Yum Brands, Inc. (NYSE: YUM) boosts EPS and plans $2.3B Pizza Hut sale
Yum! Brands, Inc. reported strong mid‑year results. For the quarter ended June 30, 2026, total revenues were $2,169 million, up 12% year over year, with operating profit of $655 million and net income of $853 million. Diluted EPS was $3.08, aided by a (60.1)% effective tax rate driven primarily by deferred tax benefits tied to the planned Pizza Hut sale, internal Pizza Hut IP reorganizations, and new tax legislation. Diluted EPS excluding Special Items was $1.62, up 12%.
System sales excluding foreign exchange rose 5% in the quarter and 6% year to date, with same‑store sales up 3% and net units up 5% to 64,166 restaurants, 97% franchised. KFC and Taco Bell grew system sales excluding FX by 6% and 9% respectively, while Pizza Hut declined modestly. Taco Bell U.S. saw a meaningful near‑term sales impact from a voluntary removal of certain lettuce, and management expects Taco Bell U.S. company restaurant margin of 19%–21% in the third quarter.
Strategically, Yum entered definitive agreements on June 16, 2026 to sell Pizza Hut in two transactions, expecting about $2.3 billion of net proceeds after taxes and fees, plus up to $75 million in potential earn‑out by 2030; related assets and liabilities are classified as held for sale, and the brand is not treated as a discontinued operation. The Board also added a new $4 billion share repurchase authorization, bringing remaining capacity to $4.389 billion, after repurchasing $670 million of stock year to date. Yum discloses a large contested U.S. tax dispute and an Indian regulatory matter but has not recorded reserves, while noting an unfavorable IRS outcome could materially affect future results.
Positive
- Quarterly net income more than doubled to $853 million, with diluted EPS excluding Special Items rising 12% to $1.62, reflecting broad‑based operating strength alongside one‑time tax benefits.
- Yum expects approximately $2.3 billion in net cash proceeds from the Pizza Hut divestitures, plus a potential $75 million earn‑out, providing significant financial flexibility.
- Shareholder returns remain robust, with $670 million of stock repurchased year to date and total remaining buyback authorization of $4.389 billion, including a new $4 billion program.
Negative
- The IRS asserts an additional tax underpayment of about $2.1 billion for 2014, plus $418 million in penalties and roughly $2.3 billion of interest through June 30, 2026; the company warns an unfavorable outcome could materially impact future financial statements.
- A Taco Bell U.S. public health–related lettuce removal caused a "meaningful near‑term" sales impact, and management now anticipates Taco Bell U.S. company restaurant margin of 19%–21% in the third quarter of 2026.
Key Figures
Total revenues: $2,169 million
Net income: $853 million
Diluted EPS excluding Special Items: $1.62
+4 more
7 metrics
Total revenues
$2,169 million
Quarter ended June 30, 2026 total revenues, up 12% versus Q2 2025
Net income
$853 million
Quarter ended June 30, 2026 net income, 128% higher than Q2 2025
Diluted EPS excluding Special Items
$1.62
Q2 2026 diluted EPS excluding Special Items versus $1.44 in Q2 2025
System sales growth ex FX
5%
Worldwide System Sales growth excluding foreign exchange in Q2 2026
Global unit count
64,166 restaurants
Total system restaurants as of June 30, 2026, 97% franchised
Expected Pizza Hut net proceeds
$2.3 billion
Approximate net proceeds after taxes, adjustments and fees from Pizza Hut sale
IRS proposed additional tax
$2.1 billion
Approximate additional 2014 tax asserted by IRS, plus $418M penalties and $2.3B interest
Key Terms
System sales, Same-store sales growth, Core Operating Profit, Special Items, +2 more
6 terms
System sales financial
"We believe System sales growth is useful to investors as a significant indicator"
System sales are the total sales generated across an entire network of a business’s outlets, including both company-owned and independently operated (franchise) locations. Investors watch this figure because it shows the brand’s overall customer demand and growth beyond what the company records on its own books—like checking the total harvest from all farms using a seed brand rather than just the seed maker’s own field.
Same-store sales growth financial
"Same-store sales growth is the estimated percentage change in system sales"
Same-store sales growth measures how much revenue changes at outlets that have been open for a comparable period (typically a year), excluding sales from newly opened or recently closed locations. It matters to investors because it shows whether demand is growing at the business’s existing operations — like checking whether established trees are producing more fruit rather than counting fruit from newly planted trees — and helps separate true organic performance from growth driven by expansion or closures.
Core Operating Profit financial
"Core Operating Profit excludes Special Items and FX and we use Core Operating Profit"
Core operating profit is the company's profit from its normal day-to-day business activities after removing one-time items, unusual gains or losses, and financing or tax effects. Investors use it like a household budget that strips out unexpected windfalls or repairs: it shows the steady earnings power of the business and helps compare performance across periods or with peers without distortion from rare or non‑operational events.
Special Items financial
"Special Items are not included in any of our Division segment results"
Special items are unusual or infrequent gains or losses that a company reports separately from its regular operating profit, such as restructuring costs, asset write-downs, legal settlements, or one-time gains from selling a business. Investors pay attention because these items can make reported profits look better or worse than the company’s ongoing performance—like a homeowner’s one-off roof repair affecting a single month’s budget but not the household’s regular income and expenses.
net investment hedge financial
"forward contracts with a U.S. dollar notional amount of approximately $75 million to reduce exposure as a net investment hedge"
Accumulated other comprehensive loss financial
"Changes in Accumulated other comprehensive loss (“AOCI”) are presented below"
Accumulated other comprehensive loss is the running negative total of certain gains and losses that companies record outside their regular profit-and-loss statement, such as changes in the value of some investments, pension adjustments, or currency translation effects. It matters to investors because it reduces shareholders’ equity and reveals economic swings that haven’t affected reported net income yet — like a side ledger showing pending ups and downs that could influence future cash flow or balance-sheet strength.
Earnings Snapshot
Total revenues: $2,169 million · Guidance included
Quarter and year to date ended June 30, 2026
Total revenues
$2,169 million
12% increase versus $1,933 million in Q2 2025
Operating Profit
$655 million
5% increase versus $622 million in Q2 2025
Net Income
$853 million
128% increase versus $374 million in Q2 2025
Diluted EPS
$3.08
131% increase versus $1.33 in Q2 2025
Diluted EPS excluding Special Items
$1.62
12% increase versus $1.44 in Q2 2025
Guidance
Management highlighted a meaningful near-term Taco Bell U.S. sales impact from a lettuce-related public health issue and indicated Taco Bell U.S. company restaurant margin is expected to range between 19% and 21% in the quarter ending September 30, 2026.
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FAQ
How did Yum Brands (YUM) perform financially in the quarter ended June 30, 2026?
Yum Brands generated $2,169 million in revenue, up 12% year over year, and net income of $853 million. Diluted EPS was $3.08, while EPS excluding Special Items was $1.62, a 12% increase versus $1.44 a year earlier.
What were Yum Brands (YUM) system sales and same-store sales trends in Q2 2026?
Worldwide system sales excluding FX grew 5%, with same‑store sales up 3% and units up 5%. KFC and Taco Bell delivered 6% and 9% system sales growth ex‑FX, respectively, while Pizza Hut system sales excluding FX declined 2%.
What are the key terms of Yum Brands (YUM) Pizza Hut divestiture?
Yum signed definitive agreements on June 16, 2026 to sell Pizza Hut in two deals, expecting about $2.3 billion of net proceeds after taxes, adjustments and fees, plus a potential $75 million earn‑out by 2030. Closings are anticipated in August 2026, subject to approvals.
How much stock has Yum Brands (YUM) repurchased and what authorization remains?
Under its May 2024 authorization, Yum repurchased 4.345 million shares for $670 million year to date. Remaining capacity totals $4.389 billion, including about $0.4 billion under the 2024 plan and a new $4 billion authorization running through June 30, 2028.
What is Yum Brands (YUM) current debt and liquidity profile?
As of June 30, 2026, Yum reported $2,813 million of short‑term borrowings and $9,462 million of long‑term debt, with cash and cash equivalents of $674 million. Year‑to‑date cash from operations was $923 million, and cash paid for interest was $267 million.
What major tax and legal contingencies does Yum Brands (YUM) disclose?
Yum is contesting an IRS proposed additional tax of about $2.1 billion plus penalties and interest related to 2014 reorganizations, and an Indian enforcement action with a penalty of roughly INR 11 billion. The company has not recorded reserves but notes the IRS matter could be materially adverse if resolved unfavorably.
How many restaurants does Yum Brands (YUM) operate or franchise globally?
Yum’s system comprised 64,166 restaurants in 157 countries and territories as of June 30, 2026. About 62,536 units were franchised and 1,630 were company‑owned, meaning roughly 97% of locations are operated by franchisees.
| UNITED STATES | ||
| SECURITIES AND EXCHANGE COMMISSION | ||
| Washington, D. C. 20549 | ||
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES | |||||||||||
EXCHANGE ACT OF 1934 for the quarterly period ended | |||||||||||
| OR | |||||||||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||
For the transition period from ____________ to _________________
Commission file number 1-13163
________________________
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |||||||||||||||||||
| incorporation or organization) | Identification No.) | |||||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||||||||
| Registrant’s telephone number, including area code: | | |||||||||||||||||||
| Securities registered pursuant to Section 12(b) of the Act | |||||||||||
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | |||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated Filer | ☐ | ||||||||||||
| Non-accelerated Filer | ☐ | Smaller Reporting Company | ||||||||||||
| Emerging Growth Company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
The number of shares outstanding of the registrant’s Common Stock as of July 30, 2026, was 272,901,085 shares.
YUM! BRANDS, INC.
