Yum! Brands Reports Third-Quarter Results
Returns $1.8 Billion to Shareholders Through Dividends and Share Repurchases Year-to-Date;
- Yum! Brands, Inc. (NYSE: YUM) today reported results for the third quarter ended September 30, 2026. Third-quarter GAAP EPS was $5.92 and third-quarter EPS excluding Special Items was $1.56.
Chris Turner, CEO, said “Yum! has entered its next chapter of growth, having completed the divestiture of Pizza Hut, with a sharper focus on our Raise the B.A.R. priorities. In support of those priorities, KFC delivered record Q3 global gross unit development and continues to scale its new global strategy reflecting the brand’s ambition of being the most modern chicken QSR. I’m also very pleased that, since the end of September, Taco Bell U.S. has been outpacing the QSR industry on same-store sales growth. Taco Bell will continue building on this momentum, with differentiated value and innovation that resonate across all consumer groups. With iconic brands, unmatched global scale and significant development white space, we remain confident in our ability to deliver consistent earnings growth and create long-term shareholder value.”
• On August 7 th and September 1 st , Yum! completed the sales of the Pizza Hut brand in mainland China to Yum China and Pizza Hut excluding mainland China to LongRange Capital , respectively.
Performance Metrics Third-Quarter % Change System Sales Same-Store Sales Units Ex F/X KFC Division +6 +1 +7 Taco Bell Division -2 -4 +3 Worldwide 3 Even +7
• 2026 results presented below include the results of Pizza Hut prior to the sale dates referenced above. 2025 results include the results of Pizza Hut for the entirety of the periods presented below.
• Excluding the results of Pizza Hut from both 2026 and 2025, Core Operating Profit grew 1% for the quarter and 6% for the year to date.
• 2026 GAAP Operating Profit figures presented below reflect a pre-tax gain of approximately $1.7 billion related to the sales of Pizza Hut.
• Foreign currency translation favorably impacted Divisional Operating Profit by $7 million and $48 million in the quarter and year to date, respectively.
Reported Third-Quart… Year-to-Date Results % Change % Change GAAP Core GAAP Core Operating Operating Operating Operating Profit Profit1 Profit Profit1 KFC +9 +8 +13 +8 Division Taco Bell -5 -4 +10 +10 Division Pizza Hut -41 -41 -23 -24 Division Worldwide +248 -4 +97 +2
1 See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Core Operating Profit and Special Items.
System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further details. Digital system sales includes all transactions at system restaurants where consumers utilize ordering interaction that is primarily facilitated by automated technology. Yum! Brands, Inc. • 1900 Colonel Sanders Lane • Louisville, KY 40213 • P: 502 874-8300 • investors.yum.com
• Company-owned restaurant margins were 12.3%, down 140 basis points year-over- year, primarily driven by the 15 lower margin stores being tested under the Saucy brand in 2026.
• Foreign currency translation favorably impacted operating profit by $7 million.
KFC Markets1 Percent of KFC System Sales Growth System Sales2 Ex F/X Third-Quarter Year-to-Date (% Change) (% Change) China 26% +3 +5 Europe 13% +2 +1 United States 12% -6 -3 Asia 12% +12 +11 Latin America 8% +11 +11 Australia 7% +5 +4 United Kingdom 7% +7 +8 Middle East / Turkey 6% +25 +21 / North Africa Africa 5% +8 +7 Canada 2% Even -1 India 2% +20 +17
1 Refer to investors.yum.com/financial-information/financial-reports/ for a list
• Taco Bell U.S. system sales declined 3% and same-store sales declined 4%. U.S.
• Taco Bell International system sales excluding foreign currency translation grew 14% and same-store sales grew 5%.
• Habit Burger & Grill Division system sales grew 3% and same-store sales were flat .
• See reconciliation of Non-GAAP Measurements to GAAP results within this release for further detail of Special Items by financial statement line item including the impact of Special Items on General and administrative expenses.
• Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the third-quarter Form 10-Q.
• The Company targets the following long-term financial performance metrics, first announced in 2022, that it believes it can achieve over an extended period of time, on average:
1 At this time, we are unable to forecast any Special Items or any impact from changes in F/X rates, and therefore cannot provide an estimate of Operating Profit Growth on a GAAP basis. 3
Yum! Brands, Inc. will host a conference call to review the company's financial performance and strategies at 8:15 a.m. Eastern Time November 3, 2026. The number is 833/461-5787 for North America callers and +1/585-542-9983 for international callers, conference ID 304548872.
The call will be available for playback beginning at 10:00 a.m. Eastern Time November 3, 2026 through November 10, 2026. To access the playback, dial +1/833-309-1852, conference ID 304548872.
The webcast and the playback can be accessed by visiting Yum! Brands' website, investors.yum.com/events-and-presentations and selecting “Q3 2026 Yum! Brands, Inc. Earnings Call.”
Quarter-end dates for each division, restaurant count details, definitions of terms and Restricted Group financial information are available at investors.yum.com. Reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures are included in our Condensed Consolidated Summary of Results.
This announcement may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as “expect,” “expectation,” “believe,” “anticipate,” “may,” “could,” “intend,” “belief,” “plan,” “estimate,” “target,” “predict,” “likely,” “seek,” “project,” “model,” “ongoing,” “will,” “should,” “forecast,” “outlook” or similar terminology. These statements are based on and reflect our current expectations, estimates, assumptions and/ or projections, our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections, including with respect to the future earnings and performance or capital structure of Yum! Brands, will prove to be correct or that any of our expectations, estimates or projections will be achieved. Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: food safety and food- or beverage-borne illness concerns, including the impact of the July 2026 cyclospora outbreak; the impact of such outbreak on sales and pace of recovery; adverse impacts of public health conditions or other catastrophic or unforeseen events; the success and financial stability of our concepts’ franchisees; the success of our development strategy; anticipated benefits from past or potential future acquisitions, investments, other strategic transactions or initiatives, or our portfolio business model; the possibility that we may not be able to realize the anticipated benefits of the sale of the Pizza Hut business; our significant exposure to the Chinese market; our global operations and related exposure to geopolitical instability, including the expansion or threatened expansion of restrictive trade policies or anti-American sentiment; foreign currency risks and foreign exchange controls; our ability to protect the integrity or availability of IT systems or the security of confidential information and other cybersecurity risks; compliance with data privacy, data protection and emerging technology legal requirements; our ability to successfully and securely implement technology initiatives, including utilization of artificial intelligence; our increasing dependence on digital commerce and delivery platforms; the impact of social media; our ability to protect our trademarks or other intellectual property; shortages or interruptions in the availability and the delivery of food, equipment and other supplies; the loss of key personnel or failure to successfully transition senior management, labor shortages and increased labor costs, including as a result of state and local legislation related to wages and working conditions; changes in food prices and other operating costs; our corporate reputation, the value and perception of our brands and changes in consumer preferences such as wellness trends; evolving expectations and requirements with respect to social and environmental sustainability matters; adverse effects of severe weather and climate change; pending or future litigation and legal claims or proceedings; changes in, or non-compliance with, legal requirements; tax matters, including changes in tax rates or laws, impositions of new taxes, tax implications of our restructurings, or disagreements with taxing authorities; changes in consumer discretionary spending and macroeconomic conditions, including inflationary pressures and interest rate conditions; competition within the retail food industry; and risks relating to our level of indebtedness. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. The forward-looking statements included in this announcement are only made as of the date of this announcement and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances.
You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions “Risk Factors” and “Forward-Looking Statements” in our most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q) for additional detail about factors that could affect our financial and other results.
Yum! Brands is a leading restaurant company that grows iconic brands globally, powered by world-class talent, franchise partners and technology. Yum! subsidiaries or franchisees operate more than 44,000 KFC, Taco Bell and/or Habit Burger & Grill restaurants across 150-plus countries and territories.
KFC and Taco Bell are global leaders in their respective categories, while Habit Burger & Grill is a fast-casual concept known for made-to-order chargrilled burgers, sandwiches and more. Guided by its Recipe for Good Growth and Raising the B.A.R. priorities, Yum! brings together its global brands, franchise system, scale and leading digital and technology capabilities to drive growth and create long-term value. Together, these strengths help Yum! build the world’s most loved, trusted and connected restaurant brands.
