Yum Revenue Rises 12% as Taco Bell Offsets Pizza Hut
The restaurant operator opened 1,053 locations as worldwide unit count increased 5%.
Yum Brands (YUM), the restaurant operator, more than doubled second-quarter GAAP earnings per share as Taco Bell’s growth and special-item benefits outweighed continued weakness at Pizza Hut. GAAP diluted earnings rose 131% to $3.08 a share, while earnings excluding special items increased 12% to $1.62 a share.
The quarter reinforced the split forming inside Yum’s portfolio as the company prepared to sell Pizza Hut. Excluding that chain, system sales rose 7%, same-store sales increased 4% and core operating profit advanced 8%, compared with 5% growth for both consolidated system sales and core operating profit.
Revenue rose 12% to $2.169 billion from $1.933 billion a year earlier. GAAP operating profit increased 5% to $655 million, leaving profit growth behind the top-line gain. The $1.46-a-share benefit from special items accounted for the gap between GAAP and adjusted earnings growth.
Taco Bell led the operating gains, with same-store sales growth accelerating to 7% from 4% a year earlier. Its system sales rose 9% and operating profit increased 19%, while company-owned restaurant margin expanded 1.6 percentage points to 25.9%. KFC system sales grew 6% as unit count increased 7%, and its core operating profit advanced 9% on a constant-currency basis.
KFC’s growth remained uneven across markets. System sales rose 20% in the Middle East, Turkey and North Africa and 16% in India, while U.S. sales declined 2% and Europe was flat. Pizza Hut’s system sales fell 2% and core operating profit dropped 14%, with its operating margin contracting 5.9 percentage points to 27.6%. Habit Burger & Grill increased system sales 7% but recorded a $4 million operating loss, compared with a $3 million profit a year earlier.
Digital sales excluding Pizza Hut approached $9 billion and accounted for more than 60% of system sales. Yum reiterated its long-term targets of 5% annual unit growth, 7% constant-currency system-sales growth and at least 8% core operating-profit growth. The quarter reached the unit target, while system sales and core operating profit each grew 5%.
Yum continued to expect the Pizza Hut sale to generate about $2.3 billion in after-tax net proceeds and roughly $85 million of one-time separation expenses in 2026. The company recorded $44 million of review-related charges in the quarter and doubled year-to-date share repurchases to $674 million after its board authorized an additional $4 billion program.