Yum! Brands (YUM) Q2 2025 earnings summary

Executive summary

• CEO transition announced: David Gibbs to retire, Chris Turner to become CEO on October 1, 2025, with Gibbs advising through 2026.

• System sales grew 4% in Q2, led by strong unit growth at KFC International and market share gains at Taco Bell U.S.; digital sales mix reached a record 57%.

• Total Q2 revenues rose 10% year-over-year to $1.93B, with net income up 2% to $374M and adjusted EPS up 7% to $1.44.

• 386 net new units opened, with 871 gross openings across brands; KFC International opened 565 new units.

• Foreign currency translation had a favorable $4M impact on divisional operating profit.

Financial highlights

• System sales up 4% year-over-year, with 3% unit growth and 2% same-store sales growth.

• Digital sales grew 18% year-over-year, now 57% of total sales, exceeding $9B.

• Restaurant-level margins at 16.3%, down from 17.8% last year, impacted by commodity costs and UK store mix.

• Core operating profit increased 2% to $646M; ex-special EPS $1.44 (up 7%), reported EPS $1.33.

• Net capital expenditures $54M in Q2; 740,000 shares repurchased for $108M in Q2, $336M year-to-date.

Outlook and guidance

• On track for 8% core operating profit growth for the year, excluding the 53rd week.

• Management expects annual operating cash flows to exceed $1.4B and net leverage ratio near 4.0x EBITDA.

• Q4 expected to show double-digit profit growth due to easier compares and refranchising gains.

• Taco Bell U.S. expected to deliver 24%-25% restaurant-level margins for the year.

• Interest expense expected between $500M and $520M, with a $20M FX tailwind to GAAP operating profit for the remainder of the year.