Analysts are invited to contact: Matt Morris, Head of Investor Relations at 888/298-6986 Members of the media are invited to contact: Lori Eberenz, Director, Public Relations, at 502/874-8200
1 See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Company restaurant margin %. 8
ASSETS Current Assets 9/30/26 12/31/25 ────────────────────────────────────────────────────────────────────────────── Cash and cash equivalents $ 2,108 $ 709 Accounts and notes receivable, less allowance: 639 841 $54 in 2026 and $60 in 2025 Prepaid expenses and other current 558 490 assets Total Current Assets 3,305 2,040 Property, plant and equipment, net of accumulated depreciation of $1,531 in 2026 and $1,485 in 2025 1,638 1,605 Goodwill 718 969 Intangible assets, net 803 909 Other assets 1,620 1,708 Deferred income taxes 685 965 Total Assets $ 8,769 $ 8,197 LIABILITIES AND SHAREHOLDERS' DEFICIT Current Liabilities Accounts payable and other current $ 1,271 $ 1,433 liabilities Income taxes payable 20 46 Short-term borrowings 2,141 38 Total Current Liabilities 3,431 1,516 Long-term debt 9,459 11,872 Other liabilities and deferred 2,043 2,133 credits Total Liabilities 14,933 15,521 Shareholders' Deficit Common Stock, no par value, 750 shares — — authorized; 269 shares issued in 2026 and 277 shares issued in 2025 Accumulated deficit -5,924 -7,014 Accumulated other comprehensive loss -241 -311 Total Shareholders' Deficit -6,165 -7,325 Total Liabilities and Shareholders' $ 8,769 $ 8,197 Deficit
Year to date Cash Flows - Operating Activities 9/30/26 9/30/25 ────────────────────────────────────────────────────────────────────────────── Net Income $ 2,908 $ 1,024 Depreciation and amortization 177 139 Refranchising (gain) loss -24 -33 Gain on Pizza Hut divestitures -1,683 — Deferred income taxes 62 175 Share-based compensation expense 51 54 Changes in accounts and notes 18 51 receivable Changes in prepaid expenses and other -52 -8 current assets Changes in accounts payable and other -6 -42 current liabilities Changes in income taxes payable -44 -31 Other, net -9 64 Net Cash Provided by Operating 1,398 1,393 Activities Cash Flows - Investing Activities Capital spending -262 -236 Acquisition of franchise -5 -100 restaurants Proceeds from refranchising of 32 53 restaurants Maturities (purchases) of Short-term — 91 investments, net Proceeds from Pizza Hut 2,380 — divestitures Other, net 10 -16 Net Cash Provided by (Used in) Investing 2,155 -208 Activities Cash Flows - Financing Activities Proceeds from long-term debt — 1,493 Repayments of long-term debt -27 -957 Revolving credit facilities, three -300 -350 months or less, net Repurchase shares of Common Stock -1,202 -374 Dividends paid on Common Stock -616 -592 Other, net -35 -42 Net Cash Used in Financing -2,180 -822 Activities Effect of Exchange Rate on Cash and Cash 3 29 Equivalents Net Increase in Cash, Cash Equivalents, Restricted Cash and Restricted 1,376 393 Cash Equivalents Cash, Cash Equivalents, Restricted Cash 923 807 and Restricted Cash Equivalents - Beginning of Period Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - $ 2,299 $ 1,200 End of Period
(unaudited) In addition to the results provided in accordance with Generally Accepted Accounting Principles in the United States of America ("GAAP"), the Company provides the following non-GAAP measurements.
• Diluted Earnings Per Share ("EPS") excluding Special Items (as defined below);
• Core Operating Profit. Core Operating Profit excludes Special Items and foreign currency translation (“F/X”) and we use Core Operating Profit for the purposes of evaluating performance internally;
• Company restaurant profit and Company restaurant margin as a percentage of sales (as defined below).
These non-GAAP measurements are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measurements provide additional information to investors to facilitate the comparison of past and present operations.
Special Items are not included in any of our Division segment results as the Company does not believe they are indicative of our ongoing operations due to their size and/or nature. Our chief operating decision maker does not consider the impact of Special Items when assessing segment performance. The Special Items are described in (a) - (f) in the accompanying notes.
Company restaurant profit is defined as Company sales less Company restaurant expenses, both of which appear on the face of our Condensed Consolidated Statements of Income. Company restaurant expenses include those expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, cost of restaurant-level labor, rent, depreciation and amortization of restaurant-level assets and advertising expenses incurred by and on behalf of that Company restaurant. Company restaurant margin as a percentage of sales ("Company restaurant margin %") is defined as Company restaurant profit divided by Company sales. We use Company restaurant profit for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe Company restaurant profit provides useful information to investors as to the profitability of our Company-owned restaurants. In calculating Company restaurant profit, the Company excludes revenues and expenses directly associated with our franchise operations as well as non-restaurant-level costs included in General and administrative expenses, some of which may support Company-owned restaurant operations. The Company also excludes restaurant-level asset impairment and closures expenses, which have historically not been significant, from the determination of Company restaurant profit as such expenses are not believed to be indicative of ongoing operations. Further, while we generally include depreciation and amortization of restaurant- level assets within Divisional Company restaurant expenses used to derive Divisional Company restaurant profit, we record amortization of reacquired franchise rights arising from acquisition accounting within Corporate and Unallocated Company restaurant expenses as such amortization is not believed to be indicative of ongoing Divisional results as well as to enhance the comparability of acquired stores' margins with those of existing restaurants. Company restaurant profit and Company restaurant margin % as presented may not be comparable to other similarly titled measures of other companies in the industry.
Certain non-GAAP measurements are presented excluding the impact of F/X. These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the F/X impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.
KFC Division ────────────────────────────────────────────────────────────────────────────── GAAP Operating $ 425 $ 388 $ 1,217 $ 1,082 Profit Negative (Positive) Foreign -7 N/A -44 N/A Currency Impact Core Operating $ 418 $ 388 $ 1,174 $ 1,082 Profit Taco Bell Division GAAP Operating $ 255 $ 267 $ 846 $ 770 Profit Negative (Positive) Foreign — N/A -1 N/A Currency Impact Core Operating $ 255 $ 267 $ 846 $ 770 Profit Pizza Hut Division GAAP Operating $ 50 $ 84 $ 184 $ 239 Profit Negative (Positive) Foreign — N/A -4 N/A Currency Impact Core Operating $ 50 $ 84 $ 181 $ 239 Profit Habit Burger & Grill Division GAAP Operating $ -1 $ -2 $ -12 $ — Profit (Loss) Negative (Positive) Foreign — N/A — N/A Currency Impact Core Operating $ -1 $ -2 $ -12 $ — Profit (Loss) Reconcili… of GAAP Net Income to Net Income excluding Special Items GAAP Net $ 1,623 $ 397 $ 2,908 $ 1,024 Income Special Items (Income) -1,656 18 -1,618 73 Expense - Operating Profit Special Items Expense - Other 2 — 2 — pension (income) expense(b) Special Items Tax 459 28 2 116 Expense(f) Net Income excluding $ 427 $ 442 $ 1,294 $ 1,214 Special Items Reconcili… of Diluted EPS to Diluted EPS excluding Special Items Diluted $ 5.92 $ 1.41 $ 10.51 $ 3.64 EPS Less Special Items 4.36 -0.16 5.83 -0.67 Diluted EPS Diluted EPS excluding $ 1.56 $ 1.58 $ 4.68 $ 4.32 Special Items Reconcili… of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items GAAP Effective 26.1 % 26.7 % 10.3 % 30.3 % Tax Rate Impact on Tax Rate as a 5.2 % 5.9 % -10.2 % 8.9 % result of Special Items Effective Tax Rate excluding 20.9 % 20.8 % 20.5 % 21.4 % Special Items
The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.
The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results. 15
The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.
The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results. 16
Notes to the Condensed Consolidated Summary of Results, Condensed Consolidated Balance Sheets
(unaudited) Amounts presented as of and for the quarters and years to date ended September 30, 2026 and 2025 are preliminary.
Amounts presented in the Condensed Consolidated Summary of Results, Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows (the "Financial Statements") and in the tabular presentations in these Notes are rounded to the nearest underlying whole number in millions in all instances. As a result, some totals and percentages may not recompute based on rounded figures as presented within the Financial Statements and these Notes.
As of September 1, 2026, the Company determined it has three reportable segments on a prospective basis as a result of the sale of the Pizza Hut business. The Company has included the results of our divested segment, Pizza Hut Division, through the sale dates in the financial statements and tables for comparability purposes.
Certain General and administrative expenses allocations between KFC Division and Corporate and Unallocated for the prior periods have been restated to be comparable with the allocations for the quarter and year to date ended September 30, 2026.
(a) In 2025, we began a review of strategic options for the Pizza Hut brand which culminated in the quarter ended September 30, 2026 with two separate transactions for the sale of the brand. We recorded charges of $26 million and $107 million during the quarter and year to date ended September 30, 2026, respectively, and charges of $4 million in both the quarter and year to date ended September 30, 2025, to Corporate and unallocated General and administrative expenses, which primarily included third-party advising costs associated with this strategic options review. Additionally in 2025, we wrote off approximately $4 million of franchise incentive assets associated with rationalizing the Pizza Hut estate in preparation for a potential transaction. Given the significance of the costs incurred through the course of this strategic options review, we have reflected such amounts as Special Items.
