Yum! Brands, Inc. (NYSE: YUM) reported second-quarter results that came in slightly below Wall Street expectations, with adjusted earnings per share of $1.44 missing analyst estimates of $1.46.
Revenue totaled $1.93 billion, just under the $1.94 billion consensus forecast.
Shares of the fast-food giant fell 3.24% in Tuesday trading following the release.
Mixed performance across brands and markets
The parent company of KFC, Taco Bell, Pizza Hut, and The Habit Burger Grill reported a 7% year-on-year increase in adjusted EPS, while worldwide system sales grew 4% excluding foreign currency effects.
Taco Bell emerged as the top performer, delivering 6% system sales growth and a 4% rise in same-store sales, outpacing the broader US fast-food category.
KFC’s international operations also performed well, with 7% system sales growth and 3% same-store sales growth. However, its US business struggled, posting an 8% decline in system sales and a 5% drop in same-store sales.
Pizza Hut faced continued challenges, with both overall system sales and same-store sales falling 1%.
CEO David Gibbs credited the company’s food innovation, digital transformation, and strong brand portfolio for driving results. “Taco Bell US meaningfully outpaced the category with 4% same-store sales growth, and KFC International opened 565 gross new units,” he said.
Digital growth and expansion remain key drivers
Digital sales momentum continued in the second quarter, with system sales exceeding $9 billion and a record digital sales mix of approximately 57%.
The company opened 871 gross new restaurants during the period, expanding its global unit count to 60,893 — a 3% increase from the same quarter last year.
Financially, Yum! reported an adjusted EBITDA of $645 million, which fell short of analyst expectations of $700.3 million.
The operating margin came in at 32.2%, down from 34.4% in the same quarter last year, while free cash flow margin improved to 19.4% from 16.6% a year earlier.
Same-store sales grew 2% year-on-year, reversing a 1% decline in the same period last year.
Market capitalization stood at $40.86 billion as of the earnings release, underscoring Yum!’s position as a leading global fast-food operator despite the quarterly shortfall.
Leadership transition ahead
The earnings announcement comes as Yum! prepares for a change at the top.
Current CFO Chris Turner will succeed David Gibbs as CEO effective October 1, 2025.
Turner will inherit a company with strong global brand equity but facing challenges in certain markets, particularly the US operations of KFC and Pizza Hut.
Yum! Brands, originally spun off from PepsiCo, has long relied on its diversified portfolio to balance regional and brand-specific performance.
The second-quarter results highlight the company’s international growth potential and digital innovation, even as it navigates uneven performance in its home market.
While investors reacted to the earnings miss with a nearly 3% share price drop, Yum!’s sustained global expansion, digital adoption, and brand strength may provide a foundation for long-term growth under its incoming leadership.
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