Yum! Brands Q1 2025 Earnings

Yum! Brands reported solid growth in Q1 2025, led by Taco Bell and KFC International, despite challenges at Pizza Hut and a one-time tax charge.

Key Financial Highlights:
- Revenue: $1.79 billion (up 12%)
- GAAP Operating Profit: $548 million (up 5%)
- Core Operating Profit: $586 million (up 8%)
- GAAP EPS: $0.90 (down 18% year-over-year)
- EPS excluding Special Items: $1.30 (up 13%)
- Net Income: $253 million (down 19%)
- Digital system sales: approximately $9 billion (around 55% of system sales)

Segment Performance:

Taco Bell
- Same-store sales (U.S.): up 9%
- Operating profit: $241 million (up 16%)
- Operating margin: 36.7% (up 1.9 percentage points)
- System sales growth: up 11%
- Unit growth: 2%
- Continued strong innovation and domestic strength supported performance

KFC
- Same-store sales (International): up 3%
- Operating profit: $331 million (up 6%)
- System sales growth: up 5% (International: up 6%, U.S.: down 2%)
- Unit growth: 6% with 528 gross new restaurants opened
- Margin impacted by seasonal weakness and added maintenance in UK stores acquired in 2024

Pizza Hut
- Same-store sales: down 2% (U.S.: down 5%)
- Operating profit: $74 million (down 20%)
- System sales growth: down 3%
- Franchise transitions and tech expense timing contributed to profit decline

Habit Burger & Grill
- Same-store sales: down 3%
- Operating loss: $1 million
- System sales flat; 1 store opened

Strategic and Corporate Developments:
- Announced collaboration with NVIDIA to integrate AI across global restaurant operations
- CEO David Gibbs to retire in Q1 2026 after 36 years at the company
- Taco Bell presented its R.I.N.G. The Bell plan and 2025 product pipeline at Consumer Day
- Long-term targets: 5% unit growth, 7% system sales growth (ex-FX), and at least 8% core operating profit growth (ex-FX)

Balance Sheet and Cash Flow:
- Cash and cash equivalents: $607 million
- Long-term debt: $11.3 billion
- Operating cash flow: $404 million
- $229 million spent on share repurchases and $198 million on dividends

Challenges and One-Time Impacts:
- $86 million tax expense from a foreign audit in Mexico significantly impacted GAAP net income and EPS
- Company restaurant margin declined to 14.3% from 15.6%, due to lower KFC and Pizza Hut margins

Yum! Brands held its Global Franchise Convention in Sydney, Australia, hosting over 600 franchisees representing its four brands—KFC, Pizza Hut, Taco Bell, and Habit Burger & Grill.

The event emphasized Yum!’s unmatched scale, with 98% of its nearly 61,000 restaurants operated by franchisees. Highlights included the introduction of Byte by Yum!, a proprietary tech platform improving operations and customer experience, now used in over 25,000 restaurants. Executives emphasized innovation across brands—such as Taco Bell’s “Taco Tuesday” campaign and KFC’s “Squid Game” partnership—and new concepts like Saucy by KFC and KWENCH beverages. CEO David Gibbs and others reiterated the power of collaboration, digital transformation, and franchisee partnership in driving growth and brand connectivity into 2025 and beyond.

Yum! Brands Highlights Eco-Friendly Building Efforts to Cut Costs and Emissions

Yum! Brands, the parent company of KFC, Pizza Hut, Taco Bell, and Habit Burger & Grill, emphasized its belief that “building green can help save green” in a recent sustainability-focused update. Since expanding to over 155 countries, the company has integrated energy-efficient and eco-conscious practices into its restaurant development strategy.

Since 2014, Yum! has followed sustainability guidelines modeled after LEED but tailored to quick-service operations. The brands have since evolved those practices further — KFC launched 11 Building Green Standards while Pizza Hut introduced its Green Hut Toolkit.

Key cost-saving and emission-reducing strategies include:

- Energy-efficient systems: LED lighting cut emissions by 5% at KFC globally, while enhanced HVAC systems enabled some Pizza Hut sites to slash energy use by 30%.
- Green furniture: KFC’s Green Line Furniture uses recovered materials and reduces emissions from shipping by 32%.
- Smart controls: Energy Management Systems in 815 restaurants across India reduced KFC electricity bills by 7%.
- Solar adoption: Select KFC stores, like one in California, operate drive-thrus entirely on solar energy, reducing energy costs by 20%.

Yum! has earned recognition from CDP and achieved LEED certifications across locations in Thailand, Vietnam, and India. As of 2023, it had already reduced franchisee restaurant GHG emissions per unit by 28% versus 2019 — more than halfway toward its 2030 goal of a 46% reduction.

Chief Sustainability Officer Jon Hixson said, “We’re more than halfway to this target, thanks to our green building efforts. By saving our franchisees money and conserving energy, it’s a win for the company and our planet.”