INDEX
| Page | ||||||||
| No. | ||||||||
| Part I. | Financial Information | |||||||
| Item 1 - Financial Statements | ||||||||
Condensed Consolidated Statements of Income | 4 | |||||||
Condensed Consolidated Statements of Comprehensive Income | 5 | |||||||
Condensed Consolidated Statements of Cash Flows | 6 | |||||||
Condensed Consolidated Balance Sheets | 7 | |||||||
Condensed Consolidated Statements of Shareholders' Deficit | 8 | |||||||
Notes to Condensed Consolidated Financial Statements | 9 | |||||||
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27 | |||||||
| Item 3 - Quantitative and Qualitative Disclosures About Market Risk | 45 | |||||||
| Item 4 - Controls and Procedures | 45 | |||||||
| Report of Independent Registered Public Accounting Firm | 46 | |||||||
| Part II. | Other Information and Signatures | |||||||
| Item 1 - Legal Proceedings | 47 | |||||||
| Item 1A - Risk Factors | 47 | |||||||
| Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds | 47 | |||||||
| Item 5 - Other Information | 48 | |||||||
| Item 6 - Exhibits | 49 | |||||||
| Signatures | 50 | |||||||
2
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements
3
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | |||||||||||||||||||||||
| YUM! BRANDS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| (in millions, except per share data) | |||||||||||||||||||||||
| Quarter ended | Year to date | ||||||||||||||||||||||
| Revenues | 6/30/2026 | 6/30/2025 | 6/30/2026 | 6/30/2025 | |||||||||||||||||||
| Company sales | $ | $ | $ | $ | |||||||||||||||||||
| Franchise and property revenues | |||||||||||||||||||||||
| Franchise contributions for advertising and other services | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Costs and Expenses, Net | |||||||||||||||||||||||
| Company restaurant expenses | |||||||||||||||||||||||
| General and administrative expenses | |||||||||||||||||||||||
| Franchise and property expenses | |||||||||||||||||||||||
| Franchise advertising and other services expense | |||||||||||||||||||||||
| Refranchising (gain) loss | ( | ( | ( | ( | |||||||||||||||||||
| Other (income) expense | ( | ( | ( | ||||||||||||||||||||
| Total costs and expenses, net | |||||||||||||||||||||||
| Operating Profit | |||||||||||||||||||||||
| Investment (income) expense, net | ( | ( | ( | ||||||||||||||||||||
| Other pension (income) expense | ( | ( | |||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Income Before Income Taxes | |||||||||||||||||||||||
| Income tax (benefit) provision | ( | ( | |||||||||||||||||||||
| Net Income | $ | $ | $ | $ | |||||||||||||||||||
| Basic Earnings Per Common Share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted Earnings Per Common Share | $ | $ | $ | $ | |||||||||||||||||||
| Dividends Declared Per Common Share | $ | $ | $ | $ | |||||||||||||||||||
| See accompanying Notes to Condensed Consolidated Financial Statements. | |||||||||||||||||||||||
4
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) | |||||||||||||||||||||||
| YUM! BRANDS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Quarter ended | Year to date | ||||||||||||||||||||||
| 6/30/2026 | 6/30/2025 | 6/30/2026 | 6/30/2025 | ||||||||||||||||||||
| Net Income | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income (loss), net of tax | |||||||||||||||||||||||
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature | |||||||||||||||||||||||
Adjustments and gains (losses) arising during the period | ( | ||||||||||||||||||||||
| Reclassification of adjustments and (gains) losses into Net Income | |||||||||||||||||||||||
| ( | |||||||||||||||||||||||
Tax (expense) benefit | |||||||||||||||||||||||
| ( | |||||||||||||||||||||||
Changes in pension and post-retirement benefits | |||||||||||||||||||||||
Unrealized gains (losses) arising during the period | |||||||||||||||||||||||
Reclassification of (gains) losses into Net Income | |||||||||||||||||||||||
Tax (expense) benefit | ( | ||||||||||||||||||||||
Changes in derivative instruments | |||||||||||||||||||||||
Unrealized gains (losses) arising during the period | |||||||||||||||||||||||
Reclassification of (gains) losses into Net Income | ( | ( | ( | ||||||||||||||||||||
| ( | |||||||||||||||||||||||
Tax (expense) benefit | ( | ( | |||||||||||||||||||||
| ( | |||||||||||||||||||||||
Other comprehensive income (loss), net of tax | |||||||||||||||||||||||
| Comprehensive Income | $ | $ | $ | $ | |||||||||||||||||||
| See accompanying Notes to Condensed Consolidated Financial Statements. | |||||||||||||||||||||||
5
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||||||
| YUM! BRANDS, INC. AND SUBSIDIARIES | |||||||||||
| (in millions) | |||||||||||
| Year to date | |||||||||||
| 6/30/2026 | 6/30/2025 | ||||||||||
| Cash Flows – Operating Activities | |||||||||||
| Net Income | $ | $ | |||||||||
| Depreciation and amortization | |||||||||||
| Refranchising (gain) loss | ( | ( | |||||||||
| Deferred income taxes | ( | ||||||||||
| Share-based compensation expense | |||||||||||
| Changes in accounts and notes receivable | |||||||||||
| Changes in prepaid expenses and other current assets | ( | ( | |||||||||
| Changes in accounts payable and other current liabilities | ( | ( | |||||||||
| Changes in income taxes payable | ( | ||||||||||
| Other, net | |||||||||||
| Net Cash Provided by Operating Activities | |||||||||||
| Cash Flows – Investing Activities | |||||||||||
| Capital spending | ( | ( | |||||||||
Acquisitions of franchise restaurants | ( | ( | |||||||||
| Proceeds from refranchising of restaurants | |||||||||||
| Maturities (purchases) of Short term investments, net | |||||||||||
| Other, net | ( | ||||||||||
| Net Cash Used in Investing Activities | ( | ( | |||||||||
| Cash Flows – Financing Activities | |||||||||||
| Repayments of long-term debt | ( | ( | |||||||||
| Revolving credit facility, three months or less, net | |||||||||||
| Repurchase shares of Common Stock | ( | ( | |||||||||
| Dividends paid on Common Stock | ( | ( | |||||||||
| Other, net | ( | ( | |||||||||
Net Cash Used in Financing Activities | ( | ( | |||||||||
| Effect of Exchange Rates on Cash and Cash Equivalents | ( | ||||||||||
| Net (Decrease) Increase in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, including Balances Classified within Assets held for sale | ( | ||||||||||
| Less: Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents Classified within Assets held for sale | ( | ||||||||||
| Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | ( | ||||||||||
| Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period | |||||||||||
| Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period | $ | $ | |||||||||
| See accompanying Notes to Condensed Consolidated Financial Statements. | |||||||||||
6
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||||||
| YUM! BRANDS, INC. AND SUBSIDIARIES | |||||||||||
| (in millions) | |||||||||||
6/30/2026 | 12/31/2025 | ||||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts and notes receivable, net | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Assets held for sale | |||||||||||
| Total Current Assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Deferred income taxes | |||||||||||
| Total Assets | $ | $ | |||||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable and other current liabilities | $ | $ | |||||||||
| Income taxes payable | |||||||||||
| Short-term borrowings | |||||||||||
| Liabilities held for sale | |||||||||||
| Total Current Liabilities | |||||||||||
| Long-term debt | |||||||||||
| Other liabilities and deferred credits | |||||||||||
| Total Liabilities | |||||||||||
| Shareholders’ Deficit | |||||||||||
Common Stock, | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total Shareholders’ Deficit | ( | ( | |||||||||
| Total Liabilities and Shareholders’ Deficit | $ | $ | |||||||||
| See accompanying Notes to Condensed Consolidated Financial Statements. | |||||||||||
7
| CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (Unaudited) | ||||||||||||||||||||||||||||||||
| YUM! BRANDS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
Quarters and years to date ended June 30, 2026 and 2025 | ||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| Yum! Brands, Inc. | ||||||||||||||||||||||||||||||||
| Issued Common Stock | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Shareholders' Deficit | |||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||
Balance at March 31, 2026 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||
| Net Income | ||||||||||||||||||||||||||||||||
| Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature | ||||||||||||||||||||||||||||||||
| Pension and post-retirement benefit plans | ||||||||||||||||||||||||||||||||
Derivative instruments (net of tax impact of $ | ||||||||||||||||||||||||||||||||
| Comprehensive Income | ||||||||||||||||||||||||||||||||
| Dividends declared | ( | ( | ||||||||||||||||||||||||||||||
Repurchase of shares of Common Stock(1) | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Employee share-based award exercises | ( | ( | ||||||||||||||||||||||||||||||
| Share-based compensation events | ||||||||||||||||||||||||||||||||
Balance at June 30, 2026 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||
Balance at December 31, 2025 | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||
| Net Income | ||||||||||||||||||||||||||||||||
| Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature | ( | ( | ||||||||||||||||||||||||||||||
Pension and post-retirement benefit plans (net of tax impact of $ | ||||||||||||||||||||||||||||||||
Derivative instruments (net of tax impact of $ | ||||||||||||||||||||||||||||||||
| Comprehensive Income | ||||||||||||||||||||||||||||||||
| Dividends declared | ( | ( | ||||||||||||||||||||||||||||||
Repurchase of shares of Common Stock(1) | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Employee share-based award exercises | ( | ( | ||||||||||||||||||||||||||||||
| Share-based compensation events | ||||||||||||||||||||||||||||||||
Balance at June 30, 2026 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||
Balance at March 31, 2025 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||
| Net Income | ||||||||||||||||||||||||||||||||
| Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature | ||||||||||||||||||||||||||||||||
| Comprehensive Income | ||||||||||||||||||||||||||||||||
| Dividends declared | ( | ( | ||||||||||||||||||||||||||||||
Repurchase of shares of Common Stock(1) | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Employee share-based award exercises | ( | ( | ||||||||||||||||||||||||||||||
| Share-based compensation events | ||||||||||||||||||||||||||||||||
Balance at June 30, 2025 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||
Balance at December 31, 2024 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||
| Net Income | ||||||||||||||||||||||||||||||||
| Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature | ||||||||||||||||||||||||||||||||
Pension and post-retirement benefit plans | ||||||||||||||||||||||||||||||||
Derivative instruments (net of tax impact of $ | ( | ( | ||||||||||||||||||||||||||||||
| Comprehensive Income | ||||||||||||||||||||||||||||||||
| Dividends declared | ( | ( | ||||||||||||||||||||||||||||||
Repurchase of shares of Common Stock(1) | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Employee share-based award exercises | ( | ( | ( | |||||||||||||||||||||||||||||
| Share-based compensation events | ||||||||||||||||||||||||||||||||
Balance at June 30, 2025 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||
(1)Includes excise tax on share repurchases | ||||||||||||||||||||||||||||||||
| See accompanying Notes to Condensed Consolidated Financial Statements. | ||||||||||||||||||||||||||||||||
8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Tabular amounts in millions, except per share data)
Note 1 - Financial Statement Presentation
We have prepared our accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by Generally Accepted Accounting Principles in the United States (“GAAP”) for complete financial statements. Therefore, we suggest that the accompanying Financial Statements be read in conjunction with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (“2025 Form 10-K”).