(b) During the quarter ended September 30, 2026, we completed the divestiture of the Pizza Hut brand in two transactions. On August 7, 2026, we completed the sale of Pizza Hut in mainland China to Yum China Holdings, Inc. for $1.2 billion in proceeds. On September 1, 2026, we completed the sale of Pizza Hut excluding mainland China to LongRange Capital, a private equity firm, for $1.2 billion of net proceeds. The Pizza Hut divestitures resulted in a pre-tax gain of $1.7 billion, which represented the amount of net consideration received over the carrying value of the net assets and was recorded to Gain on Pizza Hut divestitures in the quarter ended September 30, 2026. Additionally, we incurred charges of $2 million within Other Pension (income) expense associated with an option for certain Pizza Hut employees to voluntarily elect an early payout of their pension benefits in connection with the sales. Due to the nature and size of the divestitures, we have reflected such amounts as Special Items.
(c) In 2025, we decided to designate two brand headquarters in the U.S., located in Plano, Texas and Irvine, California, to foster greater collaboration among brands and employees. This involved relocating the KFC U.S. corporate office to the KFC Global headquarters and requiring the majority of our U.S.-based remote employees to relocate to an appropriate headquarter office. We also decided to relocate our YUM Corporate headquarters to a new space in Louisville, Kentucky and accordingly, donated our existing space. Costs incurred to date primarily include severance for the employees who chose not to relocate and consultant fees. As a result of these decisions, we recorded charges of approximately $3 million during the quarter ended September 30, 2025, and approximately $1 million and $20 million for the years to date ended September 30, 2026 and 2025, respectively to Corporate and unallocated General and administrative expenses. Due to their scope and size, these charges have been reflected as Special Items.
(d) During the quarter ended March 31, 2026, we received approximately $44 million, net of legal expenses, related to a credit card interchange fee litigation settlement in which we were a plaintiff. This settlement was recorded to Unallocated Other (income) expense. Due to the nature and size of the settlement, including the years to which the litigation related, it has been reflected as a Special Item within Other income.
(e) On January 8, 2025, we terminated our franchise agreements with franchisee IS Gida A.S. (IS Gida), the owner and operator of KFC and Pizza Hut restaurants in Turkey and a subsidiary of IS Holding A.S. (IS Holding), after failure by IS Gida to meet our standards. As a result, 283 KFC restaurants and 254 Pizza Hut restaurants in Turkey were closed during the first quarter of 2025. We also re- acquired the master franchise rights in Germany for KFC and Pizza Hut from the owner of IS Holding in December 2024. We recorded charges of $1 million and $8 million during the quarter and year to date ended September 30, 2025, respectively, to Corporate and unallocated General and administrative expenses consisting primarily of severance costs associated with re-acquiring the master franchise rights in Germany. Consistent with prior charges related to the matter, these charges have been reflected as Special Items. 17 (f) The below table includes the detail of Special Items Tax (Benefit) Expense:
Tax (Benefit) on Special Items Expense - Operating Profit was determined by assessing the tax impact of each individual component within Special Items, other than the income tax impacts from Gain on Pizza Hut divestitures which is shown separately, based upon the nature of the item and jurisdictional tax law.
Tax Expense - Income tax impacts from Gain on Pizza Hut divestitures in the quarter ended September 30, 2026, reflects $466 million of tax expense recorded upon the sales of the Pizza Hut business. The year to date ended September 30, 2026 also reflects a $359 million net deferred tax benefit, reflecting the recognition of certain tax basis in entities expected to be sold with the Pizza Hut business upon entering into definitive agreements during the quarter ended June 30, 2026.
Tax (Benefit) - Intra-entity transfers and valuations of intellectual property in the year to date ended September 30, 2026, reflects tax benefits of $113 million resulting from an internal reorganization to consolidate our Pizza Hut legal entities and assets into two isolated ownership structures by aligning the legal ownership, simplifying the organizational footprint and consolidating the Pizza Hut domestic and international businesses. As part of this reorganization, certain Pizza Hut intellectual property ("IP") rights from subsidiaries in the U.S. were transferred to international subsidiaries resulting in a step-up in amortizable tax basis of those IP rights. This reorganization began in the fourth quarter of 2025 in connection with our Pizza Hut strategic options review.
Additionally, Tax (Benefit) - Intra-entity transfers and valuations of intellectual property in the year to date ended September 30, 2026, includes $12 million of tax expense representing an adjustment to the valuation allowance on tax credits previously granted by local Swiss tax authorities in connection with transferred IP rights in Switzerland. Previously recorded impacts associated with this IP transfer were recorded as Special Items.
Tax Expense - U.S. OBBBA in the quarter and year to date ended September 30, 2025, reflects the tax expense recorded upon the July 4, 2025, enactment of H.R.1, commonly known as the One Big Beautiful Bill Act (“OBBBA”) in the United States. The tax expense was primarily associated with a change in management's judgment regarding our ability to utilize U.S. foreign tax credit related deferred tax assets that existed at the date of enactment and has been reflected as a Special Item due to the size of the non-recurring adjustment necessary upon enactment of the legislation.
Tax (Benefit) - Tax audit in the quarter and year to date ended September 30, 2025, reflects the benefit associated with the reversal of a reserve due to a favorable audit resolution. Such reserve was established in prior years and was originally recorded as a Special Item.
Tax Expense - Other Income tax impacts recorded as Special in the year to date ended September 30, 2026, includes a $13 million adjustment to tax expense associated with our decision to exit Russia. Consistent with previously recorded impacts associated with our decision to exit Russia, this adjustment was recorded as a Special Item.
Tax Expense - Foreign tax reserve in the quarter and year to date ended September 30, 2025, is associated with a reserve, and the related ongoing foreign exchange and inflationary adjustments, associated with a change in management's judgment around a Mexican subsidiary's ability to utilize losses to offset recapture gains triggered by a historical tax deconsolidation in Mexico. This expense was reflected as a Special Item due to its size and the time elapsed since the years to which the reserve relates. 18
Full text with the tables
NEWS
Yum! Brands Reports Third-Quarter Results
KFC Unit Growth of 7%; Yum! Completes Pizza Hut Divestiture;
Returns $1.8 Billion to Shareholders Through Dividends and Share Repurchases
Year-to-Date;
Taco Bell U.S. Outpaces the QSR Industry Since End of September
Louisville, KY (November 3, 2026)
- Yum! Brands, Inc. (NYSE: YUM) today reported results for the third quarter
ended September 30, 2026. Third-quarter GAAP EPS was $5.92 and third-quarter EPS
excluding Special Items was $1.56.
CHRIS TURNER COMMENTS
Chris Turner, CEO, said “Yum! has entered its next chapter of growth, having
completed the divestiture of Pizza Hut, with a sharper focus on our Raise the
B.A.R. priorities. In support of those priorities, KFC delivered record Q3
global gross unit development and continues to scale its new global strategy
reflecting the brand’s ambition of being the most modern chicken QSR. I’m also
very pleased that, since the end of September, Taco Bell U.S. has been outpacing
the QSR industry on same-store sales growth. Taco Bell will continue building on
this momentum, with differentiated value and innovation that resonate across all
consumer groups. With iconic brands, unmatched global scale and significant
development white space, we remain confident in our ability to deliver
consistent earnings growth and create long-term shareholder value.”
STRATEGIC ANNOUNCEMENTS
• On August 7 th and September 1 st , Yum! completed the sales of the Pizza Hut
brand in mainland China to Yum China and Pizza Hut excluding mainland China to
LongRange Capital , respectively.
PERFORMANCE METRICS EXCLUDING PIZZA HUT
• Unit count increased 7% including 955 gross new units in the quarter.
• Digital system sales over $9 billion, with digital mix reaching 64%.
Performance Metrics Third-Quarter % Change
System Sales Same-Store Sales Units
Ex F/X
KFC Division +6 +1 +7
Taco Bell Division -2 -4 +3
Worldwide 3 Even +7
OPERATING RESULTS
• 2026 results presented below include the results of Pizza Hut prior to the
sale dates referenced above. 2025 results include the results of Pizza Hut for
the entirety of the periods presented below.
• Excluding the results of Pizza Hut from both 2026 and 2025, Core Operating
Profit grew 1% for the quarter and 6% for the year to date.
• 2026 GAAP Operating Profit figures presented below reflect a pre-tax gain of
approximately $1.7 billion related to the sales of Pizza Hut.
• Foreign currency translation favorably impacted Divisional Operating Profit by
$7 million and $48 million in the quarter and year to date, respectively.
Reported Third-Quart… Year-to-Date
Results % Change % Change
GAAP Core GAAP Core
Operating Operating Operating Operating
Profit Profit1 Profit Profit1
KFC +9 +8 +13 +8
Division
Taco Bell -5 -4 +10 +10
Division
Pizza Hut -41 -41 -23 -24
Division
Worldwide +248 -4 +97 +2
Third-Q… Year-to…
2026 2025 % Change 2026 2025 %
Change
GAAP $5.92 $1.41 +319 $10.51 $3.64 +188
EPS
Less
Special $4.36 $(0.16) NM $5.83 $(0.67) NM
Items
EPS1
EPS
Exclud… $1.56 $1.58 -1 $4.68 $4.32 +8
Special
Items
1 See reconciliation of Non-GAAP Measurements to GAAP Results within this
release for further detail of Core Operating Profit and Special Items.
