Yum! Brands, Inc.

Excluding Pizza Hut, Yum! reported 7% system sales growth, driven by 6% unit growth and 4% same-store sales growth. Digital sales approached $9 billion and digital mix reached 61% ex-Pizza Hut; first-half digital sales ex-Pizza Hut exceeded $17 billion, up 25% year over year. Core operating profit grew 8%, even with a 3 percentage point drag from quarterly phasing of 2026 refranchising gains and Habit store closure costs. Taco Bell U.S. restaurant-level margin was 26.2%, up 170 basis points year over year. Yum!’s ex special G&A was $223 million, up 2% year over year. Excluding Pizza Hut, Yum! opened 720 stores in the quarter. For guidance, management said Taco Bell U.S. same-store sales quarter-to-date through July 27 were negative 2%, and third-quarter equity store-level margins are expected to be 19% to 21%. Yum! expects the Pizza Hut transactions to close in August, with anticipated net proceeds of $2.3 billion; a portion is expected to pay down revolver borrowings and most of the remainder to fund share repurchases, subject to market conditions. Management also said the 1.7% G&A as a percentage of system sales remains relevant and that it expects continued operating leverage over time.

Chris Turner emphasized food safety and consumer trust first, saying Yum! is acting quickly and transparently on the U.S. industry issue affecting Taco Bell. He framed the Pizza Hut sale as making both Pizza Hut and Yum! stronger, and said Yum! is entering its next chapter as a more focused company with a long runway in development, category expansion and digital growth. His tone was confident but measured: he described KFC and Taco Bell as strong businesses with clear strategic priorities under the Raise the B.A.R. plan, and said Taco Bell’s sales impact should be temporary.

Ranjith Roy walked through the financials with specific figures: 7% system sales growth ex-Pizza Hut, 4% same-store sales growth, $223 million of ex special G&A up 2%, and 8% core operating profit growth despite a 3 percentage point drag from refranchising phasing and Habit closure costs. He highlighted Taco Bell U.S. restaurant margins of 26.2%, up 170 basis points, and said Q3 Taco Bell equity store margins should be 19% to 21% because of lower sales, promotional investment and a heavier impacted store mix. On capital allocation, he said Yum! repurchased about $670 million of shares in the first half and expects to use part of the $2.3 billion in net Pizza Hut proceeds to pay down the revolver, with most of the rest earmarked for buybacks.

Analysts pressed on Taco Bell’s recovery, asking how severe the recent sales hit has been and whether the issue is unique. Management said the peak impact was on July 18, that sales have steadily improved since then, and that the last four days of trends were well within a 20% decline range, with Taco Bell’s social sentiment returning to pre-issue positivity and transactions improving on recent Tuesday drops. Questions also focused on KFC’s long-term growth and the scope of its global reset; management said the brand modernization, tenders, sauces, beverage rollouts and improved unit economics are global priorities, with the U.K. as a lead market and the changes rolling out over time across 150 countries. On G&A, management said the 1.7% of system sales target still stands after Pizza Hut and that AI may help efficiency, but the bigger focus is how to redeploy resources to support growth and capabilities.