Yum China delivered a quarter that met Wall Street’s high expectations, with management attributing the positive momentum to sustained store expansion, menu innovation, and effective operational execution. CEO Joey Wat cited the company’s ability to maintain positive same-store sales growth for three consecutive quarters, supported by a strong pipeline of new product launches and brand collaborations. Additionally, management noted that investments in value offerings and targeted marketing helped capture growing consumer demand, especially as the company opened more than 1,700 net new stores and expanded into lower-tier cities.
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Yum China (YUMC) Q4 CY2025 Highlights:
- Revenue: $2.82 billion vs analyst estimates of $2.72 billion (8.8% year-on-year growth, 3.9% beat)
- Adjusted EPS: $0.40 vs analyst estimates of $0.37 (9.2% beat)
- Adjusted EBITDA: $318 million vs analyst estimates of $304.9 million (11.3% margin, 4.3% beat)
- Operating Margin: 6.6%, in line with the same quarter last year
- Locations: 18,101 at quarter end, up from 16,395 in the same quarter last year
- Same-Store Sales rose 3% year on year (-1% in the same quarter last year)
- Market Capitalization: $20.13 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Yum China’s Q4 Earnings Call
- Michelle Cheng (Goldman Sachs) asked about the impact of recent delivery price adjustments and rising delivery mix on margins. CEO Joey Wat emphasized that price increases were limited to delivery menus and aimed to offset higher rider costs, while CFO Adrian Ding explained that operational efficiencies and targeted pricing should help maintain stable margins despite cost pressures.
- Chen Luo (Bank of America) inquired about the sequential improvement in same-store sales growth and trading dynamics during the Chinese New Year period. Wat responded that early signs indicate modestly improving consumer sentiment, but noted that the peak trading window had not yet occurred, making it too early for firm conclusions.
- Lillian Liu (Morgan Stanley) questioned the measures planned to accelerate Pizza Hut’s revenue momentum in 2026. Wat highlighted recent expansion into over 200 new cities, the success of the new thin crust pizza, and the introduction of burger products as ongoing growth drivers.
- Anne Ling (Jefferies) asked for details on the Gemini store rollout and the role of the equity-franchise hybrid model. Wat explained that Gemini pairs KFC and Pizza Hut stores with shared back-end operations to lower costs, and Ding clarified that the hybrid approach is designed to accelerate franchising without compromising operational standards.
- Christine Peng (UBS) sought more detail on K Pro’s economics and Pizza Hut’s burger strategy. Wat described K Pro as a light meal format targeting KFC’s member base, offering energy bowls and smoothies, while Pizza Hut’s burger leverages in-store dough and targets single-person meals, a fast-growing segment for the brand.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be closely monitoring (1) the pace and profitability of new store and franchise openings, especially in lower-tier and strategic cities; (2) the impact of delivery sales mix on overall margin performance as rider costs grow; and (3) the effectiveness of digital initiatives like Q Smart and SmartK in driving efficiency and customer engagement. Ongoing menu innovation and the scaling of side-by-side store formats will also be important indicators of sustained growth.
Yum China currently trades at $56.62, up from $50.74 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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