Research · Sep 3, 2026
[YUMC] Yum China Thesis 2026: Eighteen-Thousand Store Network Targets Double-Digit Earnings Growth
Yum China Holdings Inc. FY25 revenue $11.80B (+4%); op income $1.46B (+25%); NI $929M (+2%); EPS $2.50 (+7%). Op margin 12.4% (+210bp YoY / +580bp from FY22). FCF $840M (+18%). KFC opened 1,349 net new stores → ~13,000 total; system sales +5%; restaurant margins +50bp to 17.4%; Q4 same-store sales +3%. Pizza Hut opened 444 net new stores → 4,168 total; system sales +6% Q4; same-store +1%; restaurant margins +80bp to 12.8%. Emerging brands: Lavazza +34 net new stores; positive same-store; packaged coffee retail +40%+. 1,700+ total net new stores FY25 → 18,000+ total store base. RGM 3.0 strategy launched (Resilience + Growth + Moats). AI initiatives: Q Smart (KFC operations) + SmartK (kitchen automation). $1.14B FY25 buyback. FY26 guide: 20,000+ total stores by year-end; 1,900+ net new (40-50% from franchisees); capex $600-$700M; mid-to-high single-digit system sales growth; high single-digit operating profit growth; double-digit EPS growth. Q1 margin challenges from rider costs + smaller commodity benefits + tough YoY comp.