2025
New Builds
Closures
6/30/2026
Company-owned
3,830
315
(109)
4,036
Franchisees
338
180
(5)
513
Total
4,168
495
(114)
4,549
Others
12/31/2025
New Builds
Closures
6/30/2026
Company-owned
198
61
(19)
240
Franchisees
738
95
(114)
719
Total
936
156
(133)
959
Reconciliation of Reported GAAP Results to Non-GAAP Measures
(in millions, except per share data)
(unaudited)
In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") in this press release, the Company provides the following non-GAAP measures:
These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measures provides additional information to investors to facilitate the comparison of past and present results, excluding those items that the Company does not believe are indicative of our core operations.
With respect to non-GAAP measures adjusted for Special Items, the Company excludes impact from Special Items for the purpose of evaluating performance internally and uses them as factors in determining compensation for certain employees. Special Items are not included in any of our segment results.
Adjusted EBITDA is defined as net income including noncontrolling interests adjusted for equity in net earnings (losses) from equity method investments, income tax, interest income, net, investment gain or loss, depreciation and amortization, store impairment charges, and Special Items. Store impairment charges included as an adjustment item in Adjusted EBITDA primarily resulted from our semi-annual impairment evaluation of long-lived assets of individual restaurants, and additional impairment evaluation whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. If these restaurant-level assets were not impaired, depreciation of the assets would have been recorded and included in EBITDA. Therefore, store impairment charges were a non-cash item similar to depreciation and amortization of our long-lived assets of restaurants. The Company believes that investors and analysts may find it useful in measuring operating performance without regard to such non-cash items.
Restaurant Profit is defined as Company sales less expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, restaurant-level payroll and employee benefits, rent, depreciation and amortization of restaurant-level assets, advertising expenses, and other operating expenses. Company restaurant margin percentage is defined as Restaurant profit divided by Company sales. We also use Restaurant profit and Restaurant margin for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe they provide useful information to investors as to the profitability of our Company-owned restaurants.
Core Operating Profit is defined as Operating Profit adjusted for Special Items, and further excluding Items Affecting Comparability and the impact of F/X. We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Items such as charges, gains and accounting changes which are viewed by management as significantly impacting the current period or the comparable period, due to changes in policy or other external factors, or non-cash items pertaining to underlying activities that are different from or unrelated to our core operations, are generally considered "Items Affecting Comparability." Examples of Items Affecting Comparability include, but are not limited to: temporary relief from landlords and government agencies; VAT deductions due to tax policy changes; and amortization of reacquired franchise rights recognized upon acquisitions. We believe presenting Core Operating Profit provides additional information to further enhance comparability of our operating results and we use this measure for purposes of evaluating the performance of our core operations. Core OP margin is defined as Core Operating Profit divided by Total revenues, excluding the impact of F/X.
The following tables set forth the reconciliation of the most directly comparable GAAP financial measures to the non-GAAP financial measures. The reconciliation of GAAP Operating Profit to Restaurant Profit and Core Operating Profit by segment is presented in Segment Results within this release.
Quarter Ended
Year to Date Ended
6/30/2026
6/30/2025
6/30/2026
6/30/2025
Reconciliation of Operating Profit to Adjusted Operating Profit
Operating Profit
$ 348
$ 304
$ 795
$ 703
Special Items, Operating Profit
—
—
—
—
Adjusted Operating Profit
$ 348
$ 304
$ 795
$ 703
Reconciliation of Net Income to Adjusted Net Income
Net Income – Yum China Holdings, Inc.
$ 244
$ 215
$ 553
$ 507
Special Items, Net Income –Yum China Holdings, Inc.
—
—
—
—
Adjusted Net Income – Yum China Holdings, Inc.
$ 244
$ 215
$ 553
$ 507
Reconciliation of EPS to Adjusted EPS
Basic Earnings Per Common Share
$ 0.70
$ 0.58
$ 1.58
$ 1.36
Special Items, Basic Earnings Per Common Share
—
—
—
—
Adjusted Basic Earnings Per Common Share
$ 0.70
$ 0.58
$ 1.58
$ 1.36
Diluted Earnings Per Common Share
$ 0.70
$ 0.58
$ 1.57
$ 1.35
Special Items, Diluted Earnings Per Common Share
—
—
—
—
Adjusted Diluted Earnings Per Common Share
$ 0.70
$ 0.58
$ 1.57
$ 1.35
Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate
Effective tax rate
26.0 %
25.8 %
26.6 %
26.9 %
Impact on effective tax rate as a result of Special Items
—
—
—
—
Adjusted effective tax rate
26.0 %
25.8 %
26.6 %
26.9 %
Net income, along with the reconciliation to Adjusted EBITDA, is presented below:
Quarter Ended
Year to Date Ended
6/30/2026
6/30/2025
6/30/2026
6/30/2025
Net Income – Yum China Holdings, Inc.