Yum! Highlights Sustainable Packaging Efforts Across Global Brands

Yum! Brands (NYSE: YUM), the parent company of KFC, Pizza Hut, and Taco Bell, has reaffirmed its commitment to environmental responsibility by advancing the reuse, recyclability, and compostability of its consumer-facing packaging. This initiative supports Yum!'s broader sustainability goals while also presenting opportunities for cost savings across its global restaurant operations.

In the latest episode of its "Quick Bite" video series, Yum! showcased how giving packaging a second life aligns with both environmental stewardship and long-term business value. The company emphasized that as it serves millions of customers daily, being thoughtful about the materials it uses is not only good for the planet, but also good for operations.

This packaging initiative is part of Yum!’s broader ESG platform, known as “Recipe for Good,” which focuses on People, Food, and Planet. Under its “Planet” pillar, Yum! continues to explore solutions like reusable cup programs and compostable materials that reduce waste and support circular systems.

The company’s latest sustainability update comes as it continues to drive growth through its RED Brands strategy, bold restaurant development, and its culture-first talent approach. Yum! has also recently earned recognition as one of USA Today's 2024 Climate Leaders and was named among Newsweek’s Most Responsible Companies.

Yum! Brands CEO David Gibbs to Retire in 2026; Succession Planning Underway

Yum! Brands (NYSE: YUM) has announced that Chief Executive Officer David Gibbs will retire in the first quarter of 2026, concluding a distinguished 36-year career with the company. The Board of Directors has launched a succession planning process to identify the next CEO, with Gibbs continuing to lead during the transition.

Gibbs, who became CEO in January 2020, guided the company through a digital transformation and navigated it through the COVID-19 pandemic. Under his leadership, Yum! Brands accelerated restaurant development, tripled annual net new unit growth, and surpassed $30 billion in digital sales in 2024, with more than half of all transactions conducted through digital channels.

Non-Executive Chairman Brian Cornell praised Gibbs’ legacy, noting his transformative impact on the company and his role in strengthening the company’s iconic brands—KFC, Taco Bell, Pizza Hut, and Habit Burger Grill.

Yum! Brands operates over 61,000 restaurants in more than 155 countries and territories and continues to rank highly across sustainability, innovation, and franchise leadership rankings.

The next CEO is expected to be appointed with ample time to ensure a seamless transition. Gibbs reaffirmed his commitment to supporting the process and delivering on the company’s strategic growth objectives in the meantime.

Yum! Brands Partners with NVIDIA to Advance AI Technology in Restaurants
Louisville, KY – March 18, 2025 – Yum! Brands, Inc. (NYSE: YUM) announced a strategic partnership with NVIDIA to accelerate the development of AI-driven innovations across its global restaurant network. This collaboration aims to enhance automation, customer service, and operational efficiency at KFC, Taco Bell, Pizza Hut, and The Habit Burger Grill locations worldwide.

By leveraging NVIDIA's AI expertise, Yum! Brands intends to improve predictive analytics, drive-thru automation, digital ordering, and kitchen efficiency, streamlining restaurant operations and enhancing the customer experience.

The official press release regarding this partnership is included as Exhibit 99.1 in Yum! Brands' Form 8-K filing.

Yum! Brands hosted Taco Bell Consumer Day on March 4, 2025, providing an overview of its long-term strategy and recent performance updates. The company outlined growth targets for Taco Bell, including an 8% projected U.S. same-store sales increase for the first quarter of 2025, company restaurant margins of 24-25% for the year, and the addition of 100 net-new international units.

By 2030, Yum! Brands aims for Taco Bell to reach $3.0 million in annual unit volumes (AUVs) in the U.S., expand company restaurant margins to 25-26%, and establish 3,000 international locations. The company emphasized its focus on innovation and brand experience to drive growth.

Yum! Brands issued a press release on the event, which is available on its investor relations website. The company included standard forward-looking statements, cautioning that results could vary due to franchisee performance, global economic conditions, geopolitical risks, and the execution of its technology initiatives.

Yum! Brands, Inc. reported strong financial results for the fourth quarter and full year 2024. Fourth-quarter GAAP EPS was $1.49, and EPS excluding Special Items was $1.61. For the full year, GAAP EPS was $5.22, and EPS excluding Special Items was $5.48, reflecting a 6% increase.

David Gibbs, CEO, highlighted the strong growth in core operating profits, with Taco Bell U.S. achieving 5% same-store sales growth in Q4 and KFC International adding over 2,000 net new units. Chris Turner, CFO, noted the opening of 4,535 new stores globally and the company’s digital progress, with digital sales up 15%. Yum! also launched Byte by Yum!, a proprietary AI-driven digital ecosystem to streamline operations across its restaurants.

In strategic news, Yum! promoted Scott Mezvinsky to KFC Division CEO, announced new concepts like Saucy by KFC and Taco Bell’s Live Más Cafe, and introduced a new Pizza Hut restaurant design.