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    YUM
    Earnings call· Jun 2026(Q2 FY26)

    YUM BRANDS Q2 FY26 earnings call YUM

    Jul 30, 2026 Source

    Executive summary

    Yum! Brands Q2 FY26 — Strong Core Performance Amidst Taco Bell Recovery and Pizza Hut Divestiture

    Yum! Brands delivered solid Q2 FY26 results, driven by strong performance in KFC and Taco Bell, excluding the divested Pizza Hut. The company is navigating a temporary food safety issue impacting Taco Bell U.S. sales, but is seeing early signs of recovery. Strategic priorities focus on consumer engagement, unit economics, and digital capabilities, reinforced by the Pizza Hut divestiture.

    Highlights

    5

    • Excluding Pizza Hut, system sales grew 7%, unit growth 6%, and same-store sales 4%.

    • Digital sales, excluding Pizza Hut, exceeded $17 billion in the first half of the year, up 25% year-over-year.

    • KFC delivered 6% system sales growth, 7% unit growth, and 2% same-store sales growth.

    • Taco Bell delivered 7% same-store sales growth, outperforming the QSR industry for the 9th consecutive quarter.

    • Taco Bell's digital sales mix reached 47%, up 5 percentage points year-over-year.

    Concerns

    3

    • Taco Bell U.S. same-store sales quarter-to-date through July 27 were negative 2% due to a food safety issue.

    • Taco Bell's Q3 equity store level margins are expected to range between 19% and 21%, reflecting lower sales and promotional investments.

    • A quarterly drag of 3 percentage points on core operating profit growth was experienced due to phasing of 2026 refranchising gains and Habit store closure costs.

    Guidance & targets

    6
    CategoryTargetConfidence
    KFC strategy implementation
    Core elements live across top 20 markets
    medium materiality
    High
    KFC unit development
    Best development year ever
    high materiality
    High
    Taco Bell Sweden unit openings
    5 more restaurants
    low materiality
    High
    Transition services fees (Pizza Hut)
    $2.5 million per month
    medium materiality
    High
    Pizza Hut divestiture proceeds allocation
    Pay down revolver, majority for share repurchases
    high materiality
    High
    Taco Bell Q3 equity store level margins
    19% to 21%
    high materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Yum! (ex-Pizza Hut)
    Delivered solid first half performance, with strong digital sales growth.
    Unit growth: 6%Same-store sales growth: 4%Digital sales (H1): >$17BDigital sales growth (H1): 25% YoY
    		—7%——
    KFC
    Strong performance with record development. U.K. Picklemania drove 8% SSSG, Asia 6% SSSG (Japan accelerated 8 points from Q1, Korea delivered 6th consecutive quarter of double-digit SSSG). Brazil achieved over 20% SSSG in each of the past 3 quarters.
    Unit growth: 7%Same-store sales growth: 2%
    		—6%——
    Taco Bell
    Outperformed QSR for 9th consecutive quarter. Digital mix up 5 percentage points YoY. International business continues to build scale with strong SSSG in key markets like India, U.K., and Canada. Baja Blast launch in the U.K. lifted SSSG by 14% in its first week.
    Same-store sales growth: 7%Digital sales mix: 47%
    		————
    Habit Burger Grill
    Delivered 4% same-store sales growth.
    Same-store sales growth: 4%
    		————

    Operational metrics

    17
    Core operating profit growth
    8%
    Q2 FY26

    Excluding Pizza Hut, even after a quarterly drag of 3 percentage points from phasing of 2026 refranchising gains and Habit store closure costs.

    Taco Bell U.S. restaurant level margins
    26.2%170 bps expansion YoY
    Q2 FY26

    Reflecting strong sales leverage and P&L cost optimization.

    Yum! ex-special G&A
    $223Mup 2% YoY
    Q2 FY26

    G&A has been flat over the last 3 years while units and system sales grew.

    Yum! gross new stores
    720
    Q2 FY26

    Excluding Pizza Hut.

    KFC gross new stores
    660
    Q2 FY26

    Across 55 markets.

    KFC average unit volumes
    $1.5M
    current

    Attractive restaurant economics with 2.5- to 3-year paybacks.

    KFC unit opportunity
    20,000
    long-term

    In underpenetrated markets like India, Southeast Asia, West Africa, and Brazil, where density is 1/5 that of top 25 markets.

    Taco Bell gross new units
    25
    Q2 FY26

    Broadening development pipeline across traditional and nontraditional formats.

    Taco Bell equity development sites registered
    24
    to date

    Across Georgia, South Carolina, and Florida, tracking above last year's pace.

    Taco Bell restaurants using Voice AI
    over 900
    current

    Enabled by the connected Byte platform, with continued growth driven by franchise partners.

    AI productivity tools daily usage increase
    50%
    YoY

    For corporate employees, with teams building over 400 specialized AI agents.

    KFC loyalty program coverage
    over 75%
    by end of FY26

    Of KFC system sales, excluding China, significantly expanding consumer engagement.

    Share repurchases
    $670M
    H1 FY26

    Funded by free cash flow and drawing on the revolver.

    Taco Bell U.S. same-store sales
    negative 2%
    QTD through July 27

    Impacted by a food safety issue, with peak impact on July 18.