Yum! Brands, Inc. and its Subsidiaries (collectively referred to herein as the “Company,” “YUM,” “we,” “us” or “our”) franchise or operate a system of over 64,000 restaurants in 157 countries and territories. As of June 30, 2026, 97 % of these restaurants were owned and operated by franchisees. The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-inspired and pizza categories, respectively. The Habit Burger & Grill is a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more.
As of June 30, 2026, YUM consisted of four operating segments:
•The KFC Division which includes our worldwide operations of the KFC concept
•The Taco Bell Division which includes our worldwide operations of the Taco Bell concept
•The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept
•The Habit Burger & Grill Division which includes our worldwide operations of the Habit Burger & Grill concept
In 2025, we began a review of strategic options for the Pizza Hut brand. The objective of the review was to create value for YUM, Pizza Hut and its franchise partners by determining the optimal approach to best capitalize on Pizza Hut's structural advantages — strong brand equity, experienced franchise partners and meaningful scale — in the highly fragmented pizza market. In June 2026, we entered into two definitive agreements to sell the Pizza Hut brand thereby completing this review (see Note 3 for discussion regarding the agreements).
YUM's fiscal year begins on January 1 and ends December 31 of each year, with each quarter comprised of three months. The majority of our U.S. subsidiaries and certain international subsidiaries operate on a weekly periodic calendar where the first three quarters of each fiscal year consist of 12 weeks and the fourth quarter consists of 16 weeks in fiscal years with 52 weeks and 17 weeks in fiscal years with 53 weeks. Our remaining international subsidiaries operate on a monthly calendar similar to that on which YUM operates.
Our preparation of the accompanying Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
The accompanying Financial Statements include all normal and recurring adjustments considered necessary to present fairly, when read in conjunction with our 2025 Form 10-K, the results of the interim periods presented. Our results of operations, comprehensive income, cash flows and changes in shareholders' deficit for these interim periods are not necessarily indicative of the results to be expected for the full year.
Our significant interim accounting policies include the recognition of advertising and marketing costs, generally in proportion to revenue, and the recognition of income taxes using an estimated annual effective tax rate.
We have reclassified certain items in the Financial Statements for the prior periods to be comparable with the classification for the quarter ended June 30, 2026. These reclassifications had no effect on previously reported Net Income.
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Note 2 - Restaurant Acquisitions
During 2026 and throughout 2025, we completed various restaurant acquisitions from franchisees, the most significant of which was the Taco Bell Southeast U.S. restaurant acquisition referenced below. In each transaction, the acquisition was accounted for as a business combination using the acquisition method of accounting. The allocation of the purchase price for each acquisition was based on management's analysis, which may have included analysis performed by third party valuation specialists, as of the respective acquisition dates.
The financial results of all acquired restaurants have been included in our Condensed Consolidated Financial Statements since the respective dates of the acquisitions, which individually and in the aggregate, did not materially impact our results for the quarters and years to date ended June 30, 2026 and 2025, respectively. Pro forma financial information for the periods prior to acquisition is not presented due to the immaterial impact of the restaurant acquisitions on our Condensed Consolidated Financial Statements for both the 2026 and 2025 reporting periods.
Taco Bell Southeast U.S. Restaurant Acquisition
During the fourth quarter of 2025, we completed the acquisition of 128 Taco Bell restaurants across the Southeast U.S. from a franchisee. The acquisition provided YUM with an opportunity to improve and accelerate Taco Bell profitability, expand strategic leadership within the Taco Bell system and unlock significant unit development in the region. The purchase price to be allocated for accounting purposes was $666 million, which consisted of cash in the amount of $667 million, offset by the settlement of a net liability of $1 million related to our preexisting contractual relationship with the franchisee.
During the quarter ended June 30, 2026, we finalized our preliminary estimate of the fair value of identifiable net assets acquired. The cumulative adjustments to the preliminary estimate of identifiable net assets acquired (as recorded in the December 31, 2025 quarter of acquisition) were not significant.
Note 3 - Pizza Hut Divestitures
On June 16, 2026, we entered into definitive agreements to sell Pizza Hut in two separate transactions. Pizza Hut excluding Mainland China (“Pizza Hut Ex-China”) will be acquired by LongRange Capital, a private equity firm, and Pizza Hut in Mainland China will be acquired by Yum China Holdings, Inc., which will remain YUM’s master franchisee for KFC and Taco Bell in Mainland China.
We anticipate both transactions will close in August 2026, subject to customary closing conditions, including receipt of required regulatory approvals. Across the two transactions, we expect to receive approximately $2.3 billion of net proceeds after taxes, closing adjustments and transaction-contingent fees. Additionally, YUM has the opportunity to receive an earn-out from LongRange Capital of $75 million by 2030. We will continue to provide Byte by Yum!, our proprietary technology platform, to Pizza Hut Ex-China subsequent to the sale. Additionally, following the closing of the transaction, we will provide certain enterprise technology and finance services to Pizza Hut Ex-China under a transition services agreement.
During the quarter ended June 30, 2026, we determined that certain assets and liabilities met the criteria for classification as held for sale as a result of the signing of the definitive agreements. The planned sale of Pizza Hut does not represent a strategic shift that will have a major effect on YUM’s operations and financial results and, therefore, has not been presented as a discontinued operation. We suspend certain depreciation and amortization on assets that are held for sale, the impact of which was not significant during the quarter ended June 30, 2026.
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The detail of assets and liabilities related to Pizza Hut that were classified as assets and liabilities held for sale in the Condensed Consolidated Balance Sheets are presented below.
| 6/30/2026 | |||||
| Assets held for sale | |||||
| Cash and cash equivalents | $ | ||||
| Accounts and notes receivable, net | |||||
| Prepaid expenses and other current assets | |||||
| Property, plant and equipment, net | |||||
| Goodwill | |||||
| Intangible assets, net | |||||
| Other assets | |||||
| Total Assets held for sale | $ | ||||
| Liabilities held for sale | |||||
| Accounts payable and other current liabilities | $ | ||||
| Other liabilities and deferred credits | |||||
| Total Liabilities held for sale | $ | ||||
Note 4 - Earnings Per Common Share (“EPS”)
| Quarter ended | Year to date | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Net Income | $ | $ | $ | $ | ||||||||||||||||||||||
| Weighted-average common shares outstanding (for basic calculation) | ||||||||||||||||||||||||||
| Effect of dilutive share-based employee compensation | ||||||||||||||||||||||||||
| Weighted-average common and dilutive potential common shares outstanding (for diluted calculation) | ||||||||||||||||||||||||||
| Basic EPS | $ | $ | $ | $ | ||||||||||||||||||||||
| Diluted EPS | $ | $ | $ | $ | ||||||||||||||||||||||
Unexercised employee SARs, RSUs, PSUs and stock options (in millions) excluded from the diluted EPS computation(a) | ||||||||||||||||||||||||||
(a)These unexercised employee stock appreciation rights (“SARs”), restricted stock units (“RSUs”), performance share units (“PSUs”) and stock options were not included in the computation of diluted EPS because to do so would have been antidilutive for the periods presented.
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Note 5 - Shareholders' Deficit
Under the authority of our Board of Directors, we repurchased shares of our Common Stock during the years to date ended June 30, 2026 and 2025 as indicated below. All amounts exclude applicable transaction fees and excise taxes on share repurchases.
| Shares Repurchased (thousands) | Dollar Value of Shares Repurchased | Remaining Dollar Value of Shares that may be Repurchased | ||||||||||||||||||||||||||||||||||||||||||||||||
| Authorization Date | 2026 | 2025 | 2026 | 2025 | 2026 | |||||||||||||||||||||||||||||||||||||||||||||
May 2024 | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| June 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
In May 2024, our Board of Directors authorized share repurchases of up to $2 billion (excluding applicable transaction fees and excise taxes) of our outstanding Common Stock through December 31, 2026. As of June 30, 2026 we have remaining capacity to repurchase up to $0.4 billion of Common Stock under the May 2024 authorization. In June 2026, our Board of Directors authorized share repurchases of up to $4 billion (excluding applicable transaction fees and excise taxes) of our outstanding Common Stock from the earlier of the exhaustion or expiration of the May 2024 authorization through June 30, 2028.
