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