All comparisons are versus the same period a year ago.
System sales growth figures exclude foreign currency translation ("F/X") and
core operating profit growth figures exclude F/X and Special Items. Special
Items are not allocated to any segment and therefore only impact worldwide GAAP
results. See reconciliation of Non-GAAP Measurements to GAAP Results within this
release for further details.
Digital system sales includes all transactions at system restaurants where
consumers utilize ordering interaction that is primarily facilitated by
automated technology.
Yum! Brands, Inc. • 1900 Colonel Sanders Lane • Louisville, KY 40213 • P: 502
874-8300 • investors.yum.com
KFC DIVISION
Thir… Year…
%/pp… %/pp…
Chan… Chan…
2026 2025 Repo… Ex 2026 2025 Repo… Ex
F/X F/X
Res… 35,4… 32,9… +7 N/A 35,4… 32,9… +7 N/A
Sys…
Sal… 10,0… 9,340 +8 +6 28,9… 26,4… +10 +6
($M…
Sam…
Sal… +1 +3 NM NM +2 +2 NM NM
Gro…
(%)
Fra…
and
Pro… 497 459 +8 +7 1,435 1,303 +10 +7
Rev…
($M…
Ope…
Pro… 425 388 +9 +8 1,217 1,082 +13 +8
($M…
Ope…
Mar… 44.8 44.1 +0.7 +0.6 44.3 43.3 +1.0 +1.0
(%)
• KFC Division opened 878 gross new restaurants across 66 countries.
• Company-owned restaurant margins were 12.3%, down 140 basis points year-over-
year, primarily driven by the 15 lower margin stores being tested under the
Saucy brand in 2026.
• Foreign currency translation favorably impacted operating profit by $7
million.
KFC Markets1 Percent of KFC System Sales Growth
System Sales2 Ex F/X
Third-Quarter Year-to-Date
(% Change) (% Change)
China 26% +3 +5
Europe 13% +2 +1
United States 12% -6 -3
Asia 12% +12 +11
Latin America 8% +11 +11
Australia 7% +5 +4
United Kingdom 7% +7 +8
Middle East / Turkey 6% +25 +21
/ North Africa
Africa 5% +8 +7
Canada 2% Even -1
India 2% +20 +17
1 Refer to investors.yum.com/financial-information/financial-reports/ for a list
of the countries within each of the markets.
2 Reflects Full Year 2025.
2
TACO BELL DIVISION
Thir… Year…
%/pp… %/pp…
Chan… Chan…
2026 2025 Repo… Ex 2026 2025 Repo… Ex
F/X F/X
Res… 9,102 8,816 +3 N/A 9,102 8,816 +3 N/A
Sys…
Sal… 4,292 4,368 -2 -2 13,3… 12,6… +6 +6
($M…
Sam…
Sal… -4 +7 NM NM +4 +7 NM NM
Gro…
(%)
Fra…
and
Pro… 245 254 -3 -3 767 735 +4 +4
Rev…
($M…
Ope…
Pro… 255 267 -5 -4 846 770 +10 +10
($M…
Ope…
Mar… 33.1 36.6 -3.5 -3.5 35.0 36.7 -1.7 -1.7
(%)
• Taco Bell Division opened 73 gross new restaurants across 16 countries.
• Taco Bell U.S. system sales declined 3% and same-store sales declined 4%. U.S.
company-owned restaurant margins were 20.5%.
• Taco Bell International system sales excluding foreign currency translation
grew 14% and same-store sales grew 5%.
HABIT BURGER & GRILL DIVISION
• Habit Burger & Grill Division opened 4 gross new restaurants.
• Habit Burger & Grill Division system sales grew 3% and same-store sales were
flat .
OTHER ITEMS
• See reconciliation of Non-GAAP Measurements to GAAP results within this
release for further detail of Special Items by financial statement line item
including the impact of Special Items on General and administrative expenses.
• Disclosures pertaining to outstanding debt in our Restricted Group capital
structure will be provided at the time of the filing of the third-quarter Form
10-Q.
LONG-TERM GROWTH ALGORITHM
• The Company targets the following long-term financial performance metrics,
first announced in 2022, that it believes it can achieve over an extended period
of time, on average:
• 5% Unit Growth
• 7% System Sales Growth, excluding F/X; and
• At least 8% Core Operating Profit Growth 1
1 At this time, we are unable to forecast any Special Items or any impact from
changes in F/X rates, and therefore cannot provide an estimate of Operating
Profit Growth on a GAAP basis.
3
CONFERENCE CALL
Yum! Brands, Inc. will host a conference call to review the company's financial
performance and strategies at 8:15 a.m. Eastern Time November 3, 2026. The
number is 833/461-5787 for North America callers and +1/585-542-9983 for
international callers, conference ID 304548872.
The call will be available for playback beginning at 10:00 a.m. Eastern Time
November 3, 2026 through November 10, 2026. To access the playback, dial
+1/833-309-1852, conference ID 304548872.
The webcast and the playback can be accessed by visiting Yum! Brands' website,
investors.yum.com/events-and-presentations and selecting “Q3 2026 Yum! Brands,
Inc. Earnings Call.”
ADDITIONAL INFORMATION ONLINE
Quarter-end dates for each division, restaurant count details, definitions of
terms and Restricted Group financial information are available at
investors.yum.com. Reconciliation of non-GAAP financial measures to the most
directly comparable GAAP measures are included in our Condensed Consolidated
Summary of Results.
FORWARD-LOOKING STATEMENTS
This announcement may contain “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. We intend all forward-looking statements to be covered by
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements generally can be identified by the fact that
they do not relate strictly to historical or current facts and by the use of
forward-looking words such as “expect,” “expectation,” “believe,” “anticipate,”
“may,” “could,” “intend,” “belief,” “plan,” “estimate,” “target,” “predict,”
“likely,” “seek,” “project,” “model,” “ongoing,” “will,” “should,” “forecast,”
“outlook” or similar terminology. These statements are based on and reflect our
current expectations, estimates, assumptions and/ or projections, our perception
of historical trends and current conditions, as well as other factors that we
believe are appropriate and reasonable under the circumstances. Forward-looking
statements are neither predictions nor guarantees of future events,
circumstances or performance and are inherently subject to known and unknown
risks, uncertainties and assumptions that could cause our actual results to
differ materially from those indicated by those statements. There can be no
assurance that our expectations, estimates, assumptions and/or projections,
including with respect to the future earnings and performance or capital
structure of Yum! Brands, will prove to be correct or that any of our
expectations, estimates or projections will be achieved. Numerous factors could
cause our actual results and events to differ materially from those expressed or
implied by forward-looking statements, including, without limitation: food
safety and food- or beverage-borne illness concerns, including the impact of the
July 2026 cyclospora outbreak; the impact of such outbreak on sales and pace of
recovery; adverse impacts of public health conditions or other catastrophic or
unforeseen events; the success and financial stability of our concepts’
franchisees; the success of our development strategy; anticipated benefits from
past or potential future acquisitions, investments, other strategic transactions
or initiatives, or our portfolio business model; the possibility that we may not
be able to realize the anticipated benefits of the sale of the Pizza Hut
business; our significant exposure to the Chinese market; our global operations
and related exposure to geopolitical instability, including the expansion or
threatened expansion of restrictive trade policies or anti-American sentiment;
foreign currency risks and foreign exchange controls; our ability to protect the
integrity or availability of IT systems or the security of confidential
information and other cybersecurity risks; compliance with data privacy, data
protection and emerging technology legal requirements; our ability to
successfully and securely implement technology initiatives, including
utilization of artificial intelligence; our increasing dependence on digital
commerce and delivery platforms; the impact of social media; our ability to
protect our trademarks or other intellectual property; shortages or
interruptions in the availability and the delivery of food, equipment and other
supplies; the loss of key personnel or failure to successfully transition senior
management, labor shortages and increased labor costs, including as a result of
state and local legislation related to wages and working conditions; changes in
food prices and other operating costs; our corporate reputation, the value and
perception of our brands and changes in consumer preferences such as wellness
trends; evolving expectations and requirements with respect to social and
environmental sustainability matters; adverse effects of severe weather and
climate change; pending or future litigation and legal claims or proceedings;
changes in, or non-compliance with, legal requirements; tax matters, including
changes in tax rates or laws, impositions of new taxes, tax implications of our
restructurings, or disagreements with taxing authorities; changes in consumer
discretionary spending and macroeconomic conditions, including inflationary
pressures and interest rate conditions; competition within the retail food
industry; and risks relating to our level of indebtedness. In addition, other
risks and uncertainties not presently known to us or that we currently believe
to be immaterial could affect the accuracy of any such forward-looking
statements. All forward-looking statements should be evaluated with the
understanding of their inherent uncertainty. The forward-looking statements
included in this announcement are only made as of the date of this announcement
and we disclaim any obligation to publicly update any forward-looking statement
to reflect subsequent events or circumstances.