Changes in Accumulated other comprehensive loss (“AOCI”) are presented below.
| Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Investment Nature | Pension and Post-Retirement Benefits | Derivative Instruments | Total | |||||||||||||||||||||||
Balance at March 31, 2026, net of tax | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| OCI, net of tax | ||||||||||||||||||||||||||
Gains (losses) arising during the period classified into AOCI, net of tax | ||||||||||||||||||||||||||
(Gains) losses reclassified from AOCI, net of tax | ||||||||||||||||||||||||||
Balance at June 30, 2026, net of tax | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Balance at December 31, 2025, net of tax | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| OCI, net of tax | ||||||||||||||||||||||||||
Gains (losses) arising during the period classified into AOCI, net of tax | ( | ( | ||||||||||||||||||||||||
(Gains) losses reclassified from AOCI, net of tax | ( | |||||||||||||||||||||||||
| ( | ||||||||||||||||||||||||||
| Balance at June 30, 2026, net of tax | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
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Note 6 - Other (Income) Expense
| Quarter ended | Year to date | |||||||||||||||||||||||||
| 6/30/2026 | 6/30/2025 | 6/30/2026 | 6/30/2025 | |||||||||||||||||||||||
| Foreign exchange net (gain) loss | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
| Impairment and closure expense | ||||||||||||||||||||||||||
Other(a) | ( | ( | ( | ( | ||||||||||||||||||||||
| Other (income) expense | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
(a) The year to date ended June 30, 2026, includes income of approximately $44 million related to a credit card interchange fee litigation settlement, net of legal expenses, in which we were a plaintiff. This settlement was recorded to Unallocated Other income.
Note 7 - Supplemental Balance Sheet Information
Accounts and Notes Receivable, net
The Company’s receivables are primarily generated from ongoing business relationships with our franchisees as a result of franchise and lease agreements. Trade receivables consisting of royalties from franchisees are generally due within 30 days of the period in which the corresponding sales occur and are classified as Accounts and notes receivable, net in our Condensed Consolidated Balance Sheets. Accounts and notes receivable, net also includes receivables generated from advertising cooperatives that we consolidate.
| 6/30/2026 | 12/31/2025 | ||||||||||
| Accounts and notes receivable, gross | $ | $ | |||||||||
| Allowance for doubtful accounts | ( | ( | |||||||||
| Accounts and notes receivable, net | $ | $ | |||||||||
Prepaid Expenses and Other Current Assets
| 6/30/2026 | 12/31/2025 | ||||||||||
Income tax receivable | $ | $ | |||||||||
Restricted cash | |||||||||||
Prepaid expenses | |||||||||||
Other current assets | |||||||||||
Prepaid expenses and other current assets | $ | $ | |||||||||
Property, Plant and Equipment, net
| 6/30/2026 | 12/31/2025 | ||||||||||
| Property, plant and equipment, gross | $ | $ | |||||||||
| Accumulated depreciation and amortization | ( | ( | |||||||||
| Property, plant and equipment, net | $ | $ | |||||||||
| Other Assets | 6/30/2026 | 12/31/2025 | |||||||||
Operating lease right-of-use assets(a) | $ | $ | |||||||||
| Franchise incentives | |||||||||||
| Other | |||||||||||
| Other assets | $ | $ | |||||||||
(a) Non-current operating lease liabilities of $1,139 million and $1,174 million as of June 30, 2026 and December 31, 2025, respectively, are included in Other liabilities and deferred credits in our Condensed Consolidated Balance Sheets.
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Reconciliation of Cash and Cash Equivalents for Condensed Consolidated Statements of Cash Flows
| 6/30/2026 | 12/31/2025 | ||||||||||
| Cash and cash equivalents as presented in Condensed Consolidated Balance Sheets | $ | $ | |||||||||
Restricted cash included in Prepaid expenses and other current assets(a) | |||||||||||
Restricted cash and restricted cash equivalents included in Other assets(b) | |||||||||||
| Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents as presented in Condensed Consolidated Statements of Cash Flows | $ | $ | |||||||||
(a) Restricted cash within Prepaid expenses and other current assets reflects the cash related to advertising cooperatives which we consolidate that can only be used to settle obligations of the respective cooperatives and cash held in reserve for Taco Bell Securitization interest payments.
(b) Primarily trust accounts related to our self-insurance program.
Note 8 - Income Taxes
| Quarter ended | Year to date | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Income tax (benefit) provision | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Effective tax rate | ( | % | % | ( | % | % | |||||||||||||||||
Our second quarter and year to date 2026 effective tax rate was impacted by:
•A net deferred tax benefit of $359 million recorded in the quarter ended June 30, 2026, reflecting the recognition of certain tax basis in entities that are expected to be sold with the Pizza Hut business. Such recognition was triggered upon entering into definitive agreements during the quarter ended June 30, 2026 to sell Pizza Hut. The Pizza Hut sales are expected to close at significant book gains in the quarter ended September 30, 2026 resulting in the utilization of these deferred tax benefits.
•Tax benefits of $91 million and $113 million in the quarter and year to date ended June 30, 2026, respectively, associated with the continued internal reorganization to consolidate the Pizza Hut legal entities and assets into two isolated ownership structures by aligning the legal ownership, simplifying the organizational footprint and consolidating the Pizza Hut domestic and international businesses. The tax benefits were the result of establishing deferred tax assets associated with a step-up in amortizable tax basis in intellectual property rights that were transferred to international subsidiaries as well as releasing valuation allowances against tax attributes which will be utilized to partially offset the taxable gains recognized in such transfers.
•Favorable impacts from newly effective provisions of the One Big Beautiful Bill Act.
Our second quarter and year to date 2025 effective tax rate was impacted by $10 million and $102 million of tax expense, respectively, related to a reserve associated with a Mexican subsidiary's ability to utilize certain losses to offset recapture gains.
Note 9 - Revenue Recognition
Disaggregation of Total Revenues
The following tables disaggregate revenue by Concept, for our two most significant markets based on Operating Profit and for all other markets. We believe this disaggregation best reflects the extent to which the nature, amount, timing and uncertainty of our revenues and cash flows are impacted by economic factors.
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Quarter ended 6/30/2026 | |||||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Total | |||||||||||||||||||||||||||||||
| U.S. | |||||||||||||||||||||||||||||||||||
| Company sales | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Franchise revenues | |||||||||||||||||||||||||||||||||||
| Property revenues | |||||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | |||||||||||||||||||||||||||||||||||
| China | |||||||||||||||||||||||||||||||||||
| Franchise revenues | |||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||
| Company sales | |||||||||||||||||||||||||||||||||||
| Franchise revenues | |||||||||||||||||||||||||||||||||||
| Property revenues | |||||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Quarter ended 6/30/2025 | |||||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Total | |||||||||||||||||||||||||||||||
| U.S. | |||||||||||||||||||||||||||||||||||
| Company sales | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Franchise revenues | |||||||||||||||||||||||||||||||||||
| Property revenues | |||||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | |||||||||||||||||||||||||||||||||||
| China | |||||||||||||||||||||||||||||||||||
| Franchise revenues | |||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||
| Company sales | |||||||||||||||||||||||||||||||||||
| Franchise revenues | |||||||||||||||||||||||||||||||||||
| Property revenues | |||||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
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Year to date 6/30/2026 | |||||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Total | |||||||||||||||||||||||||||||||
| U.S. | |||||||||||||||||||||||||||||||||||
| Company sales | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Franchise revenues | |||||||||||||||||||||||||||||||||||
| Property revenues | |||||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | |||||||||||||||||||||||||||||||||||
| China | |||||||||||||||||||||||||||||||||||
| Franchise revenues | |||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||
| Company sales | |||||||||||||||||||||||||||||||||||
| Franchise revenues | |||||||||||||||||||||||||||||||||||
| Property revenues | |||||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Year to date 6/30/2025 | |||||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Total | |||||||||||||||||||||||||||||||
| U.S. | |||||||||||||||||||||||||||||||||||
| Company sales | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Franchise revenues | |||||||||||||||||||||||||||||||||||
| Property revenues | |||||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | |||||||||||||||||||||||||||||||||||
| China | |||||||||||||||||||||||||||||||||||
| Franchise revenues | |||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||
| Company sales | |||||||||||||||||||||||||||||||||||
| Franchise revenues | |||||||||||||||||||||||||||||||||||
| Property revenues | |||||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | (a) | ||||||||||||||||||||||||||||||
(a) Does not include a charge of $1 million to Unallocated Franchise revenues during the year to date ended June 30, 2025.
Contract Liabilities
Our contract liabilities are comprised of unamortized upfront fees received from franchisees and are presented within Accounts payable and other current liabilities and Other liabilities and deferred credits in our Condensed Consolidated Balance Sheets. A summary of significant changes to the contract liability balance during 2026 is presented below.
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| Deferred Franchise Fees | ||||||||
Balance at December 31, 2025 | $ | |||||||
| Revenue recognized that was included in unamortized upfront fees received from franchisees at the beginning of the period | ( | |||||||
| Increase for upfront fees associated with contracts that became effective during the period, net of amounts recognized as revenue during the period | ||||||||
| Deferred franchise fees related to Pizza Hut reclassified to Liabilities held for sale (see Note 3) | ( | |||||||
Other(a) | ( | |||||||
Balance at June 30, 2026 | $ | |||||||
(a) Primarily includes the impact of foreign currency translation.