$ 244
$ 215
$ 553
$ 507
Net income – noncontrolling interests
20
18
42
39
Equity in net (earnings) losses from equity method investments
(2)
(2)
(4)
(6)
Income tax provision
92
80
215
199
Interest income, net
(12)
(25)
(28)
(51)
Investment loss
6
18
17
15
Operating Profit
348
304
795
703
Special Items, Operating Profit
—
—
—
—
Adjusted Operating Profit
348
304
795
703
Depreciation and amortization
120
110
237
219
Store impairment charges
14
13
18
19
Adjusted EBITDA
$ 482
$ 427
$ 1,050
$ 941
Operating Profit, along with the reconciliation to Core Operating Profit, is presented below:
Quarter ended
% Change
Year to Date Ended
% Change
6/30/2026
6/30/2025
B/(W)
6/30/2026
6/30/2025
B/(W)
Operating Profit
$ 348
$ 304
14
$ 795
$ 703
13
Special Items, Operating Profit
—
—
—
—
Adjusted Operating Profit
$ 348
$ 304
14
$ 795
$ 703
13
Items Affecting Comparability
—
—
—
—
F/X impact
(20)
—
(44)
—
Core Operating Profit
$ 328
$ 304
7
$ 751
$ 703
7
Total revenues
3,138
2,787
13
6,409
5,768
11
F/X impact
(183)
—
(342)
—
Total revenues, excluding the impact of F/X
$ 2,955
$ 2,787
6
$ 6,067
$ 5,768
5
Core OP margin
11.1 %
10.9 %
0.2
ppts.
12.4 %
12.2 %
0.2
ppts.
Yum China Holdings, Inc.
Segment Results
(in US$ million)
(unaudited)
Quarter Ended 6/30/2026
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated (1)
Elimination
Total
Company sales
$ 2,294
$ 604
$ 12
$ —
$ —
$ 2,910
Franchise fees and income
24
3
2
—
—
29
Revenues from transactions with franchisees (2)
19
3
25
108
—
155
Other revenues
1
3
235
25
(220)
44
Total revenues
$ 2,338
$ 613
$ 274
$ 133
$ (220)
$ 3,138
Company restaurant expenses
1,903
526
12
—
—
2,441
General and administrative expenses
67
28
8
36
—
139
Franchise expenses
10
2
—
—
—
12
Expenses for transactions with franchisees (2)
15
2
23
108
—
148
Other operating costs and expenses
1
3
231
23
(220)
38
Closures and impairment expenses, net
10
1
1
—
—
12
Total costs and expenses, net
2,006
562
275
167
(220)
2,790
Operating Profit (Loss)
$ 332
$ 51
$ (1)
$ (34)
$ —
$ 348
Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:
Quarter Ended 6/30/2026
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated (1)
Elimination
Total
GAAP Operating Profit (Loss)
$ 332
$ 51
$ (1)
$ (34)
$ —
$ 348
Less:
Franchise fees and income
24
3
2
—
—
29
Revenues from transactions with franchisees (2)
19
3
25
108
—
155
Other revenues
1
3
235
25
(220)
44
Add:
General and administrative expenses
67
28
8
36
—
139
Franchise expenses
10
2
—
—
—
12
Expenses for transactions with franchisees (2)
15
2
23
108
—
148
Other operating costs and expenses
1
3
231
23
(220)
38
Closures and impairment expenses, net
10
1
1
—
—
12
Restaurant profit
$ 391
$ 78
$ —
$ —
$ —
$ 469
Company sales
2,294
604
12
—
—
2,910
Restaurant margin
17.1 %
12.9 %
(2.3) %
N/A
N/A
16.1 %
Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:
Quarter Ended 6/30/2026
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated (1)
Elimination
Total
GAAP Operating Profit (Loss)
$ 332
$ 51
$ (1)
$ (34)
$ —
$ 348
Special Items, Operating Profit
—
—
—
—
—
—
Adjusted Operating Profit (Loss)
$ 332
$ 51
$ (1)
$ (34)
$ —
$ 348
Items Affecting Comparability
—
—
—
—
—
—
F/X impact
(19)
(3)
—
2
—
(20)
Core Operating Profit (Loss)
$ 313
$ 48
$ (1)
$ (32)
$ —
$ 328
Quarter Ended 6/30/2025
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated (1)
Elimination
Total
Company sales
$ 2,059