You should consult our filings with the Securities and Exchange Commission
(including the information set forth under the captions “Risk Factors” and
“Forward-Looking Statements” in our most recently filed Annual Report on Form
10-K and Quarterly Report on Form 10-Q) for additional detail about factors that
could affect our financial and other results.
Yum! Brands is a leading restaurant company that grows iconic brands globally,
powered by world-class talent, franchise partners and technology. Yum!
subsidiaries or franchisees operate more than 44,000 KFC, Taco Bell and/or Habit
Burger & Grill restaurants across 150-plus countries and territories.
KFC and Taco Bell are global leaders in their respective categories, while Habit
Burger & Grill is a fast-casual concept known for made-to-order chargrilled
burgers, sandwiches and more. Guided by its Recipe for Good Growth and Raising
the B.A.R. priorities, Yum! brings together its global brands, franchise system,
scale and leading digital and technology capabilities to drive growth and create
long-term value. Together, these strengths help Yum! build the world’s most
loved, trusted and connected restaurant brands.
Analysts are invited to contact:
Matt Morris, Head of Investor
Relations at 888/298-6986
Members of the media are invited to
contact:
Lori Eberenz, Director, Public
Relations, at 502/874-8200
4
YUM! Brands, Inc.
Condensed Consolidated Summary of Results
(amounts in millions, except per share amounts)
(unaudited)
Year
Qua… % to %
end… Cha… date Cha…
──────────────────────────────────────────────────────────────────────────────
9/3… 9/3… B/(… 9/3… 9/3… B/(…
Re…
Co… $ 784 $ 697 13 $ 2,4… $ 1,974 22
sa…
Fr…
and 854 857 — 2,6… 2,476 5
pr…
re…
Fr…
co…
for
ad… 415 426 -3 1,2… 1,249 2
and
ot…
se…
To… 2,0… 1,9… 4 6,2… 5,699 10
re…
Co…
and
Ex…
Net
Co…
re… 679 587 -16 2,0… 1,668 -23
ex…
Ge…
and 305 282 -8 950 885 -7
ad…
ex…
Fr…
and 51 35 -48 136 107 -27
pr…
ex…
Fr…
ad…
and 413 427 3 1,2… 1,251 -2
ot…
se…
ex…
Re…
(g… -22 -17 29 -24 -33 -27
lo…
Ot…
(i… -7 -1 NM -46 -15 NM
ex…
To…
co…
and 1,4… 1,3… -8 4,3… 3,863 -13
ex…
net
Ga…
on
Pi… 1,6… — N/A 1,6… — N/A
Hut
di…
Op… 2,3… 666 248 3,6… 1,836 97
Pr…
In…
(i… — — NM -6 -1 NM
ex…
net
Ot…
pe… 2 1 -121 2 — -563
(i…
ex…
In…
ex… 120 124 4 377 368 -3
net
In…
be… 2,1… 541 306 3,2… 1,470 121
in…
ta…
In…
tax 572 144 -296 335 446 25
pr…
Net $ 1,6… $ 397 309 $ 2,9… $ 1,024 184
In…
Ba…
EPS
EPS $ 5.96 $ 1.42 318 $ 10.… $ 3.67 188
Av…
sh… 272 278 2 275 279 1
ou…
Di…
EPS
EPS $ 5.92 $ 1.41 319 $ 10.… $ 3.64 188
Av…
sh… 274 281 2 277 281 2
ou…
Di…
de…
per $ 0.75 $ 0.71 $ 2.25 $ 2.13
co…
sh…
See accompanying notes.
5
YUM! Brands, Inc.
KFC DIVISION Operating Results
(amounts in millions)
(unaudited)
Ye…
Qu… % to %
en… Ch… da… Ch…
──────────────────────────────────────────────────────────────────────────────
9/… 9/… B/… 9/… 9/… B/…
C… $ 274 $ 259 6 $ 804 $ 721 12
s…
F…
a… 497 459 8 1,… 1,… 10
p…
r…
F…
c…
f…
a… 177 161 9 511 478 7
a…
o…
s…
T… 948 879 8 2,… 2,… 10
r…
C…
r… 240 224 -7 711 635 -12
e…
G…
a… 90 92 2 264 261 -1
a…
e…
F…
a… 21 15 -39 57 51 -12
p…
e…
F…
a…
a… 174 160 -8 503 472 -7
o…
s…
e…
O…
(… -2 — NM -4 1 NM
e…
T…
c…
a… 523 491 -6 1,… 1,… -8
e…
n…
O… $ 425 $ 388 9 $ 1,… $ 1,… 13
P…
C…
r… 12… % 13… % (1… 11… % 11… % (0…
m… pp… pp…
%1
O… 44… % 44… % 0.7 44… % 43… % 1.0
m… pp… pp…
See accompanying notes.
1 See reconciliation of Non-GAAP Measurements to GAAP Results within this
release for further detail of Company restaurant margin %.
6
YUM! Brands, Inc.
TACO BELL DIVISION Operating Results
(amounts in millions)
(unaudited)
Ye…
Qu… % to %
en… Ch… da… Ch…
──────────────────────────────────────────────────────────────────────────────
9/… 9/… B/… 9/… 9/… B/…
C… $ 354 $ 298 19 $ 1,… $ 848 32
s…
F…
a… 245 254 -3 767 735 4
p…
r…
F…
c…
f…
a… 171 178 -4 530 514 3
a…
o…
s…
T… 770 730 5 2,… 2,… 15
r…
C…
r… 283 227 -24 860 649 -33
e…
G…
a… 52 50 -4 158 148 -7
a…
e…
F…
a… 11 8 -39 27 22 -23
p…
e…
F…
a…
a… 169 177 5 529 510 -4
o…
s…
e…
O…
(… — — NM — — NM
e…
T…
c…
a… 515 463 -11 1,… 1,… -19
e…
n…
O… $ 255 $ 267 -5 $ 846 $ 770 10
P…
C…
r… 20… % 23… % (3… 23… % 23… % (0…
m… pp… pp…
%1
O… 33… % 36… % (3… 35… % 36… % (1…
m… pp… pp…
See accompanying notes.
1 See reconciliation of Non-GAAP Measurements to GAAP Results within this
release for further detail of Company restaurant margin %.
7
YUM! Brands, Inc.
PIZZA HUT DIVISION Operating Results
(amounts in millions)
(unaudited)
Ye…
Qu… % to %
en… Ch… da… Ch…
──────────────────────────────────────────────────────────────────────────────
9/… 9/… B/… 9/… 9/… B/…
C… $ 26 $ 9 177 $ 89 $ 20 350
s…
F…
a… 109 146 -25 394 436 -10
p…
r…
F…
c…
f…
a… 67 85 -21 226 255 -11
a…
o…
s…
T… 202 240 -16 709 710 —
r…
C…
r… 24 10 -1… 85 21 -2…
e…
G…
a… 43 50 14 159 159 —
a…
e…
F…
a… 18 11 -72 49 32 -53
p…
e…
F…
a…
a… 69 89 22 240 268 10
o…
s…
e…
O…
(… -2 -4 NM -8 -9 NM
e…
T…
c…
a… 152 156 3 524 471 -11
e…
n…
O… $ 50 $ 84 -41 $ 184 $ 239 -23
P…
C…
r… 8.4 % -1… % 20… 3.9 % -9… % 13…
m… pp… pp…
%1
O… 24… % 35… % (1… 26… % 33… % (7…
m… pp… pp…
See accompanying notes.
1 See reconciliation of Non-GAAP Measurements to GAAP Results within this
release for further detail of Company restaurant margin %.
8
YUM! Brands, Inc.
Condensed Consolidated Balance Sheets
(amounts in millions)
(unaudited)
ASSETS
Current Assets 9/30/26 12/31/25
──────────────────────────────────────────────────────────────────────────────
Cash and cash equivalents $ 2,108 $ 709
Accounts and notes receivable, less
allowance: 639 841
$54 in 2026 and $60 in 2025
Prepaid expenses and other current 558 490
assets
Total Current Assets 3,305 2,040
Property, plant and equipment, net of
accumulated depreciation of $1,531 in
2026
and $1,485 in 2025 1,638 1,605
Goodwill 718 969
Intangible assets, net 803 909
Other assets 1,620 1,708
Deferred income taxes 685 965
Total Assets $ 8,769 $ 8,197
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities
Accounts payable and other current $ 1,271 $ 1,433
liabilities
Income taxes payable 20 46
Short-term borrowings 2,141 38
Total Current Liabilities 3,431 1,516
Long-term debt 9,459 11,872
Other liabilities and deferred 2,043 2,133
credits
Total Liabilities 14,933 15,521
Shareholders' Deficit
Common Stock, no par value, 750
shares — —
authorized; 269 shares issued in 2026
and 277 shares issued in 2025
Accumulated deficit -5,924 -7,014
Accumulated other comprehensive loss -241 -311
Total Shareholders' Deficit -6,165 -7,325
Total Liabilities and Shareholders' $ 8,769 $ 8,197
Deficit
See accompanying notes.