We expect to recognize contract liabilities as revenue over the remaining term of the associated franchise agreement as follows:
| Less than 1 year | $ | |||||||
| 1 - 2 years | ||||||||
| 2 - 3 years | ||||||||
| 3 - 4 years | ||||||||
| 4 - 5 years | ||||||||
| Thereafter | ||||||||
| Total | $ | |||||||
Note 10 - Reportable Operating Segments
The Company's operating segments maintain separate financial information, and our Chief Operating Decision Maker (“CODM”), the Company's Chief Executive Officer, evaluates the operating segments' operating results on a regular basis in deciding how to allocate resources among the segments and in assessing segment performance. The CODM evaluates the performance of the Company's segments based on Divisional Operating Profit and is involved in determining and reviewing forecasted Divisional Operating Profit as part of the annual plan process. Throughout the year, the CODM considers forecast to actual results and variances on a monthly and quarterly basis to allocate resources for the segments' operations. The CODM also considers this information in determining how to prioritize capital allocation, including investments in restaurant development, technology and human capital, while maintaining a strong and flexible balance sheet, offering a competitive dividend and returning excess cash to shareholders. Our CODM manages assets on a consolidated basis. Accordingly, segment assets are not reported to our CODM or used in his decisions to allocate resources or assess performance of the segments. Therefore, total segment assets and long-lived assets have not been disclosed. The significant expense categories and amounts presented in the tables below align with the segment-level information that is regularly provided to the CODM.
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| Quarter ended 6/30/2026 | ||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Total | ||||||||||||||||||||||||||||
Company Sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Franchise and property revenues | ||||||||||||||||||||||||||||||||
Franchise contributions for advertising and other services | ||||||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Company restaurant expenses | ||||||||||||||||||||||||||||||||
| General and administrative expenses | ||||||||||||||||||||||||||||||||
| Franchise and property expenses | ||||||||||||||||||||||||||||||||
| Franchise advertising and other services expense | ||||||||||||||||||||||||||||||||
| Other (income) expense | ( | ( | ( | |||||||||||||||||||||||||||||
Division Operating Profit (Loss) | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Unallocated amounts:(a) | ||||||||||||||||||||||||||||||||
Corporate and unallocated G&A expenses(b) | $ | ( | ||||||||||||||||||||||||||||||
Unallocated Company restaurant expenses(c) | ( | |||||||||||||||||||||||||||||||
| Unallocated Refranchising gain (loss) | ||||||||||||||||||||||||||||||||
| Unallocated Other income (expense) | ( | |||||||||||||||||||||||||||||||
| Consolidated Operating Profit | ||||||||||||||||||||||||||||||||
| Investment income (expense), net | ||||||||||||||||||||||||||||||||
| Other pension income (expense) | ||||||||||||||||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||||||||||||||
| Income before income taxes | $ | |||||||||||||||||||||||||||||||
Other Segment Disclosures
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Corporate and Unallocated | Total | |||||||||||||||||||||||||||||||||
Depreciation and Amortization(e) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Capital Spending | ||||||||||||||||||||||||||||||||||||||
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| Quarter ended 6/30/2025 | ||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Total | ||||||||||||||||||||||||||||
Company Sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Franchise and property revenues | ||||||||||||||||||||||||||||||||
Franchise contributions for advertising and other services | ||||||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Company restaurant expenses | ||||||||||||||||||||||||||||||||
| General and administrative expenses | ||||||||||||||||||||||||||||||||
| Franchise and property expenses | ||||||||||||||||||||||||||||||||
| Franchise advertising and other services expense | ||||||||||||||||||||||||||||||||
| Other (income) expense | ( | ( | ||||||||||||||||||||||||||||||
Division Operating Profit (Loss) | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Unallocated amounts:(a) | ||||||||||||||||||||||||||||||||
Corporate and unallocated G&A expenses(b) | $ | ( | ||||||||||||||||||||||||||||||
Unallocated Company restaurant expenses(c) | ( | |||||||||||||||||||||||||||||||
| Unallocated Refranchising gain (loss) | ||||||||||||||||||||||||||||||||
Unallocated Other income (expense) | ||||||||||||||||||||||||||||||||
| Consolidated Operating Profit | ||||||||||||||||||||||||||||||||
Investment income (expense), net | ||||||||||||||||||||||||||||||||
| Other pension income (expense) | ||||||||||||||||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||||||||||||||
| Income before income taxes | $ | |||||||||||||||||||||||||||||||
Other Segment Disclosures
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Corporate and Unallocated | Total | |||||||||||||||||||||||||||||||||
Depreciation and Amortization(e) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Capital Spending | ||||||||||||||||||||||||||||||||||||||
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| Year to Date 6/30/2026 | ||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Total | ||||||||||||||||||||||||||||
Company Sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Franchise and property revenues | ||||||||||||||||||||||||||||||||
Franchise contributions for advertising and other services | ||||||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Company restaurant expenses | ||||||||||||||||||||||||||||||||
| General and administrative expenses | ||||||||||||||||||||||||||||||||
| Franchise and property expenses | ||||||||||||||||||||||||||||||||
| Franchise advertising and other services expense | ||||||||||||||||||||||||||||||||
| Other (income) expense | ( | ( | ||||||||||||||||||||||||||||||
| Division Operating Profit (Loss) | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Unallocated amounts:(a) | ||||||||||||||||||||||||||||||||
Corporate and unallocated G&A expenses(b) | $ | ( | ||||||||||||||||||||||||||||||
Unallocated Company restaurant expenses(c) | ( | |||||||||||||||||||||||||||||||
| Unallocated Refranchising gain (loss) | ||||||||||||||||||||||||||||||||
Unallocated Other income (expense)(d) | ||||||||||||||||||||||||||||||||
| Consolidated Operating Profit | ||||||||||||||||||||||||||||||||
| Investment income (expense), net | ||||||||||||||||||||||||||||||||
| Other pension income (expense) | ||||||||||||||||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||||||||||||||
| Income before income taxes | $ | |||||||||||||||||||||||||||||||
| Other Segment Disclosures | ||||||||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Corporate and Unallocated | Total | |||||||||||||||||||||||||||||||||
Depreciation and Amortization(e) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Capital Spending | ||||||||||||||||||||||||||||||||||||||
20
| Year to Date 6/30/2025 | ||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Total | ||||||||||||||||||||||||||||
Company Sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Franchise and property revenues | ||||||||||||||||||||||||||||||||
Franchise contributions for advertising and other services | ||||||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Company restaurant expenses | ||||||||||||||||||||||||||||||||
| General and administrative expenses | ||||||||||||||||||||||||||||||||
| Franchise and property expenses | ||||||||||||||||||||||||||||||||
| Franchise advertising and other services expense | ||||||||||||||||||||||||||||||||
| Other (income) expense | ( | ( | ||||||||||||||||||||||||||||||
Division Operating Profit (Loss) | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Unallocated amounts:(a) | ||||||||||||||||||||||||||||||||
Corporate and unallocated G&A expenses(b) | $ | ( | ||||||||||||||||||||||||||||||
Unallocated Company restaurant expenses(c) | ( | |||||||||||||||||||||||||||||||
Unallocated Franchise and property revenues | ( | |||||||||||||||||||||||||||||||
| Unallocated Refranchising gain (loss) | ||||||||||||||||||||||||||||||||
Unallocated Other income (expense) | ||||||||||||||||||||||||||||||||
| Consolidated Operating Profit | ||||||||||||||||||||||||||||||||
| Investment income (expense), net | ||||||||||||||||||||||||||||||||
| Other pension income (expense) | ||||||||||||||||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||||||||||||||
| Income before income taxes | $ | |||||||||||||||||||||||||||||||
| Other Segment Disclosures | ||||||||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Corporate and Unallocated | Total | |||||||||||||||||||||||||||||||||
Depreciation and Amortization(e) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Capital Spending | ||||||||||||||||||||||||||||||||||||||
21
Revenues by Country(f)
| Quarter ended | Year to date | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||||||||||||
| United Kingdom | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
(a)Amounts have not been allocated to any segment for performance reporting purposes.
(b)Corporate and unallocated G&A expenses include charges of $44 million and $81 million in the quarter and year to date ended June 30, 2026, respectively, related to our Pizza Hut strategic options review. Corporate and unallocated G&A expenses include charges of $14 million and $32 million in the quarter and year to date ended June 30, 2025, respectively, related to our resource optimization program and charges of $10 million during the quarter ended June 30, 2025 and $1 million and $17 million for the years to date ended June 30, 2026 and 2025, respectively, related to our brand headquarters consolidation.
(c)Unallocated Company restaurant expenses include amortization of reacquired franchise rights.
(d)Unallocated Other income (expense) includes income of $44 million, net of legal expenses, in the year to date ended June 30, 2026, related to a credit card interchange fee litigation settlement in which we were a plaintiff.
(e)The amounts of depreciation and amortization disclosed by reportable segment are primarily included within the segment expense captions of Company restaurant expenses and G&A expenses .
(f)The United States and United Kingdom represented 10% or more of our total revenues for all periods presented.
Note 11 - Pension Benefits
We sponsor qualified and supplemental (non-qualified) noncontributory defined benefit pension plans covering certain full-time salaried and hourly U.S. employees. The most significant of these plans, the YUM Retirement Plan (the “Plan”), is funded. We fund our other U.S. plans as benefits are paid. Our two significant U.S. plans, including the Plan and a supplemental plan, were previously amended such that any salaried employee hired or rehired by YUM after September 30, 2001, is not eligible to participate in those plans. Additionally, these two plans in the U.S. are currently closed to new hourly participants.
The components of net periodic benefit cost associated with our U.S. pension plans are as follows:
| Quarter ended | Year to date | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Service cost | $ | $ | $ | $ | |||||||||||||||||||
| Interest cost | |||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||
| Amortization of net (gain) / loss | |||||||||||||||||||||||
| Amortization of prior service costs | |||||||||||||||||||||||
Net periodic benefit cost (income) | $ | $ | $ | $ | ( | ||||||||||||||||||
Additional loss recognized due to settlements(a) | $ | $ | $ | $ | |||||||||||||||||||
(a)Loss is a result of settlement transactions which exceeded the sum of annual service and interest costs for the applicable plan. This loss was recorded in Other pension (income) expense .
