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Yum China (YUMC) Posts Strong Q3 Profit Amid Expansion, Digital Surge
Shanghai – Yum China Holdings, Inc. (YUMC), the parent company of KFC and Pizza Hut in China, reported robust third-quarter results, showcasing resilience and strategic execution in a dynamic market. The company’s operational proficiency, underscored by same-store sales growth, accelerated new store openings, and margin expansion, positions it favorably in the competitive Chinese market.
Key Performance Indicators:
- Operating Profit: Rose 8% year-over-year to $400 million, fueled by strategic cost management. The core operating profit also grew 8% yoy, showing positive gains through restaurant margin expansion.
- Same-Store Sales: Increased by 1% YoY, a testament to successful marketing and product innovation, with transactions up 4% YoY for the eleventh consecutive quarter.
- Revenue: Total revenue reached $3.2 billion, a 4% increase year-over-year reflecting the demand for quick-service options amongst consumers.
- Store Expansion: Added 536 net new stores during the quarter, accelerating expansion plans with YUMC storecount hitting 17,514.
- Digital Dominance: Digital sales surged, reaching $2.8 billion, with digital ordering accounting for approximately 95% of total company sales, indicating successful integration of new-era technologies.
The company’s total store count reached 17,514 as of September 30, 2025, comprising 12,640 KFC and 4,022 Pizza Hut locations. This expansion strategy is crucial, as Yum China continues to capture market share across diverse geographic tiers in China, making flexible store formats and the franchise strategy vital in this process.
Breaking Down the Brands:
- KFC: System sales were up 5%, with same-store sales growing by 2% YoY. KFC continues to innovate its menu and customer experience, maintaining its leading position within the quick-service category through the expansion of smaller orders across 12,640 store locations.
- Pizza Hut: Achieved a 4% increase in system sales. Delivery sales contributed to 48% of company revenues, with pizza crusts and menu options contributing to overall demand across 4,022 Pizza Hut stores.
Yum China’s CEO, Joey Wat, focused greatly on innovation and efficiencies across product selections and company synergies: “We delivered another solid quarter in a dynamic market – accelerating store openings, achieving positive same–store sales growth, and expanding margins. Delivering across all three dimensions was no easy task. It reflected the effectiveness of our dual focus on innovation and operational efficiency”.
Technological Integration and Market Penetration:
Digital sales have become a cornerstone of Yum China’s strategy, bolstering customer engagement and operational efficiency including both online ordering and delivery services. The increase in delivery sales, which now contribute approximately 51% of the total company sales, reflects Yum China’s effective leveraging of digital platforms and logistics networks. The company’s ability to capture and leverage membership data from 575 million KFC and Pizza Hut members further enhances its customer relationship management and targeted marketing capabilities.
Financial Outlook and Capital Returns
Yum China remains committed to deliver returns to shareholders and maintains momentum towards an established performance. The company outlines the following financial targets:
- Approximately 1,600 to 1,800 net new stores in 2025,
- Capital expenditures in the range of approximately $600 million to $700 million for the 2025 fiscal year,
- Approximately $3 billion will be returned to shareholders in 2025-2026, with an additional $1.5 billion delivered in 2024.
CNBC Analysis:
Yum China’s Q3 2025 results demonstrate a company firing on multiple cylinders. Same-store sales gains point to strong brand momentum in a competitive landscape. Aggressive store expansion signals confidence in long-term growth potential, and margin expansion confirms operational discipline. The digital strategy is clearly resonating with Chinese consumers, and the company’s commitment to returning capital provides an added incentive for investors. While macroeconomic uncertainties persist in China, Yum China’s diversified portfolio, digital prowess, and cost controls position it favorably to navigate potential headwinds and capitalize on emerging opportunities.
|
Third Quarter |
Year to Date Ended 9/30 |
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|
%/ppts Change |
%/ppts Change |
|||||||||||||||
|
2025 |
2024 |
Reported |
Ex F/X |
2025 |
2024 |
Reported |
Ex F/X |
|||||||||
|
System Sales Growth (1) (%) |
4 |
4 |
NM |
NM |
4 |
5 |
NM |
NM |
||||||||
|
Same-Store Sales Growth (1) (%) |
1 |
(3) |
NM |
NM |
1 |
(3) |
NM |
NM |
||||||||
|
Operating Profit ($mn) |
400 |
371 |
+8 |
+8 |
1,103 |
1,011 |
+9 |
+9 |
||||||||
|
Adjusted Operating Profit (2) ($mn) |
400 |
371 |
+8 |
+8 |
1,103 |
1,011 |
+9 |
+9 |
||||||||
|
Core Operating Profit (2)(3) ($mn) |
399 |
371 |
NM |
+8 |
1,107 |
1,011 |
NM |
+9 |
||||||||
|
OP Margin (4) (%) |
12.5 |
12.1 |
+0.4 |
+0.4 |
12.3 |
11.6 |
+0.7 |
+0.7 |
||||||||
|
Core OP Margin (2)(5) (%) |
12.5 |
12.1 |
NM |
+0.4 |
12.3 |
11.6 |
NM |
+0.7 |
||||||||
|
Net Income ($mn) |
282 |
297 |
(5) |
(5) |
789 |
796 |
(1) |
(1) |
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