Third quarter 2026
Filed Nov 3, 2026Yum! Brands Reports Third-Quarter Results KFC Unit Growth of 7%; Yum! Completes Pizza Hut Divestiture; Returns $1.8 Billion to Shareholders Through Dividends and Share Repurchases Year-to-Date; Taco Bell U.S. Outpaces the QSR Industry Since End of September
GAAP results were lifted by a $1.7 billion pre-tax gain on the Pizza Hut divestitures, while EPS excluding Special Items declined 1% to $1.56. KFC delivered system sales and unit growth, but Taco Bell Division system sales and same-store sales declined and divisional operating profit fell.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Third-quarter total revenuesGAAP | $2.05B | – | 4% |
| Year-to-date total revenuesGAAP | $6.28B | – | 10% |
| Third-quarter company salesGAAP | $784M | – | 13% |
| Third-quarter franchise and property revenuesGAAP | $854M | – | — |
| Third-quarter franchise contributions for advertising and other servicesGAAP | $415M | – | (3)% |
| Third-quarter total costs and expenses, netGAAP | $1.42B | – | (8)% |
| Third-quarter gain on Pizza Hut divestituresGAAP | $1.68B | – | N/A |
| Third-quarter operating profitGAAP | $2.32B | – | 248% |
| Third-quarter Core Operating Profitnon-GAAP | $654M | – | (4)% |
| Year-to-date operating profitGAAP | $3.62B | – | 97% |
| Year-to-date Core Operating Profitnon-GAAP | $1.95B | – | 2% |
| Third-quarter net incomeGAAP | $1.62B | – | 309% |
| Third-quarter net income excluding Special Itemsnon-GAAP | $427M | – | – |
| Third-quarter diluted EPSGAAP | $5.92 | – | 319% |
| Third-quarter diluted EPS excluding Special Itemsnon-GAAP | $1.56 | – | (1)% |
| Year-to-date diluted EPSGAAP | $10.51 | – | 188% |
| Year-to-date diluted EPS excluding Special Itemsnon-GAAP | $4.68 | – | +8% |
| Third-quarter GAAP effective tax rateGAAP | 26.1 % | – | – |
| Third-quarter effective tax rate excluding Special Itemsnon-GAAP | 20.9 % | – | – |
| Worldwide unit countother | +7% | – | +7% |
| Digital system salesother | over $9 billion | – | – |
| Digital mixother | 64% | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| KFC DivisionSystem Sales ($MM) were $10,046, up +8 reported and +6 excluding F/X; same-store sales growth was +1; restaurants were 35,421, up +7; and the division opened 878 gross new restaurants across 66 countries. | $948M | – | 8% |
| Taco Bell DivisionSystem Sales ($MM) were $4,292, down (2); same-store sales growth was (4); restaurants were 9,102, up +3; and the division opened 73 gross new restaurants across 16 countries. | $770M | – | 5% |
| Pizza Hut DivisionOperating Profit was $50 million, down (41)%. Yum! completed the sale of Pizza Hut in mainland China on August 7, 2026 and Pizza Hut excluding mainland China on September 1, 2026. | $202M | – | (16)% |
| Habit Burger & Grill DivisionHabit Burger & Grill Division opened 4 gross new restaurants. System sales grew 3% and same-store sales were flat. | $134M | – | — |
Long-term growth algorithm outlook
- Note5% Unit Growth
- Note7% System Sales Growth, excluding F/X
- NoteAt least 8% Core Operating Profit Growth
Capital returns
- Returns $1.8 Billion to Shareholders Through Dividends and Share Repurchases Year-to-Date
- Repurchase shares of Common Stock: $(1,202) million year to date 9/30/26
- Dividends paid on Common Stock: $(616) million year to date 9/30/26
- Dividends declared per common share: $0.75 for the quarter ended 9/30/26
- Dividends declared per common share: $2.25 year to date 9/30/26
What drove it
- Excluding Pizza Hut from both 2026 and 2025, Core Operating Profit grew 1% for the quarter and 6% for the year to date.
- KFC opened 878 gross new restaurants across 66 countries and reported 35,421 restaurants, up +7.
- KFC system sales grew +6 excluding F/X, with Asia up +12, Middle East / Turkey / North Africa up +25, India up +20 and Latin America up +11.
- Taco Bell International system sales excluding foreign currency translation grew 14% and same-store sales grew 5%.
- Foreign currency translation favorably impacted Divisional Operating Profit by $7 million in the quarter and $48 million year to date.
- The Pizza Hut divestitures resulted in a pre-tax gain of $1.7 billion.
Concerns
- Taco Bell Division system sales declined (2), same-store sales declined (4), operating profit declined (5), and operating margin declined (3.5) ppts.
- Taco Bell U.S. system sales declined 3% and same-store sales declined 4%.
- KFC U.S. system sales declined (6) and KFC United States year-to-date system sales declined (3).