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Note 12 - Short-term Borrowings and Long-term Debt
| Short-term Borrowings | 6/30/2026 | 12/31/2025 | ||||||||||||
| Current maturities of long-term debt | $ | $ | ||||||||||||
Other | ||||||||||||||
| Less current portion of debt issuance costs and discounts | ( | ( | ||||||||||||
| Short-term borrowings | $ | $ | ||||||||||||
| Long-term Debt | ||||||||||||||
| Securitization Notes | $ | $ | ||||||||||||
| Subsidiary Senior Unsecured Notes | ||||||||||||||
| Revolving Facility | ||||||||||||||
| Term Loan A Facility | ||||||||||||||
| Term Loan B Facility | ||||||||||||||
| YUM Senior Unsecured Notes | ||||||||||||||
| Finance lease obligations | ||||||||||||||
| $ | $ | |||||||||||||
| Less long-term portion of debt issuance costs and discounts | ( | ( | ||||||||||||
| Less current maturities of long-term debt | ( | ( | ||||||||||||
| Long-term debt | $ | $ | ||||||||||||
The Term Loan A Facility and the Revolving Facility will mature on the earliest of (i) April 26, 2029, (ii) the date that is 91 days prior to the March 15, 2028 maturity of the existing Term Loan B Facility if more than $250 million of such Term Loan B remains outstanding as of such date or (iii) the date that is 91 days prior to the June 1, 2027 maturity of the existing Subsidiary Senior Unsecured Notes if more than $250 million of such Subsidiary Senior Unsecured Notes remain outstanding as of such date. Given the $750 million in Subsidiary Senior Unsecured Notes outstanding at June 30, 2026, the maturity date of the Term Loan A Facility and Revolving Facility will occur less than 12 months from the balance sheet date of these Condensed Consolidated Financial Statements if the Company has not paid nor refinanced at least $500 million of the Subsidiary Senior Unsecured Notes 91 days prior to June 1, 2027. As such, the outstanding borrowings of the Term Loan A Facility and the Revolving Facility have been classified as Short-term borrowings in the Condensed Consolidated Balance Sheets as of June 30, 2026.
Details of our Short-term borrowings and Long-term debt as of December 31, 2025 can be found within our 2025 Form 10-K.
Cash paid for interest during the years to date ended June 30, 2026 and 2025, was $267 million and $256 million, respectively.
Note 13 - Derivative Instruments
We use derivative instruments to manage certain of our market risks related to fluctuations in foreign currency exchange rates, interest rates and deferred compensation liabilities. As a result of the use of derivative instruments, the Company is exposed to risk that the counterparties will fail to meet their contractual obligations. To mitigate the counterparty credit risk, we only enter into contracts with major financial institutions carefully selected based upon their credit ratings and other factors, and continually assess the creditworthiness of counterparties. At June 30, 2026, all of the counterparties to our derivative instruments had investment grade ratings according to the three major ratings agencies. To date, all counterparties have performed in accordance with their contractual obligations.
Foreign Currency Contracts
We utilized foreign currency forward contracts with a U.S. dollar notional amount of approximately $75 million to reduce the foreign currency exposure relating to our net investment in certain Indian rupee functional currency operations during the quarter ended June 30, 2026. These forward contracts are designated as a net investment hedge and the related mark-to-market adjustments are being recorded as a cumulative translation adjustment within AOCI. These foreign currency forward contracts did not have a material impact on our Condensed Consolidated Financial Statements for the quarter or year to date ended June 30, 2026.
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Interest Rate Swaps
We have utilized interest rate swaps to fix the interest rate on $1.5 billion of borrowings, primarily under our Term Loan B Facility, through March 2028. The interest rate swaps have been designated as a cash flow hedge and to date have been highly effective. The current rate on the swapped portion of the Term Loan B Facility (excluding debt issuance costs) is 5.09 %.
Gains or losses on the interest rate swaps are reported as a component of AOCI and reclassified into Interest expense, net in our Condensed Consolidated Statements of Income in the same period or periods during which the related hedged interest payments affect earnings.
Gains and losses on these interest rate swaps recognized in OCI and reclassifications from AOCI into Net Income were as follows:
| Quarter ended | Year to date | ||||||||||||||||||||||||||||||||||||||||||||||
| Gains/(Losses) Recognized in OCI | (Gains)/Losses Reclassified from AOCI into Net Income | Gains/(Losses) Recognized in OCI | (Gains)/Losses Reclassified from AOCI into Net Income | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | $ | $ | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||
| Income tax benefit/(expense) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
As of June 30, 2026, the estimated net gain included in AOCI related to our interest rate swaps that will be reclassified into earnings in the next 12 months is $9 million, based on current Secured Overnight Financing (“SOFR”) interest rates.
Total Return Swaps
We have entered into total return swap derivative contracts, with the objective of reducing our exposure to market-driven changes in certain of the liabilities associated with compensation deferrals into our Executive Income Deferral (“EID”) plan. While these total return swaps represent economic hedges, we have not designated them as hedges for accounting purposes. As a result, the changes in the fair value of these derivatives are recognized immediately in earnings within General and administrative expenses in our Condensed Consolidated Statements of Income largely offsetting the changes in the associated EID liabilities. The fair value associated with the total return swaps as of both June 30, 2026 and December 31, 2025, was not significant.
See Note 14 for the fair value of our derivative assets and liabilities.
Note 14 - Fair Value Disclosures
As of June 30, 2026, the carrying values of cash and cash equivalents, restricted cash, accounts receivable, short-term borrowings, accounts payable and borrowings under our Revolving Facility approximated their fair values because of the short-term nature of these instruments. The fair value of our notes receivable, net of allowances, and lease guarantees, less reserves for expected losses, approximates their carrying value. The following table presents the carrying value and estimated fair value of the Company’s debt obligations:
| 6/30/2026 | 12/31/2025 | ||||||||||||||||||||||
| Carrying Value | Fair Value (Level 2) | Carrying Value | Fair Value (Level 2) | ||||||||||||||||||||
Securitization Notes(a) | $ | $ | $ | $ | |||||||||||||||||||
Subsidiary Senior Unsecured Notes(b) | |||||||||||||||||||||||
Term Loan A Facility(b) | |||||||||||||||||||||||
Term Loan B Facility(b) | |||||||||||||||||||||||
YUM Senior Unsecured Notes(b) | |||||||||||||||||||||||
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(a) We estimated the fair value of the Securitization Notes using market quotes and calculations. The markets in which the Securitization Notes trade are not considered active markets.
(b) We estimated the fair value of the YUM and Subsidiary Senior Unsecured Notes, Term Loan A Facility and Term Loan B Facility using market quotes and calculations based on market rates.
Recurring Fair Value Measurements
The Company has interest rate swaps which are required to be measured at fair value on a recurring basis (see Note 13 for discussion regarding derivative instruments). The following table presents the fair values for those interest rate swaps measured at fair value on a recurring basis and the level within the fair value hierarchy in which the measurements fall.
| Fair Value | ||||||||||||||||||||||||||
| Condensed Consolidated Balance Sheet | Level | 6/30/2026 | 12/31/2025 | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Interest Rate Swaps | Prepaid expenses and other current assets | 2 | $ | $ | ||||||||||||||||||||||
| Interest Rate Swaps | Other assets | 2 | ||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Interest Rate Swaps | Other liabilities and deferred credits | 2 | ( | |||||||||||||||||||||||
The fair value of the Company's interest rate swaps was determined based on the present value of expected future cash flows considering the risks involved, including nonperformance risk, and using discount rates appropriate for the duration based on observable inputs.
Note 15 - Contingencies
Internal Revenue Service Proposed Adjustment
Following an Internal Revenue Service (“IRS”) audit for the 2013 to 2015 fiscal years, we were unable to resolve underpayments of tax that the IRS proposed resulting from that audit using the IRS Appeals process, a pre-litigation, alternative dispute resolution tool. The IRS asserts an underpayment of tax of approximately $2.1 billion plus $418 million in penalties for fiscal year 2014. Both amounts are subject to interest, with interest of approximately $2.3 billion accruing through June 30, 2026. Those amounts relate primarily to a series of reorganizations that we undertook in 2014 in connection with the business realignment of our corporate and management reporting structure along brand lines. The IRS asserts that these transactions resulted in taxable distributions of approximately $6.0 billion.
We disagree with the IRS’s position and are contesting that position vigorously. On June 4, 2025, we filed a petition in the United States Tax Court disputing the IRS's position as set forth in a Notice of Deficiency. The IRS filed its Answer on September 12, 2025. The litigation is ongoing.
The Company does not expect resolution of this matter within twelve months and cannot predict with certainty the timing of such resolution. The Company believes that it is more likely than not the Company’s tax position will be sustained; therefore, no reserve is recorded with respect to this matter.
An unfavorable resolution of this matter could have a material, adverse impact on our Condensed Consolidated Financial Statements in future periods.
25
Lease Guarantees
As a result of having assigned our interest in obligations under real estate leases as a condition to the refranchising of certain Company-owned restaurants, and guaranteeing certain other leases, we are frequently secondarily liable on lease agreements. These leases have varying terms, the latest of which expires in 2065 . As of June 30, 2026, the potential amount of undiscounted payments we could be required to make in the event of non-payment by the primary lessee was approximately $300 million. The present value of these potential payments discounted at our pre-tax cost of debt at June 30, 2026, was approximately $250 million. Our franchisees are the primary lessees under the vast majority of these leases. We generally have cross-default provisions with these franchisees that would put them in default of their franchise agreement in the event of non-payment under the lease. We believe these cross-default provisions significantly reduce the risk that we will be required to make payments under these leases, although such risk may not be reduced in the context of a bankruptcy or other similar restructuring of a large franchisee or group of franchisees. The liability recorded for our expected losses under such leases as of June 30, 2026, was not material.