9
YUM! Brands, Inc.
Condensed Consolidated Statements of Cash Flows
(amounts in millions)
(unaudited)
Year to date
Cash Flows - Operating Activities 9/30/26 9/30/25
──────────────────────────────────────────────────────────────────────────────
Net Income $ 2,908 $ 1,024
Depreciation and amortization 177 139
Refranchising (gain) loss -24 -33
Gain on Pizza Hut divestitures -1,683 —
Deferred income taxes 62 175
Share-based compensation expense 51 54
Changes in accounts and notes 18 51
receivable
Changes in prepaid expenses and
other -52 -8
current assets
Changes in accounts payable and
other -6 -42
current liabilities
Changes in income taxes payable -44 -31
Other, net -9 64
Net Cash Provided by Operating 1,398 1,393
Activities
Cash Flows - Investing Activities
Capital spending -262 -236
Acquisition of franchise -5 -100
restaurants
Proceeds from refranchising of 32 53
restaurants
Maturities (purchases) of
Short-term — 91
investments, net
Proceeds from Pizza Hut 2,380 —
divestitures
Other, net 10 -16
Net Cash Provided by (Used in)
Investing 2,155 -208
Activities
Cash Flows - Financing Activities
Proceeds from long-term debt — 1,493
Repayments of long-term debt -27 -957
Revolving credit facilities, three -300 -350
months or less, net
Repurchase shares of Common Stock -1,202 -374
Dividends paid on Common Stock -616 -592
Other, net -35 -42
Net Cash Used in Financing -2,180 -822
Activities
Effect of Exchange Rate on Cash
and Cash 3 29
Equivalents
Net Increase in Cash, Cash
Equivalents,
Restricted Cash and Restricted 1,376 393
Cash
Equivalents
Cash, Cash Equivalents, Restricted
Cash 923 807
and Restricted Cash Equivalents -
Beginning of Period
Cash, Cash Equivalents, Restricted
Cash
and Restricted Cash Equivalents - $ 2,299 $ 1,200
End of
Period
See accompanying notes.
10
Reconciliation of Non-GAAP Measurements to GAAP Results
(amounts in millions, except per share amounts)
(unaudited)
In addition to the results provided in accordance with Generally Accepted
Accounting Principles in the United States of America ("GAAP"), the Company
provides the following non-GAAP measurements.
• Diluted Earnings Per Share ("EPS") excluding Special Items (as defined below);
• Effective Tax Rate excluding Special Items;
• Core Operating Profit. Core Operating Profit excludes Special Items and
foreign currency translation (“F/X”) and we use Core Operating Profit for the
purposes of evaluating performance internally;
• Net Income, excluding Special Items;
• Company restaurant profit and Company restaurant margin as a percentage of
sales (as defined below).
These non-GAAP measurements are not intended to replace the presentation of our
financial results in accordance with GAAP. Rather, the Company believes that the
presentation of these non-GAAP measurements provide additional information to
investors to facilitate the comparison of past and present operations.
Special Items are not included in any of our Division segment results as the
Company does not believe they are indicative of our ongoing operations due to
their size and/or nature. Our chief operating decision maker does not consider
the impact of Special Items when assessing segment performance. The Special
Items are described in (a) - (f) in the accompanying notes.
Company restaurant profit is defined as Company sales less Company restaurant
expenses, both of which appear on the face of our Condensed Consolidated
Statements of Income. Company restaurant expenses include those expenses
incurred directly by our Company-owned restaurants in generating Company sales,
including cost of food and paper, cost of restaurant-level labor, rent,
depreciation and amortization of restaurant-level assets and advertising
expenses incurred by and on behalf of that Company restaurant. Company
restaurant margin as a percentage of sales ("Company restaurant margin %") is
defined as Company restaurant profit divided by Company sales. We use Company
restaurant profit for the purposes of internally evaluating the performance of
our Company-owned restaurants and we believe Company restaurant profit provides
useful information to investors as to the profitability of our Company-owned
restaurants. In calculating Company restaurant profit, the Company excludes
revenues and expenses directly associated with our franchise operations as well
as non-restaurant-level costs included in General and administrative expenses,
some of which may support Company-owned restaurant operations. The Company also
excludes restaurant-level asset impairment and closures expenses, which have
historically not been significant, from the determination of Company restaurant
profit as such expenses are not believed to be indicative of ongoing operations.
Further, while we generally include depreciation and amortization of restaurant-
level assets within Divisional Company restaurant expenses used to derive
Divisional Company restaurant profit, we record amortization of reacquired
franchise rights arising from acquisition accounting within Corporate and
Unallocated Company restaurant expenses as such amortization is not believed to
be indicative of ongoing Divisional results as well as to enhance the
comparability of acquired stores' margins with those of existing restaurants.
Company restaurant profit and Company restaurant margin % as presented may not
be comparable to other similarly titled measures of other companies in the
industry.
Certain non-GAAP measurements are presented excluding the impact of F/X. These
amounts are derived by translating current year results at prior year average
exchange rates. We believe the elimination of the F/X impact provides better
year-to-year comparability without the distortion of foreign currency
fluctuations.
Year
Quar… to
ended date
──────────────────────────────────────────────────────────────────────────────
9/30… 9/30… 9/30… 9/30…
Rec…
of
GAAP
Ope…
Pro…
to
Core
Ope…
Pro…
Con…
GAAP
Ope… $ 2,317 $ 666 $ 3,616 $ 1,836
Pro…
Det…
of
Spe…
Ite…
Cha…
ass…
with
Piz… 26 8 107 8
Hut
Str…
Opt…
Rev…
Gain
on
Piz… -1,6… — -1,683 —
Hut
div…
Cha…
ass…
with — 3 1 20
Bra…
HQ
Con…
Cha…
ass…
with — 5 — 37
Res…
Opt…
Inc…
from — — -44 —
Lit…
Set…
Ger…
acq…
and — 1 — 8
Tur…
ter…
cos…
Spe…
Ite…
(In…
Exp… -1,6… 18 -1,618 73
-
Ope…
Pro…
Pos…
For…
Cur…
Imp… -7 N/A -48 N/A
on
Div…
Ope…
Pro…
Core
Ope… $ 654 $ 684 $ 1,950 $ 1,909
Pro…
11
Spec…
Items
as
shown
above
were
reco…
to
the
fina…
stat…
line
items Year
iden… Quart… to
belo… ended date
──────────────────────────────────────────────────────────────────────────────
