Yum! Brands Q2 Earnings Call Highlights

Yum! Brands NYSE: YUM reported second-quarter growth across its operations excluding Pizza Hut, while management addressed a recent U.S. food-safety issue that has temporarily affected Taco Bell sales and outlined plans to sell Pizza Hut in separate transactions.

Chief Executive Officer Chris Turner said consumer safety remains the company’s top priority and that Yum!’s teams have acted “quickly and transparently” in response to the industry-wide issue. He said Taco Bell has experienced a meaningful near-term sales impact but expects the effect to be temporary.

Excluding Pizza Hut, Yum! reported 7% system sales growth in the second quarter, supported by 6% unit growth and 4% same-store sales growth. Core operating profit increased 8%, according to Chief Financial Officer Ranjith Roy.

Yum! completed its strategic review of Pizza Hut in June and entered separate agreements to sell the business to Yum China and LongRange Capital. The transactions are valued at $2.7 billion in aggregate, with the potential for an additional $75 million earn-out from LongRange Capital by 2030. Roy said Yum! expects both transactions to close in August. Afterward, Yum! will provide transition services to Pizza Hut outside China, including enterprise technology and finance support. Most of those services are expected to phase out during 2027. The company expects to receive about $2.3 billion in net proceeds from the transactions. Yum! plans to use a portion to pay down its revolver balance and expects to reserve most of the remaining proceeds for share repurchases, subject to market conditions. Yum! repurchased approximately $670 million of stock during the first half of 2026.

Turner said the sale would create “a stronger Yum! and a stronger Pizza Hut” and allow Yum! to focus on its remaining brands and priorities, including consumer relevance, restaurant economics and digital capabilities.

KFC, which represented 58% of Yum!’s divisional operating profit excluding Pizza Hut, delivered 6% system sales growth in the quarter. The gain reflected 7% unit growth and 2% same-store sales growth. KFC opened 660 gross new stores across 55 markets during the quarter. Roy said the brand is expected to have its best development year ever, supported by franchisee confidence and opportunities in both established and underpenetrated markets. The Middle East reached 1,500 KFC restaurants during the quarter. Management highlighted growth opportunities in India, Southeast Asia, West Africa and Brazil, which together represent more than one-third of the global population. KFC’s restaurant density in those markets is approximately one-fifth of that in its top 25 markets, representing what Roy described as a 20,000-unit opportunity. KFC is also pursuing a global strategy centered on boneless chicken, sauces, updated restaurant experiences and a refreshed visual identity. Turner said the brand aims to bring core elements of the strategy to its top 20 markets by the end of 2027. In the United Kingdom, KFC’s Pickle Mania limited-time offering helped drive 8% same-store sales growth in the second quarter, while Asia delivered 6% same-store sales growth. Turner said KFC’s long-term objective is to improve same-store sales growth and average unit volumes. He said the company has seen early evidence of progress in markets including the United Kingdom, Korea, Japan and Brazil.

Taco Bell generated 7% same-store sa...