Legal Proceedings
We are subject to various claims and contingencies related to lawsuits, real estate, environmental and other matters arising in the normal course of business. An accrual is recorded with respect to claims or contingencies for which a loss is determined to be probable and reasonably estimable.
India Regulatory Matter
Yum! Restaurants India Private Limited (“YRIPL”), a YUM subsidiary that operates KFC and Pizza Hut restaurants in India, is the subject of a regulatory enforcement action in India (the “Action”). The Action alleges, among other things, that KFC International Holdings, Inc. and Pizza Hut International failed to satisfy certain conditions imposed by the Secretariat for Industrial Approval in 1993 and 1994 when those companies were granted permission for foreign investment and operation in India. The conditions at issue include an alleged minimum investment commitment and store build requirements as well as limitations on the remittance of fees outside of India.
The Action originated with a complaint and show cause notice filed in 2009 against YRIPL by the Deputy Director of the Directorate of Enforcement (“DOE”) of the Indian Ministry of Finance following an income tax audit for the years 2002 and 2003. The matter was argued at various hearings in 2015, but no order was issued. Following a change in the incumbent official holding the position of Special Director of DOE (the “Special Director”), the matter resumed in 2018 and several additional hearings were conducted.
Other Matters
We are currently engaged in various other legal proceedings and have certain unresolved claims pending, the ultimate liability for which, if any, cannot be determined at this time. However, based upon consultation with legal counsel, we are of the opinion that such proceedings and claims are not expected to have a material adverse effect, individually or in the aggregate, on our Condensed Consolidated Financial Statements.
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Introduction and Overview
The following Management's Discussion and Analysis (“MD&A”), should be read in conjunction with the unaudited Condensed Consolidated Financial Statements (“Financial Statements”), the Forward-Looking Statements and our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, (“2025 Form 10-K”). All Note references herein refer to the Notes to the Financial Statements. Tabular amounts are displayed in millions of U.S. dollars except per share and unit count amounts, or as otherwise specifically identified.
Yum! Brands, Inc. and its Subsidiaries (collectively referred to herein as the “Company,” “YUM,” “we,” “us” or “our”) franchise or operate a system of over 64,000 restaurants in 157 countries and territories, primarily under the concepts of KFC, Taco Bell, Pizza Hut and The Habit Burger & Grill (collectively, the “Concepts”). The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-inspired and pizza categories, respectively. The Habit Burger & Grill, is a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. Of the over 64,000 restaurants, 97% are operated by franchisees.
YUM currently consists of four operating segments:
•The KFC Division which includes our worldwide operations of the KFC concept
•The Taco Bell Division which includes our worldwide operations of the Taco Bell concept
•The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept
•The Habit Burger & Grill Division which includes our worldwide operations of the Habit Burger & Grill concept
In 2025, we began a review of strategic options for the Pizza Hut brand. The objective of the review was to create value for YUM, Pizza Hut and its franchise partners by determining the optimal approach to best capitalize on Pizza Hut's structural advantages — strong brand equity, experienced franchise partners and meaningful scale — in the highly fragmented pizza market. In June 2026, we entered into two definitive agreements to sell the Pizza Hut brand thereby completing this review (see Note 3 for discussion regarding the agreements).
Through our Recipe for Good Growth, our mission is to grow iconic restaurant brands globally that are loved, trusted and connected:
Loved: We grow by delighting customers with craveable food and a distinctive experience.
Trusted: We operate responsibly with consistency and efficiency in our restaurants, across our system and in our communities. This includes a commitment to our priorities for social responsibility, risk management and sustainable stewardship of resources.
Connected: We use our teamwork, technology and global scale to serve every customer, everywhere, anytime.
In 2026 and beyond, we intend to drive the next chapter of growth for YUM by Raising the B.A.R. through three clear priorities that reflect bold aspirations and a commitment to industry-leading performance:
•Battle for the future consumer by staying relentlessly focused on their needs and wants.
•Accelerate restaurant unit economics for our franchisees and maximize performance of every restaurant, serving as a catalyst for new unit development and keeping our franchise system healthy.
•Reach the full potential of Byte by Yum! by effectively operating, innovating and expanding our connected platform built by restaurant operators for restaurant operators to unlock its full potential for our franchise partners and our business.
Key to our success fueling brand performance and franchise success is our unrivaled culture and talent and leading with smart, heart and courage.
We intend to drive long-term growth and shareholder returns primarily through consistent same-store sales growth and new unit development across all of our Concepts. We intend to support this growth and development through a capital and operating structure that:
27
•Invests capital in a manner consistent with an asset light, franchisor model;
•Allocates G&A in an efficient manner that provides leverage to operating profit growth while at the same time opportunistically investing in strategic growth initiatives;
•Targets a consolidated net leverage ratio that balances shareholder returns, cost of capital and flexibility against various risk factors; and
•Maximizes shareholder return through a combination of paying a competitive dividend and returning excess cash flow through share repurchases.
We intend for this MD&A to provide the reader with information that will assist in understanding our results of operations, including performance metrics that management uses to assess the Company's performance. Throughout this MD&A, we commonly discuss the following performance metrics:
•Same-store sales growth is the estimated percentage change in system sales of all restaurants that have been open and in the YUM system for one year or more, including those temporarily closed. From time-to-time restaurants may be temporarily closed due to remodeling or image enhancement, rebuilding, natural disasters, health epidemic or pandemic, landlord disputes, boycotts, social or civil unrest or other issues. The system sales of restaurants we deem temporarily closed remain in our base for purposes of determining same-store sales growth and the restaurants remain in our unit count (see below). We believe same-store sales growth is useful to investors because our results are heavily dependent on the results of our Concepts' existing store base. Additionally, same-store sales growth is reflective of the strength of our Brands, the effectiveness of our operational and advertising initiatives and local economic and consumer trends.
•Gross unit openings reflects new openings by us and our franchisees. Net new unit growth reflects gross unit openings offset by permanent store closures, by us and our franchisees. To determine whether a restaurant meets the definition of a unit we consider whether the restaurant has operations that are ongoing and independent from another YUM unit, serves the primary product of one of our Concepts, operates under a separate franchise agreement (if operated by a franchisee) and has substantial and sustainable sales. We believe gross unit openings and net new unit growth are useful to investors because we depend on new units for a significant portion of our growth. Additionally, gross unit openings and net new unit growth are generally reflective of the economic returns to us and our franchisees from opening and operating our Concept restaurants.
•System sales and System sales excluding the impacts of foreign currency translation (“FX”) reflect the results of all restaurants regardless of ownership, including Company-owned and franchise restaurants. Sales at franchise restaurants typically generate ongoing franchise and license fees for the Company at a rate of 3% to 6% of sales. Increasingly, customers are paying a fee to a third party to deliver or facilitate the ordering of our Concepts' products. We also include in System sales any portion of the amount customers pay these third parties for which the third party is obligated to pay us a license fee as a percentage of such amount. Franchise restaurant sales and fees paid by customers to third parties to deliver or facilitate the ordering of our Concepts' products are not included in Company sales on the Condensed Consolidated Statements of Income; however, any resulting franchise and license fees we receive are included in the Company's revenues. We believe System sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates our primary revenue drivers, Company and franchise same-store sales as well as net new unit growth.
In addition to the results provided in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”), the Company provides the following non-GAAP measurements:
•Diluted Earnings Per Share excluding Special Items (as defined below);
•Effective Tax Rate excluding Special Items;
•Core Operating Profit. Core Operating Profit excludes Special Items and FX and we use Core Operating Profit for the purposes of evaluating performance internally;
•Net Income excluding Special Items;
•Company restaurant profit and Company restaurant margin as a percentage of sales (as defined below).
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These non-GAAP measurements are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measurements provide additional information to investors to facilitate the comparison of past and present operations.
Special Items are not included in any of our Division segment results as the Company does not believe they are indicative of our ongoing operations due to their size and/or nature. Our chief operating decision maker does not consider the impact of Special Items when assessing segment performance.
Company restaurant profit is defined as Company sales less Company restaurant expenses, both of which appear on the face of our Condensed Consolidated Statements of Income. Company restaurant expenses include those expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, cost of restaurant-level labor, rent, depreciation and amortization of restaurant-level assets and advertising expenses incurred by and on behalf of that Company restaurant. Company restaurant margin as a percentage of sales (“Company restaurant margin %”) is defined as Company restaurant profit divided by Company sales. We use Company restaurant profit for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe Company restaurant profit provides useful information to investors as to the profitability of our Company-owned restaurants. In calculating Company restaurant profit, the Company excludes revenues and expenses directly associated with our franchise operations as well as non-restaurant-level costs included in General and administrative expenses, some of which may support Company-owned restaurant operations. The Company also excludes restaurant-level asset impairment and closures expenses, which have historically not been significant, from the determination of Company restaurant profit as such expenses are not believed to be indicative of ongoing operations. Further, while we generally include depreciation and amortization of restaurant-level assets within Divisional Company restaurant expenses used to derive Divisional Company restaurant profit, we record amortization of reacquired franchise rights arising from acquisition accounting within Corporate and unallocated Company restaurant expenses as such amortization is not believed to be indicative of ongoing Divisional results as well as to enhance comparability of acquired stores' margins with those of existing restaurants. Company restaurant profit and Company restaurant margin % as presented may not be comparable to other similarly titled measures of other companies in the industry.
Certain performance metrics and non-GAAP measurements are presented excluding the impact of FX. These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the FX impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.
Certain General and administrative expenses allocations between KFC Division and Corporate and Unallocated for the prior periods have been restated to be comparable with the allocations for the quarter and year to date ended June 30, 2026.
Results of Operations
Summary
All comparisons within this summary are versus the same period a year ago.