$ 545
$ 9
$ —
$ —
$ 2,613
Franchise fees and income
19
2
3
—
—
24
Revenues from transactions with franchisees (2)
17
1
17
80
—
115
Other revenues
1
6
172
17
(161)
35
Total revenues
$ 2,096
$ 554
$ 201
$ 97
$ (161)
$ 2,787
Company restaurant expenses
1,710
472
9
—
—
2,191
General and administrative expenses
61
26
8
36
—
131
Franchise expenses
9
1
—
—
—
10
Expenses for transactions with franchisees (2)
15
1
16
78
—
110
Other operating costs and expenses
1
5
168
17
(161)
30
Closures and impairment expenses, net
8
3
1
—
—
12
Other income, net
—
—
—
(1)
—
(1)
Total costs and expenses, net
1,804
508
202
130
(161)
2,483
Operating Profit (Loss)
$ 292
$ 46
$ (1)
$ (33)
$ —
$ 304
Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:
Quarter Ended 6/30/2025
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated (1)
Elimination
Total
GAAP Operating Profit (Loss)
$ 292
$ 46
$ (1)
$ (33)
$ —
$ 304
Less:
Franchise fees and income
19
2
3
—
—
24
Revenues from transactions with franchisees (2)
17
1
17
80
—
115
Other revenues
1
6
172
17
(161)
35
Add:
General and administrative expenses
61
26
8
36
—
131
Franchise expenses
9
1
—
—
—
10
Expenses for transactions with franchisees (2)
15
1
16
78
—
110
Other operating costs and expenses
1
5
168
17
(161)
30
Closures and impairment expenses, net
8
3
1
—
—
12
Other income, net
—
—
—
(1)
—
(1)
Restaurant profit
$ 349
$ 73
$ —
$ —
$ —
$ 422
Company sales
2,059
545
9
—
—
2,613
Restaurant margin
16.9 %
13.3 %
(11.5) %
N/A
N/A
16.1 %
Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:
Quarter Ended 6/30/2025
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated (1)
Elimination
Total
GAAP Operating Profit (Loss)
$ 292
$ 46
$ (1)
$ (33)
$ —
$ 304
Special Items, Operating Profit
—
—
—
—
—
—
Adjusted Operating Profit (Loss)
$ 292
$ 46
$ (1)
$ (33)
$ —
$ 304
Items Affecting Comparability
—
—
—
—
—
—
F/X impact
—
—
—
—
—
—
Core Operating Profit (Loss)
$ 292
$ 46
$ (1)
$ (33)
$ —
$ 304
Year to Date Ended 6/30/2026
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated (1)
Elimination
Total
Company sales
$ 4,704
$ 1,231
$ 22
$ —
$ —
$ 5,957
Franchise fees and income
47
6
6
—
—
59
Revenues from transactions with franchisees (2)
38
5
51
217
—
311
Other revenues
2
6
483
47
(456)
82
Total revenues
$ 4,791
$ 1,248
$ 562
$ 264
$ (456)
$ 6,409
Company restaurant expenses
3,852
1,059
25
—
(1)
4,935
General and administrative expenses
128
54
14
80
—
276
Franchise expenses
21
3
—
—
—
24
Expenses for transactions with franchisees (2)
30
4
48
216
—
298
Other operating costs and expenses
1
5
474
44
(455)
69
Closures and impairment expenses, net
10
1
1
—
—
12
Total costs and expenses, net
4,042
1,126
562
340
(456)
5,614
Operating Profit (Loss)
$ 749
$ 122
$ —
$ (76)
$ —
$ 795
Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:
Year to Date Ended 6/30/2026
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated (1)
Elimination
Total
GAAP Operating Profit (Loss)
$ 749
$ 122
$ —
$ (76)
$ —
$ 795
Less:
Franchise fees and income
47
6
6
—
—
59
Revenues from transactions with franchisees (2)
38
5
51
217
—
311
Other revenues
2
6
483
47
(456)
82
Add:
General and administrative expenses
128
54
14
80
—
276
Franchise expenses
21
3
—
—
—
24
Expenses for transactions with franchisees (2)
30
4
48
216
—
298
Other operating costs and expenses
1
5
474
44
(455)
69
Closures and impairment expenses, net
10
1
1
—
—
12
