Yum China (YUMC) investor relations material

Executive summary

• Achieved 10% year-over-year revenue growth to $3.3 billion in Q1 2026, with 4% growth excluding FX impact, driven by net new unit growth and higher delivery sales mix.

• Operating profit rose 12% year-over-year to $447 million, with OP margin expanding to 13.7%, supported by operational efficiencies and lower G&A and impairment expenses.

• Opened 636 net new stores, an all-time quarterly high, bringing total store count to 18,737, on track for 20,000+ by year-end 2026 and 30,000+ by 2030.

• Delivery sales grew 31% year-over-year, now representing 54% of total sales, supporting top-line growth.

• Diluted EPS increased 13% year-over-year to $0.87, or 11% excluding mark-to-market and FX impact.

Financial highlights

• Q1 2026 revenues: $3.27 billion, up from $2.98 billion in Q1 2025; system sales grew 4% year-over-year excluding FX.

• Operating profit: $447 million (13.7% margin), up from $399 million (13.4% margin) last year.

• Net income attributable to shareholders was $309 million, up 6% year-over-year; diluted EPS was $0.87, up 13%.

• Restaurant margin was 18.2%, down 40 bps year-over-year due to higher delivery costs and value-for-money offerings.

• Returned $316 million to shareholders via $214 million in share repurchases and $102 million in dividends.

Outlook and guidance

• Targeting over 20,000 stores by year-end 2026 and 30,000+ by 2030, with more than 1,900 net new stores.

• Capital expenditures projected at $600–$700 million for 2026, focused on store expansion, digitalization, and infrastructure.

• Plans to return $1.5 billion to shareholders in 2026, about 9% of current market capitalization; from 2027, intends to return nearly 100% of annual free cash flow after subsidiary dividends, expected to average $900 million to over $1 billion annually.

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

• Expect sequential improvement in same-store sales growth for Q2 2026; rider cost pressure to persist but expected to moderate in the second half.