Yum China reported higher revenue, operating profit and earnings for the third quarter, while same-store transactions continued to grow and the company opened a record number of restaurants. It also raised its 2026 new-store target and said it remains on track to return $1.5 billion to shareholders this year.
Separately, the board is adding an independent director, Alexander Dimitrief, expanding from 12 members to 13.
Third-quarter results and operating trends
- Revenue rose 8% to $3.5 billion, including the effect of foreign-exchange movements. Excluding currency translation, revenue increased 2%. Total system sales grew 3% excluding foreign exchange.
- Operating profit increased 13% to $451 million. Core operating profit, a separate measure cited by the company, rose 6%.
- Operating margin reached 13.0%, up 0.5 percentage points from a year earlier, marking the 10th consecutive quarter of year-over-year expansion.
- Restaurant margin also increased 0.5 percentage points, to 17.8%. The company attributed the improvement to more streamlined operations, favorable commodity prices and savings in Pizza Hut license fees. Those benefits more than offset pressure from value offerings, lower sales leverage and higher delivery costs as delivery made up a larger share of sales.
- Diluted earnings per share rose 20% to $0.91. The increase was 12% excluding foreign-exchange effects; the company said growth was 8% after also excluding the effect of mark-to-market changes in equity investments.
- Same-store transactions grew 3%, the 15th consecutive quarter of growth. Same-store sales were 97% of the year-earlier level. CEO Joey Wat said same-store sales faced a difficult comparison with the prior year’s delivery-platform subsidies and were affected by adverse weather in August.
- Delivery sales grew 7% and accounted for about 54% of company sales, compared with 51% a year earlier.
- KFC and Pizza Hut together had more than 278 million active members, up 6% year over year. The company defines active members as those who made a purchase in the prior 12 months.
Expansion, capital returns and Pizza Hut
- Yum China opened 692 net new stores in the quarter, a record for a single quarter. Franchisees accounted for 44% of the openings.
- The company had 19,989 stores at September 30, with franchisees operating 19% of them. It raised its 2026 full-year target to more than 2,400 net new stores, after record openings in the first nine months.
- The company returned $362 million to shareholders in the quarter: $263 million through share repurchases and $99 million in dividends. Returns for the first nine months totaled $1.08 billion. Yum China said it remains on track to return $1.5 billion in 2026, an amount it described as roughly 10% of its current market capitalization.
- Yum China completed its acquisition of the Pizza Hut brand in mainland China on August 7.
Board appointment
- Alexander Dimitrief, a partner at Zeughauser Group, joins the board effective November 4. The company considers him independent under the listing standards of the New York and Hong Kong exchanges.
- His term runs until the 2027 annual meeting, unless it ends earlier. His annual director retainer is $315,000, prorated for the term and payable in company shares, or partly in cash if he requests it.
The board appointment increases its size by one seat. The quarter’s results also show continued transaction growth alongside lower same-store sales, while margin expansion and share repurchases contributed to higher reported earnings and shareholder returns.