- KFC company-owned restaurant margins were 12.3%, down 140 basis points year-over-year, primarily driven by the 15 lower margin stores being tested under the Saucy brand in 2026.
- Pizza Hut Division operating profit declined (41)% and total revenues declined (16)% before its sale dates.
- Third-quarter Core Operating Profit declined (4)% and diluted EPS excluding Special Items declined (1)%.
What to watch
- Taco Bell U.S. same-store sales growth following the reported (4)% decline in the third quarter and management's statement that Taco Bell U.S. has been outpacing the QSR industry since the end of September.
- KFC unit development and whether its 35,421-restaurant base and 878 gross new openings support the 5% Unit Growth long-term target.
- KFC company-owned restaurant margin following the 12.3% result and the Saucy-brand testing of 15 lower margin stores.
- The effect of the Pizza Hut divestitures on reported revenue, operating profit and Core Operating Profit comparisons.
- Capital deployment after $2,380 million in proceeds from Pizza Hut divestitures, $(1,202) million of share repurchases and $(616) million of dividends paid year to date.
Balance sheet and cash flow
- Cash and cash equivalents: $2,108 million as of 9/30/26
- Short-term borrowings: $2,141 million as of 9/30/26
- Long-term debt: $9,459 million as of 9/30/26
- Net Cash Provided by Operating Activities: $1,398 million year to date 9/30/26
- Capital spending: $(262) million year to date 9/30/26
- Proceeds from Pizza Hut divestitures: $2,380 million year to date 9/30/26
- Net Cash Used in Financing Activities: $(2,180) million year to date 9/30/26
- Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period: $2,299 million
Analysis
Yum! reported third-quarter total revenues of $2,054 million, up 4%, while GAAP operating profit increased 248% to $2,317 million and GAAP diluted EPS increased 319% to $5.92. These GAAP increases were dominated by the $1,683 million gain on Pizza Hut divestitures. On a non-GAAP basis, Core Operating Profit was $654 million, down 4%, and diluted EPS excluding Special Items was $1.56, down 1%. Excluding Pizza Hut from both 2026 and 2025, Core Operating Profit grew 1% for the quarter and 6% for the year to date.
KFC was the principal operating growth contributor. KFC Division revenue rose 8% to $948 million, operating profit increased 9% to $425 million, and system sales increased 6% excluding F/X. Restaurant count increased 7% to 35,421, supported by 878 gross new openings across 66 countries. The division's operating margin increased 0.7 ppts. to 44.8%, although company-owned restaurant margin declined 140 basis points to 12.3%, primarily due to the 15 lower margin Saucy test stores.
Taco Bell's reported quarterly result was weaker. Division system sales declined 2%, same-store sales declined 4%, franchise and property revenues declined 3%, and operating profit declined 5% to $255 million. Operating margin fell 3.5 ppts. to 33.1%. Taco Bell U.S. system sales declined 3% and same-store sales declined 4%, while Taco Bell International delivered 14% system-sales growth excluding foreign currency translation and 5% same-store sales growth. Management stated that Taco Bell U.S. has been outpacing the QSR industry on same-store sales growth since the end of September.
The Pizza Hut portfolio sale materially changed the reported financials and future business mix. Yum! completed the sale of Pizza Hut in mainland China to Yum China on August 7, 2026 and the sale of Pizza Hut excluding mainland China to LongRange Capital on September 1, 2026. The transactions generated $2,380 million in proceeds year to date and a pre-tax gain of $1.7 billion. Pizza Hut Division remained included through the sale dates and reported $202 million of third-quarter revenue and $50 million of operating profit, declines of 16% and 41%, respectively.
Capital allocation was substantial during the year to date period. Net cash provided by operating activities was $1,398 million, capital spending was $(262) million, share repurchases were $(1,202) million and dividends paid were $(616) million. Cash and cash equivalents were $2,108 million at September 30, 2026, while short-term borrowings were $2,141 million and long-term debt was $9,459 million. Yum! retained its long-term growth algorithm of 5% Unit Growth, 7% System Sales Growth excluding F/X, and at least 8% Core Operating Profit Growth.
Management, verbatim
Yum! has entered its next chapter of growth, having completed the divestiture of Pizza Hut, with a sharper focus on our Raise the B.A.R. priorities.
Chris Turner, CEO
In support of those priorities, KFC delivered record Q3 global gross unit development and continues to scale its new global strategy reflecting the brand’s ambition of being the most modern chicken QSR.
Chris Turner, CEO
Taco Bell will continue building on this momentum, with differentiated value and innovation that resonate across all consumer groups.
Chris Turner, CEO
Not in the filing
stated, not guessed- Quarterly free cash flow
- Third-quarter operating cash flow
- Third-quarter capital spending
- Consolidated gross margin
- Forward quarterly or full-year revenue guidance
- Forward quarterly or full-year gross-margin guidance
- Forward quarterly or full-year operating-expense guidance
- Forward quarterly or full-year tax-rate guidance
- Prior-quarter comparative financial metrics
- Prior earnings outlook for comparison
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.