    Taco Bell sales recovery
    halfway backto prior year sales levels
    last 4 days

    Steady improvement in day-over-day sales trends since the peak impact.

    Meals provided through donations
    nearly 47M
    FY25

    Equivalent through donations, as part of global citizenship and sustainability efforts.

    People reached through community impact
    6.5M
    FY25

    Through Yum!, its brands, and franchisees.

    Industry KPIs

    3
    MetricValueDetails
    Comparable sales comps4%%
    Global system wide sales7%%
    Net unit growth development pipeline6%%

    Product announcements

    6
    ProductTypeDetails
    Pepperjack Steak Burritolaunch
    $1 Enchiritolaunch
    $1 Mexican Pizza offerlaunch
    Baja Blastlaunch
    Taco Bell redesigned applaunch
    Butter Chicken (Taco Bell)launch

    Deals & partnerships

    2
    Long-Range CapitalSale of Pizza Hut business (ex-China)$2.7B in the aggregate

    Yum! entered into an agreement to sell Pizza Hut (ex-China) to Long-Range Capital. Yum! will provide certain transition services, with the majority phased out over 2027, generating $2.5M/month in fees for the remainder of 2026. Byte will continue to power Pizza Hut ex-China under a separate commercial agreement.

    Yum! ChinaSale of Pizza Hut business (China)$2.7B in the aggregate

    Yum! entered into an agreement to sell Pizza Hut (China) to Yum! China.

    Risks & headwinds

    2
    Taco Bell U.S. food safety issuenear-term

    negative 2% quarter-to-date through July 27 (same-store sales); maximum impact to sales over the weekend of July 18; sales declines have moderated materially; sales halfway back to sales levels of the prior year (last 4 days)

    Mitigation: Swift and transparent action; leveraging 'magic formula' (brand buzz, innovation, value, digital); specific promotions ($1 Enchirito, $1 Mexican Pizza); redesigned app in Q3.

    Quarterly phasing of refranchising gains and store closure costsQ2 FY26

    3 percentage points drag on core operating profit growth

    What to watch in Q3 FY26

    5

    Taco Bell U.S. same-store sales recovery

    next quarter
    Currentnegative 2% QTD through July 27, halfway back to prior year levels in last 4 days
    Targetreturn to pre-issue trajectory

    Why it matters

    Indicates the effectiveness of recovery efforts and impact on overall brand performance.

    As we now assess recent trends, Taco Bell's U.S. same-store sales growth quarter-to-date through July 27 is negative 2%... it is early days💬, but in the subsequent week, sales declines have moderated materially and we are seeing steady improvement in day-over-day sales trends.

    Q&A highlights

    6

    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

    2 min read6 chapters

    Detailed Narrative

    01

    Taco Bell U.S. Food Safety Issue & Recovery

    Taco Bell U.S. experienced a food safety issue, leading to a negative 2% same-store sales growth quarter-to-date through July 27, with peak impact on July 18. Management noted a steady recovery, with sales halfway back to prior year levels in the last four days. Consumer sentiment has returned to pre-issue positivity, and the brand is leveraging its 'magic formula' of innovation, value, and digital engagement, including successful Tuesday drops like the $1 Mexican Pizza offer, to drive recovery.

    02

    KFC Modernization Strategy

    KFC is implementing a global strategy to modernize the brand and set the standard for modern chicken QSR. This includes menu innovation focusing on boneless chicken and new sauces, a contemporary restaurant experience, and a refreshed brand visual identity. The aspiration is to have core elements of this strategy live across its top 20 markets by the end of 2027, with the U.K. serving as a lead market for many initiatives.

    03

    Digital Transformation and Byte Platform

    Yum! is leveraging its proprietary AI-enabled Byte platform to simplify operations, manage menus, pricing, and promotions across all ordering channels. This technology enables personalized loyalty experiences and greater visibility into restaurant operations. Byte is expanding to power the vast majority of Yum! system sales outside China, and has facilitated the rapid deployment of Voice AI to over 900 Taco Bell U.S. restaurants.

    04

    Pizza Hut Divestiture

    Yum! entered into two definitive agreements to sell Pizza Hut for $2.7 billion in aggregate to Yum! China and Long-Range Capital, with a potential additional $75 million earnout by 2030. The transactions are anticipated to close in August 2026. Yum! will provide transition services to Pizza Hut ex-China, generating $2.5 million per month in fees for the remainder of 2026, which will offset previously allocated corporate G&A expenses.

    05

    AI Integration Across Yum!

    AI is increasingly integrated across Yum!'s operations, from corporate productivity tools (50% YoY increase in daily usage, 400 specialized AI agents) to restaurant-level enhancements. AI-powered capabilities include 'bite coach' for personalized operational recommendations for managers and a global innovation database that combines AI, data science, and predictive market research to accelerate menu development.

    06

    Global Development Momentum

    KFC is on track for its best development year ever, opening 660 gross new stores in Q2 across 55 markets. Significant unit expansion opportunities exist in underpenetrated markets like India, Southeast Asia, West Africa, and Brazil, representing a 20,000-unit potential. Taco Bell is also broadening its development pipeline, including 25 gross units in the U.S. and international expansion in markets like Sweden.

    AI-generated summary of the company’s earnings call. Not investment advice.