Yum! Brands (YUM) Q2 FY26 earnings call: guidance and Q&A

Seeking more detail on recent Taco Bell trends, recovery trajectory, uniqueness of the food safety issue, and actions to drive customers back.

Management detailed the -2% QTD same-store sales through July 27, noting a peak impact on July 18 and a steady recovery since, with sales halfway back to prior year levels in the last four days. They emphasized consumer safety, improved sentiment, and the 'magic formula' (brand buzz, innovation, value, digital) with examples like the Mexican Pizza Tuesday drop driving record app engagement.

“if you take the average sales for the last 4 days, which includes the weekend and the first 2 days of this week, we are halfway back to sales levels of the prior year.”

asked by Dennis Geiger · answered by Ranjith Roy

Inquiring about KFC's long-term system-wide sales, digital initiatives, reengineering efforts, and potential for comp upside, particularly in developed markets.

Management highlighted KFC's global powerhouse status, category tailwinds (chicken), first-mover advantage, and strong franchise partners. They detailed the 'raise the bar' strategy, including new brand identity, improved tenders and sauces, Kwench beverages, and Byte integration. They expressed dissatisfaction with past same-store sales and an aspiration for higher growth and AUVs globally.

“That same-store sales number, though, our history there, we are dissatisfied with it. And we think we can achieve higher and stronger same-store sales growth and higher and stronger AUVs.”

asked by David Palmer · answered by Christopher Turner

Asking how Taco Bell's digital sales reached 47% of the business and its contribution to comps over recent quarters and years.

Management explained the dramatic increase from 1% digital mix in 2018 to 47% today, attributing it to strong first-party loyalty capabilities and unique loyalty programs that build real connections with fans. They noted that digital, powered by Byte, has driven both top-line performance and helped maintain strong restaurant margins despite industry inflation.

“You'll remember that in 2018, we had a 1% digital mix in Taco Bell. So it's a dramatic change to that 47% today.”

asked by Brian Bittner · answered by Christopher Turner

Seeking clarity on the global scope and timeline of KFC's product evolution, including potential franchisee investments and changes to brand/store image.

Management confirmed that KFC's 'raising the bar' is a global initiative, with 88% of system sales outside the U.S. The U.K. will be a lead market for many initiatives (brand identity, tenders, sauces, Kwench). They emphasized consistent playbooks tailored to local markets and acknowledged that implementing this global aspiration across 150 countries will take time.

“88% of our KFC system sales are outside of the U.S. That's where the majority of the business is -- the U.K. will actually be our lead market on many of these initiatives.”

asked by Brian Harbour · answered by Christopher Turner

Questioning the G&A outlook beyond 2026/2027, considering the Pizza Hut divestiture, AI's role, and Byte cost recovery.

Management stated that G&A has been flat over the last three years while system sales grew. They reaffirmed the 1.7% G&A as a percentage of system sales target and the expectation of operating leverage. They acknowledged the work needed as transition services agreements roll off but emphasized focusing resources on top-line growth while maintaining disciplined G&A targets, with AI playing a role.

“The 1.7% G&A percent of system sales, we believe, is still relevant, and we will continue to expect operating leverage on system sales growth going forward.”

asked by John Ivankoe · answered by Ranjith Roy

Seeking further clarification on Taco Bell's QTD -2% sales, specifically if it implies a larger decline (e.g., -20%) in the last two weeks since publicity began.

Management confirmed the peak impact on July 18 and noted steady improvement since. They stated that sales for the last four days are 'well within the 20%' decline, indicating moderation from the peak impact.

“the last 4 days are well within the 20%. So I think if you look at it over the last 10 days, you'll find us on both sides of that. But currently, we're well within that.”

asked by Andrew Charles · answered by Ranjith Roy