Yum China (YUMC) investor relations material

Executive summary

• Achieved ninth consecutive quarter of system sales, operating profit, and margin growth, with Q2 revenue up 13% to $3.14 billion, operating profit up 14% to $348 million, and diluted EPS up 21% to $0.70.

• Opened 560 net new stores in Q2, with delivery sales up 26% year-over-year, now representing 54% of total sales.

• Same-store sales grew 1% year-over-year, with 14th consecutive quarter of same-store transaction growth.

• Innovation and operational efficiency initiatives supported resilient margins despite cost pressures.

• Acquisition of the Pizza Hut brand in Mainland China completed in August 2026 for $1.2 billion, financed by an offshore bridge loan, expected to support margin expansion.

Financial highlights

• Q2 2026 total revenues: $3.14 billion (+13% YoY); operating profit: $348 million (+14% YoY); diluted EPS: $0.70 (+21% YoY).

• System sales grew 6% year-over-year in Q2; same-store sales up 1% YoY.

• Restaurant margin was 16.1%, flat year-over-year; OP margin expanded 20 bps to 11.1%.

• Net income was $244 million (+14% YoY); adjusted EBITDA for Q2 was $482 million.

• Adjusted net income also up 14% year-over-year.

Outlook and guidance

• Targeting over 20,000 total stores by year-end 2026, with more than 1,900 net new stores.

• 2026-2028 growth targets: mid- to high-single-digit system sales CAGR, high-single-digit operating profit CAGR, double-digit EPS and free cash flow per share CAGR.

• Capital expenditures for FY2026 expected to be $600–700 million, focused on store expansion, remodeling, and digital investments.

• Plans to return $1.5 billion to shareholders in 2026 and nearly all annual free cash flow starting in 2027.

• Pizza Hut brand acquisition in Mainland China expected to be accretive to EPS from 2026 onward.