9/30/… 9/30/… 9/30/… 9/30…
Cond…
Cons…
Summ…
of
Resu…
Line
Item
Decr…
in
Fran… $ — $ 4 $ — $ 5
and
prop…
reve…
Incr…
in
Gene… 26 14 109 71
and
admi…
expe…
Incr…
in
Gain
on -1,683 — -1,683 —
Pizza
Hut
dive…
Incr…
in — — -44 -3
Other
inco…
Spec…
Items
(Inc…
Expe… $ -1,656 $ 18 $ -1,618 $ 73
-
Oper…
Prof…
KFC
Division
──────────────────────────────────────────────────────────────────────────────
GAAP
Operating $ 425 $ 388 $ 1,217 $ 1,082
Profit
Negative
(Positive)
Foreign -7 N/A -44 N/A
Currency
Impact
Core
Operating $ 418 $ 388 $ 1,174 $ 1,082
Profit
Taco Bell
Division
GAAP
Operating $ 255 $ 267 $ 846 $ 770
Profit
Negative
(Positive)
Foreign — N/A -1 N/A
Currency
Impact
Core
Operating $ 255 $ 267 $ 846 $ 770
Profit
Pizza Hut
Division
GAAP
Operating $ 50 $ 84 $ 184 $ 239
Profit
Negative
(Positive)
Foreign — N/A -4 N/A
Currency
Impact
Core
Operating $ 50 $ 84 $ 181 $ 239
Profit
Habit
Burger &
Grill
Division
GAAP
Operating $ -1 $ -2 $ -12 $ —
Profit
(Loss)
Negative
(Positive)
Foreign — N/A — N/A
Currency
Impact
Core
Operating $ -1 $ -2 $ -12 $ —
Profit
(Loss)
Reconcili…
of GAAP
Net Income
to Net
Income
excluding
Special
Items
GAAP Net $ 1,623 $ 397 $ 2,908 $ 1,024
Income
Special
Items
(Income) -1,656 18 -1,618 73
Expense -
Operating
Profit
Special
Items
Expense -
Other 2 — 2 —
pension
(income)
expense(b)
Special
Items Tax 459 28 2 116
Expense(f)
Net Income
excluding $ 427 $ 442 $ 1,294 $ 1,214
Special
Items
Reconcili…
of Diluted
EPS to
Diluted
EPS
excluding
Special
Items
Diluted $ 5.92 $ 1.41 $ 10.51 $ 3.64
EPS
Less
Special
Items 4.36 -0.16 5.83 -0.67
Diluted
EPS
Diluted
EPS
excluding $ 1.56 $ 1.58 $ 4.68 $ 4.32
Special
Items
Reconcili…
of GAAP
Effective
Tax
Rate to
Effective
Tax Rate
excluding
Special
Items
GAAP
Effective 26.1 % 26.7 % 10.3 % 30.3 %
Tax Rate
Impact on
Tax Rate
as a 5.2 % 5.9 % -10.2 % 8.9 %
result of
Special
Items
Effective
Tax Rate
excluding 20.9 % 20.8 % 20.5 % 21.4 %
Special
Items
12
…
…
…
…
… Q… H…
… e… B…
… 9… T… P… & C…
… K… B… H… G… a…
… D… D… D… D… U… …
──────────────────────────────────────────────────────────────────────────────
…
… $ 4… $ 2… $ … $ … $ … $ 2…
…
…
…
…
… 4… 2… … 3 — 8…
…
…
…
…
…
… 1… 1… … 1 — 4…
…
…
…
…
…
… — — — — … 1…
…
…
…
…
… 90 52 … … … 3…
…
…
…
… 21 11 … 1 — 51
…
…
…
…
… 1… 1… … 1 — 4…
…
…
…
…
… — — — — … -…
…
…
… -2 — … — … -7
…
…
… $ 34 $ 72 $ 2 $ 9 $ … $ 1…
…
…
… $ 2… $ 3… $ … $ … $ — $ 7…
…
…
… 1… % 2… % … % … % N… 1… %
…
%
Q… H…
e… B…
9… T… P… & C…
K… B… H… G… a…
D… D… D… D… U… …
──────────────────────────────────────────────────────────────────────────────
…
… $ 3… $ 2… $ … $ … $ … $ 6…
…
…
…
…
… 4… 2… … 3 … 8…
…
…
…
…
…
… 1… 1… … 1 — 4…
…
…
…
…
…
… 92 50 … … … 2…
…
…
…
… 15 8 … 1 — 35
…
…
…
…
… 1… 1… … 1 — 4…
…
…
…
…
… — — — — … -…
…
…
… — — … — 3 -1
…
…
… $ 36 $ 71 $ … $ 9 $ … $ 1…
…
…
… $ 2… $ 2… $ 9 $ … $ — $ 6…
…
…
… 1… % 2… % … % … % N… 1… %
…
%
13
Y…
to H…
D… B…
9… T… P… & C…
K… B… H… G… a…
D… D… D… D… U… …
──────────────────────────────────────────────────────────────────────────────
…
… $ 1… $ 8… $ … $ … $ … $ 3…
…
…
…
…
… 1… 7… … 9 — 2…
…
…
…
…
…
… 5… 5… … 3 — 1…
…
…
…
…
…
… — — — — … 1…
…
…
…
…
… 2… 1… … … … 9…
…
…
…
… 57 27 … 3 — 1…
…
…
…
…
… 5… 5… … 3 — 1…
…
…
…
…
… — — — — … -…
…
…
… -4 — … 8 … -…
…
…
… $ 93 $ 2… $ 3 $ … $ … $ 3…
…
…
… $ 8… $ 1… $ … $ … $ — $ 2…
…
…
… 1… % 2… % … % … % N… 1… %
…
%
Y…
to H…
D… B…
9… T… P… & C…
K… B… H… G… a…
D… D… D… D… U… …
──────────────────────────────────────────────────────────────────────────────
…
… $ 1… $ 7… $ … $ — $ … $ 1…
…
…
…
…
… 1… 7… … 8 … 2…
…
…
…
…
…
… 4… 5… … 2 — 1…
…
…
…
…
…
… 2… 1… … … … 8…
…
…
…
… 51 22 … 3 — 1…
…
…
…
…
… 4… 5… … 2 — 1…
…
…
…
…
… — — — — … -…
…
…
… 1 — … 1 … -…
…
…
… $ 85 $ 1… $ … $ … $ … $ 3…
…
…
… $ 7… $ 8… $ … $ … $ — $ 1…
…
…
… 1… % 2… % … % … % N… 1… %
…
%
14
YUM! Brands, Inc.
Segment Results
(amounts in millions)
(unaudited)
Ha…
Bu…
Q… Ta… Pi… & Co…
e… KFC Be… Hut Gr… and
9… Di… Di… Di… Di… Un… Co…
──────────────────────────────────────────────────────────────────────────────
T… $ 948 $ 770 $ 202 $ 134 $ — $ 2,0…
r…
C…
r… 240 283 24 122 11 679
e…
G…
a… 90 52 43 12 108 305
a…
e…
F…
a… 21 11 18 1 — 51
p…
e…
F…
a…
a… 174 169 69 1 — 413
o…
s…
e…
R…
(… — — — — -22 -22
l…
O…
(… -2 — -2 — -3 -7
e…
T…
c…
a… 523 515 152 135 94 1,4…
e…
n…
G…
on
P… — — — — 1,6… 1,6…
H…
d…
O…
P… $ 425 $ 255 $ 50 $ -1 $ 1,5… $ 2,3…
(…
Ha…
Bu…
Q… Ta… Pi… & Cor…
e… KFC Be… Hut Gr… and
9… Di… Di… Di… Di… Una… Co…
──────────────────────────────────────────────────────────────────────────────
T… $ 879 $ 730 $ 240 $ 134 $ -4 $ 1,9…
r…
C…
r… 224 227 10 121 4 587
e…
G…
a… 92 50 50 13 77 282
a…
e…
F…
a… 15 8 11 1 — 35
p…
e…
F…
a…
a… 160 177 89 1 — 427
o…
s…
e…
R…
(… — — — — -17 -17
l…
O…
(… — — -4 — 3 -1
e…
T…
c…
a… 491 463 156 136 67 1,3…
e…
n…
O…
P… $ 388 $ 267 $ 84 $ -2 $ -71 $ 666
(…
The above tables reconcile segment information, which is based on management
responsibility, with our Condensed Consolidated Summary of Results. Corporate
and unallocated expenses comprise items that are not allocated to segments for
performance reporting purposes.
The Corporate and Unallocated column in the above tables includes, among other
amounts, all amounts that we have deemed Special Items. See Reconciliation of
Non-GAAP Measurements to GAAP Results.
15
YUM! Brands, Inc.
Segment Results
(amounts in millions)
(unaudited)
Ha…
Y… Bu…
to Ta… Pi… & Co…
D… KFC Be… Hut Gr… and
9… Di… Di… Di… Di… Un… Co…
──────────────────────────────────────────────────────────────────────────────
T… $ 2,… $ 2,… $ 709 $ 403 $ — $ 6,2…
r…
C…
r… 711 860 85 364 36 2,0…
e…
G…
a… 264 158 159 37 332 950
a…
e…
F…
a… 57 27 49 3 — 136
p…
e…
F…
a…
a… 503 529 240 3 — 1,2…
o…
s…
e…
R…
(… — — — — -24 -24
l…
O…
(… -4 — -8 8 -42 -46
e…
T…
c…
a… 1,… 1,… 524 415 303 4,3…
e…
n…
G…
on
P… — — — — 1,6… 1,6…
H…
d…
O…
P… $ 1,… $ 846 $ 184 $ -12 $ 1,3… $ 3,6…
(…
Ha…
Y… Bu…
to Ta… Pi… & Cor…
D… KFC Be… Hut Gr… and
9… Di… Di… Di… Di… Una… Con…
──────────────────────────────────────────────────────────────────────────────
T… $ 2,… $ 2,… $ 710 $ 395 $ -5 $ 5,…
r…
C…
r… 635 649 21 352 11 1,…
e…
G…
a… 261 148 159 39 279 885
a…
e…
F…
a… 51 22 32 3 — 107
p…
e…
F…
a…
a… 472 510 268 2 — 1,…
o…
s…
e…
R…
(… — — — — -33 -33
l…
O…
(… 1 — -9 1 -8 -15
e…
T…
c…
a… 1,… 1,… 471 396 249 3,…
e…
n…
O…
P… $ 1,… $ 770 $ 239 $ — $ -2… $ 1,…
(…
The above tables reconcile segment information, which is based on management
responsibility, with our Condensed Consolidated Summary of Results. Corporate
and unallocated expenses comprise items that are not allocated to segments for
performance reporting purposes.
