Yum! Brands, Inc., the parent company of QSR heavyweights Taco Bell and KFC, exhibited a mixed financial performance in its recent quarterly report. The company’s adjusted earnings per share reached $1.73, slightly below analyst forecasts of $1.77, while revenues exceeded estimates, coming in at $2.514 billion against the expected $2.451 billion.
The quarter saw worldwide system sales appreciate by 5% on a constant currency basis, excluding an extra 53rd week for comparative adjustments. This growth was largely driven by robust performances at Taco Bell, which saw an 8% increase, and KFC, which was up 6%. Correspondingly, Yum! Brands expanded its physical footprint by opening 1,814 gross new units, translating to a 3% growth in unit count year over year.
However, despite the top-line growth and expansion efforts, the company experienced a decline in restaurant-level profitability. Operating profit rose to $738 million from $657 million a year earlier, but the restaurant margin contracted to 16% from 17.9% in the prior year’s comparable quarter. This margin reduction indicates cost pressures or potential escalations in operational expenses that outpaced revenue gains.
Digital sales amounted to over $11 billion across the system, representing nearly 60% of total sales, signaling a sustained shift in customer ordering preferences and emphasizing the importance of digital channels in the company’s business model.
Focusing on individual brands, KFC saw the addition of 1,132 new restaurants during the quarter, whereas Taco Bell contributed 228 new store openings. The company ended the quarter with a cash and cash equivalents balance of $709 million, reflecting a strong liquidity position.
CFO Ranjith Roy expressed cautious optimism, highlighting strong topline outcomes, double-digit profit growth, and strategic initiatives including a significant Taco Bell acquisition and ongoing evaluation of strategic options for the Pizza Hut brand. He indicated confidence in the company’s momentum heading into 2026, emphasizing a comprehensive strategic agenda and a positive outlook on unfolding growth opportunities.
In line with its commitment to shareholder returns, Yum! Brands announced a 6% increase to its quarterly dividend, raising it to 75 cents per share. The dividend is scheduled for distribution on March 6, reinforcing the company’s policy of returning capital to investors despite margin pressures.
Looking forward, Yum! Brands reaffirmed its long-term performance targets encompassing a 5% annual unit growth alongside a 7% increase in system sales, excluding currency effects. Additionally, the firm aims to sustain at least an 8% growth in core operating profit on average over time, underscoring an ambition to continue expanding profitability alongside scale.