Restaurant profit (loss)
$ 852
$ 172
$ (3)
$ —
$ 1
$ 1,022
Company sales
4,704
1,231
22
—
—
5,957
Restaurant margin
18.1 %
14.0 %
(8.2) %
N/A
N/A
17.2 %
Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:
Year to Date Ended 6/30/2026
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated (1)
Elimination
Total
GAAP Operating Profit (Loss)
$ 749
$ 122
$ —
$ (76)
$ —
$ 795
Special Items, Operating Profit
—
—
—
—
—
—
Adjusted Operating Profit (Loss)
$ 749
$ 122
$ —
$ (76)
$ —
$ 795
Items Affecting Comparability
—
—
—
—
—
—
F/X impact
(40)
(7)
—
3
—
(44)
Core Operating Profit (Loss)
$ 709
$ 115
$ —
$ (73)
$ —
$ 751
Year to Date Ended 6/30/2025
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated (1)
Elimination
Total
Company sales
$ 4,267
$ 1,129
$ 18
$ —
$ —
$ 5,414
Franchise fees and income
40
4
7
—
—
51
Revenues from transactions with franchisees (2)
33
3
36
164
—
236
Other revenues
2
13
342
34
(324)
67
Total revenues
$ 4,342
$ 1,149
$ 403
$ 198
$ (324)
$ 5,768
Company restaurant expenses
3,481
972
20
—
(1)
4,472
General and administrative expenses
120
52
16
81
—
269
Franchise expenses
19
2
—
—
—
21
Expenses for transactions with franchisees (2)
29
3
33
162
—
227
Other operating costs and expenses
2
11
335
34
(323)
59
Closures and impairment expenses, net
13
3
2
—
—
18
Other income, net
—
—
—
(1)
—
(1)
Total costs and expenses, net
3,664
1,043
406
276
(324)
5,065
Operating Profit (Loss)
$ 678
$ 106
$ (3)
$ (78)
$ —
$ 703
Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:
Year to Date Ended 6/30/2025
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated (1)
Elimination
Total
GAAP Operating Profit (Loss)
$ 678
$ 106
$ (3)
$ (78)
$ —
$ 703
Less:
Franchise fees and income
40
4
7
—
—
51
Revenues from transactions with franchisees (2)
33
3
36
164
—
236
Other revenues
2
13
342
34
(324)
67
Add:
General and administrative expenses
120
52
16
81
—
269
Franchise expenses
19
2
—
—
—
21
Expenses for transactions with franchisees (2)
29
3
33
162
—
227
Other operating costs and expenses
2
11
335
34
(323)
59
Closures and impairment expenses, net
13
3
2
—
—
18
Other income, net
—
—
—
(1)
—
(1)
Restaurant profit (loss)
$ 786
$ 157
$ (2)
$ —
$ 1
$ 942
Company sales
4,267
1,129
18
—
—
5,414
Restaurant margin
18.4 %
13.9 %
(16.0) %
N/A
N/A
17.4 %
Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:
Year to Date Ended 6/30/2025
KFC
Pizza Hut
All Other Segments
Corporate
and
Unallocated (1)
Elimination
Total
GAAP Operating Profit (Loss)
$ 678
$ 106
$ (3)
$ (78)
$ —
$ 703
Special Items, Operating Profit
—
—
—
—
—
—
Adjusted Operating Profit (Loss)
$ 678
$ 106
$ (3)
$ (78)
$ —
$ 703
Items Affecting Comparability
—
—
—
—
—
—
F/X impact
—
—
—
—
—
—
Core Operating Profit (Loss)
$ 678
$ 106
$ (3)
$ (78)
$ —
$ 703
The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Statements of Income.
(1) Amounts have not been allocated to any segment for purpose of making operating decision or assessing financial performance as the transactions are deemed corporate revenues and expenses in nature.
(2) Primarily includes revenues and associated expenses of transactions with franchisees derived from the Company's central procurement model whereby the Company centrally purchases substantially all food and paper products from suppliers and then sells and delivers to KFC and Pizza Hut restaurants, including franchisees.
SOURCE Yum China Holdings, Inc.