Yum China (NYSE:YUMC) executives told investors the company delivered “strong results” in fiscal 2025, driven by accelerating store expansion, continued transaction growth, and improving profitability, while also stepping up shareholder returns and outlining a 2026 plan that leans further into franchising and new store formats.
2025 growth: more stores, improving comps, and higher margins
Chief Executive Officer Joey Wat said Yum China opened more than 1,700 net new stores in 2025, bringing the total to over 18,000 stores across more than 2,500 cities. The company highlighted improving trends in both sales and same-store performance, with same-store sales growth positive for three consecutive quarters and fourth-quarter system sales growth improving sequentially to 7%.
The company also returned $1.5 billion to shareholders in 2025 through dividends and share repurchases, which management said represented roughly 8%–9% of its current market capitalization.
Brand performance: KFC steady; Pizza Hut builds momentum
Chief Financial Officer Adrian Ding said KFC opened 1,349 net new stores in 2025, ending the year with nearly 13,000 locations. KFC system sales rose 5% for the full year, and restaurant margin expanded 50 basis points to 17.4%. In the fourth quarter, KFC system sales grew 8% and same-store sales increased 3%, with same-store transactions also up 3%. Ticket average was flat, with management citing offsetting factors including growth in smaller orders and a higher delivery mix.
At Pizza Hut, Ding said 2025 was a record year for development, with 444 net new stores, bringing the total to 4,168. Restaurant margin improved 80 basis points to 12.8%, while operating profit margin reached 7.9%, described as the highest level since the 2016 listing. Fourth-quarter system sales grew 6% and same-store sales rose 1%, with same-store transactions up 13%. Ticket average was CNY 69, down 11% year over year, which management tied to a mass-market strategy.
Wat emphasized menu and format changes at Pizza Hut, including a “handcrafted thin crust” that now accounts for one out of every three pizzas sold and, she said, is bringing in younger customers. She also pointed to a growing single-person opportunity, noting Pizza Hut’s one-person meal business grew 50% in 2025, off a low base, and that Pizza Hut’s burger offering has become a mid-single-digit portion of sales mix.
Innovation, value positioning, and new formats
Management tied sales momentum to frequent innovation and a value-focused approach. Wat said the company launches about 600 new or upgraded items annually, while also focusing on “hero products.” At KFC, she said hero products represented about one-third of sales in 2025 and, together with related innovations, generated high single-digit sales growth.
Wat also highlighted the company’s pricing strategy and customer engagement efforts:
- Yum China reported 12 consecutive quarters of same-store transaction growth, with total transactions up 8% to exceed 2 billion in 2025.
- The company partnered with 70 IPs in areas such as gaming, animation, and sports to drive “emotional value” and traffic.
On formats and segmentation, Ding noted KFC’s “side-by-side modules” scaled rapidly. KCOFFEE cafés expanded from 700 locations in 2024 to 2,200 in 2025, while per-store daily cup sales increased 25%. Ding said KCOFFEE cafés generated a mid-single-digit sales uplift for parent KFC stores. K Pro, a light meal concept, added more than 200 locations in 2025 and delivered a double-digit sales uplift at parent stores; management aims to more than double its footprint to over 400 locations in 2026, focused on higher-tier cities.
At Pizza Hut, Ding said the brand entered more than 200 new cities in 2025, with about 100 adopting the WOW format. He cited lower CapEx and streamlined operations as key advantages, with standalone WOW store CapEx of approximately CNY 0.65 million–CNY 0.85 million and an estimated payback of 2–3 years, in line with the brand’s average for new stores.
Financial details: Q4 and full-year metrics, plus capital returns
Ding said fourth-quarter same-store sales increased 3% and system sales rose 7%. Restaurant margin was 13.0%, up 70 basis points year over year, driven by improvements in cost of sales and occupancy costs, partially offset by higher labor costs. Cost of sales fell to 31.6%, aided by favorable commodity prices and supply chain efficiency gains. Labor cost rose to 29.4%, reflecting higher rider costs due to a higher delivery mix, while occupancy and other costs declined to 26.0%.
Operating profit margin in the quarter was 6.6%, up 80 basis points. The company reported net income of $140 million, up 22% year over year; excluding its investment in Meituan, net income grew 14%. Diluted EPS was $0.40, up 29% year over year, or 21% excluding the Meituan investment impact.
For the full year, system sales grew 4% and same-store sales increased 1%. Restaurant margin was 16.3%, up 60 basis points. Diluted EPS was $2.51, up 8%, or 14% excluding Meituan. Total CapEx was $626 million and ROIC was 17.3%, up from 16.9% in 2024.
On shareholder returns, management reiterated a plan to return $4.5 billion from 2024 through 2026. For 2026, the company said it would return $1.5 billion, including a 21% increase in the quarterly dividend to $0.29, and it initiated a $460 million share repurchase plan for the first half of 2026. Ding also said that starting in 2027, Yum China plans to return approximately 100% of annual free cash flow (after subsidiary dividend payments to non-controlling interests), targeting average annual returns of $900 million–$1 billion+ in 2027 and 2028, and exceeding $1 billion in 2028 and beyond. In 2025, the company generated $840 million in free cash flow and ended the year with $2.0 billion in net cash.
2026 outlook: more than 20,000 stores, higher franchise mix, and delivery mix headwinds
Looking ahead, Ding said Yum China expects to surpass 20,000 stores in 2026, implying over 1,900 net new stores. Management expects 40%–50% of net new openings for both KFC and Pizza Hut to come from franchisees, and total CapEx is expected to be $600 million–$700 million due to lower CapEx per store and a higher franchise mix.
For 2026, the company guided to performance consistent with its Investor Day framework: a same-store sales index of 100–102, mid- to high-single-digit system sales growth, high-single-digit operating profit growth, double-digit EPS growth, and a slight improvement in restaurant and operating profit margins. Ding cautioned that first-quarter comparisons would be tougher due to last year’s high base, rising rider costs from an increasing delivery mix, and a smaller benefit from commodity price tailwinds. He said the company would “strive to maintain” restaurant and operating profit margins roughly in line with the prior-year period in Q1.
On pricing, Wat said KFC made a mild adjustment that affected only the delivery menu, with no changes to dine-in or takeaway pricing, and no change to signature promotions such as “Crazy Thursday.” She said the delivery price increase helps absorb higher rider costs from a higher delivery mix, while the company remains committed to driving traffic and value.
Management also said delivery mix is expected to rise further in 2026 after increasing significantly in 2025, and emphasized that Yum China aims to balance growth across delivery, takeaway, and dine-in channels. Wat noted dine-in remains a meaningful portion of sales, and highlighted growth in car-side pickup, which she said is available at over 4,000 KFC stores.
Discussing early-year trading, Wat said Chinese New Year is a key trading period with operational challenges, particularly given the later timing this year, but she said year-to-date trading had been in line with expectations.
About Yum China (NYSE:YUMC)
Yum China Holdings, Inc operates as the largest quick-service restaurant company in China, through its ownership and franchising of brands such as KFC, Pizza Hut and Taco Bell. The company’s core business encompasses full-service and fast‐casual dining, takeout and delivery channels, as well as ancillary services including loyalty programs and digital ordering platforms. Yum China’s restaurants offer a diverse menu that adapts global brand concepts to local consumer preferences, featuring items such as soy‐marinated chicken, customized pizzas and region‐inspired side dishes.
In addition to its signature brands, Yum China has expanded its portfolio to include innovative concepts tailored to evolving market trends, such as plant‐based offerings, self‐service kiosks and mobile app integrations.
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