The Corporate and Unallocated column in the above tables includes, among other
amounts, all amounts that we have deemed Special Items. See Reconciliation of
Non-GAAP Measurements to GAAP Results.
16
Notes to the Condensed Consolidated Summary of Results, Condensed Consolidated
Balance Sheets
and Condensed Consolidated Statements of Cash Flows
(amounts in millions)
(unaudited)
Amounts presented as of and for the quarters and years to date ended September
30, 2026 and 2025 are preliminary.
Amounts presented in the Condensed Consolidated Summary of Results, Condensed
Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows
(the "Financial Statements") and in the tabular presentations in these Notes are
rounded to the nearest underlying whole number in millions in all instances. As
a result, some totals and percentages may not recompute based on rounded figures
as presented within the Financial Statements and these Notes.
As of September 1, 2026, the Company determined it has three reportable segments
on a prospective basis as a result of the sale of the Pizza Hut business. The
Company has included the results of our divested segment, Pizza Hut Division,
through the sale dates in the financial statements and tables for comparability
purposes.
Certain General and administrative expenses allocations between KFC Division and
Corporate and Unallocated for the prior periods have been restated to be
comparable with the allocations for the quarter and year to date ended September
30, 2026.
(a) In 2025, we began a review of strategic options for the Pizza Hut brand
which culminated in the quarter ended September 30, 2026 with two separate
transactions for the sale of the brand. We recorded charges of $26 million and
$107 million during the quarter and year to date ended September 30, 2026,
respectively, and charges of $4 million in both the quarter and year to date
ended September 30, 2025, to Corporate and unallocated General and
administrative expenses, which primarily included third-party advising costs
associated with this strategic options review. Additionally in 2025, we wrote
off approximately $4 million of franchise incentive assets associated with
rationalizing the Pizza Hut estate in preparation for a potential transaction.
Given the significance of the costs incurred through the course of this
strategic options review, we have reflected such amounts as Special Items.
(b) During the quarter ended September 30, 2026, we completed the divestiture of
the Pizza Hut brand in two transactions. On August 7, 2026, we completed the
sale of Pizza Hut in mainland China to Yum China Holdings, Inc. for $1.2 billion
in proceeds. On September 1, 2026, we completed the sale of Pizza Hut excluding
mainland China to LongRange Capital, a private equity firm, for $1.2 billion of
net proceeds. The Pizza Hut divestitures resulted in a pre-tax gain of $1.7
billion, which represented the amount of net consideration received over the
carrying value of the net assets and was recorded to Gain on Pizza Hut
divestitures in the quarter ended September 30, 2026. Additionally, we incurred
charges of $2 million within Other Pension (income) expense associated with an
option for certain Pizza Hut employees to voluntarily elect an early payout of
their pension benefits in connection with the sales. Due to the nature and size
of the divestitures, we have reflected such amounts as Special Items.
(c) In 2025, we decided to designate two brand headquarters in the U.S., located
in Plano, Texas and Irvine, California, to foster greater collaboration among
brands and employees. This involved relocating the KFC U.S. corporate office to
the KFC Global headquarters and requiring the majority of our U.S.-based remote
employees to relocate to an appropriate headquarter office. We also decided to
relocate our YUM Corporate headquarters to a new space in Louisville, Kentucky
and accordingly, donated our existing space. Costs incurred to date primarily
include severance for the employees who chose not to relocate and consultant
fees. As a result of these decisions, we recorded charges of approximately $3
million during the quarter ended September 30, 2025, and approximately $1
million and $20 million for the years to date ended September 30, 2026 and 2025,
respectively to Corporate and unallocated General and administrative expenses.
Due to their scope and size, these charges have been reflected as Special Items.
(d) During the quarter ended March 31, 2026, we received approximately $44
million, net of legal expenses, related to a credit card interchange fee
litigation settlement in which we were a plaintiff. This settlement was recorded
to Unallocated Other (income) expense. Due to the nature and size of the
settlement, including the years to which the litigation related, it has been
reflected as a Special Item within Other income.
(e) On January 8, 2025, we terminated our franchise agreements with franchisee
IS Gida A.S. (IS Gida), the owner and operator of KFC and Pizza Hut restaurants
in Turkey and a subsidiary of IS Holding A.S. (IS Holding), after failure by IS
Gida to meet our standards. As a result, 283 KFC restaurants and 254 Pizza Hut
restaurants in Turkey were closed during the first quarter of 2025. We also re-
acquired the master franchise rights in Germany for KFC and Pizza Hut from the
owner of IS Holding in December 2024. We recorded charges of $1 million and $8
million during the quarter and year to date ended September 30, 2025,
respectively, to Corporate and unallocated General and administrative expenses
consisting primarily of severance costs associated with re-acquiring the master
franchise rights in Germany. Consistent with prior charges related to the
matter, these charges have been reflected as Special Items.
17
(f) The below table includes the detail of Special Items Tax (Benefit) Expense:
Quarter Year to
ended date
──────────────────────────────────────────────────────────────────────────────
9/30/26 9/30/25 9/30/26 9/30/25
Tax
(Benefi…
on
Special
Items $ -7 $ -4 $ -16 $ -18
Expense
-
Operati…
Profit
Tax
Expense
- Income
tax
impacts 466 — 107 —
from
Gain on
Pizza
Hut
divesti…
Tax
(Benefi…
-
Intra-e…
transfe… — — -101 —
and
valuati…
of
intelle…
property
Tax
Expense — 76 — 76
- U.S.
OBBBA
Tax
(Benefi… — -47 — -47
- Tax
audit
Tax
Expense
- Other
Income
tax — — 13 —
impacts
recorded
as
Special
Tax
Expense
- — 3 — 105
Foreign
tax
reserve
Special
Items $ 459 $ 28 $ 2 $ 116
Tax
Expense
Tax (Benefit) on Special Items Expense - Operating Profit was determined by
assessing the tax impact of each individual component within Special Items,
other than the income tax impacts from Gain on Pizza Hut divestitures which is
shown separately, based upon the nature of the item and jurisdictional tax law.
Tax Expense - Income tax impacts from Gain on Pizza Hut divestitures in the
quarter ended September 30, 2026, reflects $466 million of tax expense recorded
upon the sales of the Pizza Hut business. The year to date ended September 30,
2026 also reflects a $359 million net deferred tax benefit, reflecting the
recognition of certain tax basis in entities expected to be sold with the Pizza
Hut business upon entering into definitive agreements during the quarter ended
June 30, 2026.
Tax (Benefit) - Intra-entity transfers and valuations of intellectual property
in the year to date ended September 30, 2026, reflects tax benefits of $113
million resulting from an internal reorganization to consolidate our Pizza Hut
legal entities and assets into two isolated ownership structures by aligning the
legal ownership, simplifying the organizational footprint and consolidating the
Pizza Hut domestic and international businesses. As part of this reorganization,
certain Pizza Hut intellectual property ("IP") rights from subsidiaries in the
U.S. were transferred to international subsidiaries resulting in a step-up in
amortizable tax basis of those IP rights. This reorganization began in the
fourth quarter of 2025 in connection with our Pizza Hut strategic options
review.
Additionally, Tax (Benefit) - Intra-entity transfers and valuations of
intellectual property in the year to date ended September 30, 2026, includes $12
million of tax expense representing an adjustment to the valuation allowance on
tax credits previously granted by local Swiss tax authorities in connection with
transferred IP rights in Switzerland. Previously recorded impacts associated
with this IP transfer were recorded as Special Items.
Tax Expense - U.S. OBBBA in the quarter and year to date ended September 30,
2025, reflects the tax expense recorded upon the July 4, 2025, enactment of
H.R.1, commonly known as the One Big Beautiful Bill Act (“OBBBA”) in the United
States. The tax expense was primarily associated with a change in management's
judgment regarding our ability to utilize U.S. foreign tax credit related
deferred tax assets that existed at the date of enactment and has been reflected
as a Special Item due to the size of the non-recurring adjustment necessary upon
enactment of the legislation.
Tax (Benefit) - Tax audit in the quarter and year to date ended September 30,
2025, reflects the benefit associated with the reversal of a reserve due to a
favorable audit resolution. Such reserve was established in prior years and was
originally recorded as a Special Item.
Tax Expense - Other Income tax impacts recorded as Special in the year to date
ended September 30, 2026, includes a $13 million adjustment to tax expense
associated with our decision to exit Russia. Consistent with previously recorded
impacts associated with our decision to exit Russia, this adjustment was
recorded as a Special Item.
Tax Expense - Foreign tax reserve in the quarter and year to date ended
September 30, 2025, is associated with a reserve, and the related ongoing
foreign exchange and inflationary adjustments, associated with a change in
management's judgment around a Mexican subsidiary's ability to utilize losses to
offset recapture gains triggered by a historical tax deconsolidation in Mexico.
This expense was reflected as a Special Item due to its size and the time
elapsed since the years to which the reserve relates.
18