Quarterly Financial Highlights:
| % Change | |||||||||||||||||
| System Sales, ex FX | Same-Store Sales | Units | GAAP Operating Profit | Core Operating Profit | |||||||||||||
| KFC Division | +6 | +2 | +7 | +13 | +9 | ||||||||||||
| Taco Bell Division | +9 | +7 | +3 | +19 | +19 | ||||||||||||
| Pizza Hut Division | (2) | (1) | +1 | (12) | (14) | ||||||||||||
Worldwide | +5 | +3 | +5 | +5 | +5 | ||||||||||||
Year to date Financial Highlights:
29
| % Change | |||||||||||||||||
| System Sales, ex FX | Same-Store Sales | Units | GAAP Operating Profit | Core Operating Profit | |||||||||||||
| KFC Division | +6 | +2 | +7 | +14 | +9 | ||||||||||||
| Taco Bell Division | +10 | +8 | +3 | +18 | +18 | ||||||||||||
| Pizza Hut Division | (1) | (1) | +1 | (13) | (15) | ||||||||||||
| Worldwide | +6 | +3 | +5 | +11 | +6 | ||||||||||||
Additionally:
•Foreign currency translation favorably impacted Divisional Operating Profit by $16 million and $41 million for the quarter and year to date ended June 30, 2026, respectively.
•Gross unit openings for the quarter were 1,053 units resulting in 481 net new units.
◦Gross unit openings for the year to date were 2,083 units resulting in 881 net new units.
| Second Quarter | Year to date | ||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | ||||||||||||||||||||||||
| GAAP EPS | $3.08 | $1.33 | +131 | $4.62 | $2.23 | +107 | |||||||||||||||||||||||
Less Special Items EPS | $1.46 | $(0.11) | NM | $1.50 | $(0.51) | NM | |||||||||||||||||||||||
| EPS Excluding Special Items | $1.62 | $1.44 | +12 | $3.12 | $2.74 | +14 | |||||||||||||||||||||||
Worldwide
GAAP Results
| Quarter ended | Year to date | ||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % B/(W) | 2026 | 2025 | % B/(W) | ||||||||||||||||||||||||||||||||||||
| Company sales | $ | 837 | $ | 669 | 25 | $ | 1,622 | $ | 1,277 | 27 | |||||||||||||||||||||||||||||||
| Franchise and property revenues | 895 | 835 | 7 | 1,751 | 1,620 | 8 | |||||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | 438 | 428 | 2 | 856 | 823 | 4 | |||||||||||||||||||||||||||||||||||
| Total revenues | 2,169 | 1,933 | 12 | 4,228 | 3,720 | 14 | |||||||||||||||||||||||||||||||||||
| Company restaurant expenses | 700 | 560 | (25) | 1,378 | 1,081 | (27) | |||||||||||||||||||||||||||||||||||
| G&A expenses | 324 | 302 | (7) | 646 | 604 | (7) | |||||||||||||||||||||||||||||||||||
| Franchise and property expenses | 41 | 39 | (6) | 85 | 73 | (16) | |||||||||||||||||||||||||||||||||||
| Franchise advertising and other services expense | 444 | 428 | (4) | 863 | 824 | (5) | |||||||||||||||||||||||||||||||||||
| Refranchising (gain) loss | (1) | (11) | (88) | (2) | (16) | (85) | |||||||||||||||||||||||||||||||||||
| Other (income) expense | 6 | (7) | NM | (39) | (15) | NM | |||||||||||||||||||||||||||||||||||
| Total costs and expenses, net | 1,514 | 1,311 | (16) | 2,930 | 2,550 | (15) | |||||||||||||||||||||||||||||||||||
| Operating Profit | 655 | 622 | 5 | 1,299 | 1,170 | 11 | |||||||||||||||||||||||||||||||||||
| Investment (income) expense, net | (6) | — | NM | (6) | (1) | NM | |||||||||||||||||||||||||||||||||||
| Other pension (income) expense | — | (1) | (93) | — | (1) | (74) | |||||||||||||||||||||||||||||||||||
| Interest expense, net | 128 | 123 | (4) | 257 | 243 | (6) | |||||||||||||||||||||||||||||||||||
| Income before income taxes | 533 | 499 | 7 | 1,049 | 929 | 13 | |||||||||||||||||||||||||||||||||||
| Income tax (benefit) provision | (320) | 125 | 356 | (236) | 301 | 178 | |||||||||||||||||||||||||||||||||||
| Net Income | $ | 853 | $ | 374 | 128 | $ | 1,285 | $ | 628 | 105 | |||||||||||||||||||||||||||||||
Diluted EPS(a) | $ | 3.08 | $ | 1.33 | 131 | $ | 4.62 | $ | 2.23 | 107 | |||||||||||||||||||||||||||||||
| Effective tax rate | (60.1) | % | 25.1 | % | 85.1 | ppts. | (22.5) | % | 32.4 | % | 55.0 | ppts. | |||||||||||||||||||||||||||||
(a)See Note 4 for the number of shares used in this calculation.
30
Performance Metrics
| Unit Count | 6/30/2026 | 6/30/2025 | % Increase (Decrease) | |||||||||||||||||||||||||||||||||||
| Franchise | 62,536 | 59,907 | 4 | |||||||||||||||||||||||||||||||||||
| Company-owned | 1,630 | 1,365 | 19 | |||||||||||||||||||||||||||||||||||
| Total | 64,166 | 61,272 | 5 | |||||||||||||||||||||||||||||||||||
| Quarter ended | Year to date | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Same-store Sales Growth % | 3 | 2 | 3 | 2 | ||||||||||||||||||||||
System Sales Growth %, reported | 8 | 5 | 9 | 4 | ||||||||||||||||||||||
System Sales Growth %, excluding FX | 5 | 4 | 6 | 4 | ||||||||||||||||||||||
31
Our system sales breakdown by Company and franchise sales was as follows:
| Quarter ended | Year to date | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Consolidated | ||||||||||||||||||||||||||
Company sales(a) | $ | 837 | $ | 669 | $ | 1,622 | $ | 1,277 | ||||||||||||||||||
| Franchise sales | 16,691 | 15,608 | 32,910 | 30,504 | ||||||||||||||||||||||
| System sales | 17,529 | 16,277 | 34,531 | 31,781 | ||||||||||||||||||||||
Negative (Positive) Foreign Currency Impact(b) | (375) | N/A | (960) | N/A | ||||||||||||||||||||||
| System sales, excluding FX | $ | 17,154 | $ | 16,277 | $ | 33,571 | $ | 31,781 | ||||||||||||||||||
| KFC Division | ||||||||||||||||||||||||||
Company sales(a) | $ | 275 | $ | 245 | $ | 530 | $ | 461 | ||||||||||||||||||
| Franchise sales | 9,291 | 8,476 | 18,364 | 16,600 | ||||||||||||||||||||||
| System sales | 9,566 | 8,721 | 18,894 | 17,061 | ||||||||||||||||||||||
Negative (Positive) Foreign Currency Impact(b) | (313) | N/A | (788) | N/A | ||||||||||||||||||||||
| System sales, excluding FX | $ | 9,254 | $ | 8,721 | $ | 18,106 | $ | 17,061 | ||||||||||||||||||
| Taco Bell Division | ||||||||||||||||||||||||||
Company sales(a) | $ | 396 | $ | 287 | $ | 768 | $ | 550 | ||||||||||||||||||
| Franchise sales | 4,281 | 3,988 | 8,303 | 7,705 | ||||||||||||||||||||||
| System sales | 4,677 | 4,275 | 9,071 | 8,255 | ||||||||||||||||||||||
Negative (Positive) Foreign Currency Impact(b) | (5) | N/A | (21) | N/A | ||||||||||||||||||||||
| System sales, excluding FX | $ | 4,672 | $ | 4,275 | $ | 9,050 | $ | 8,255 | ||||||||||||||||||
| Pizza Hut Division | ||||||||||||||||||||||||||
Company sales(a) | $ | 31 | $ | 7 | $ | 63 | $ | 10 | ||||||||||||||||||
| Franchise sales | 3,077 | 3,109 | 6,160 | 6,134 | ||||||||||||||||||||||
| System sales | 3,108 | 3,116 | 6,223 | 6,144 | ||||||||||||||||||||||
Negative (Positive) Foreign Currency Impact(b) | (57) | N/A | (151) | N/A | ||||||||||||||||||||||
| System sales, excluding FX | $ | 3,052 | $ | 3,116 | $ | 6,072 | $ | 6,144 | ||||||||||||||||||
Habit Burger & Grill Division | ||||||||||||||||||||||||||
Company sales(a) | $ | 135 | $ | 130 | $ | 260 | $ | 255 | ||||||||||||||||||
| Franchise sales | 42 | 36 | 83 | 66 | ||||||||||||||||||||||
| System sales | 177 | 166 | 343 | 321 | ||||||||||||||||||||||
Negative (Positive) Foreign Currency Impact(b) | — | N/A | — | N/A | ||||||||||||||||||||||
| System sales, excluding FX | $ | 177 | $ | 166 | $ | 343 | $ | 321 | ||||||||||||||||||
(a)Company sales represents sales from our Company-operated stores as presented on our Condensed Consolidated Statements of Income.
(b) The foreign currency impact on System sales is presented in relation only to the immediately preceding year presented. When determining applicable System sales growth percentages, the System sales excluding FX for the current year should be compared to the prior year System sales.
| Non-GAAP Items | ||||||||||||||||||||||||||
| Non-GAAP Items, along with the reconciliation to the most comparable GAAP financial measure, as presented below. | ||||||||||||||||||||||||||
| Quarter ended | Year to date | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
Core Operating Profit Growth % | 5 | 2 | 6 | 5 | ||||||||||||||||||||||
Diluted EPS Growth %, excluding Special Items | 12 | 7 | 14 | 10 | ||||||||||||||||||||||
| Effective Tax Rate excluding Special Items | 22.3 | % | 23.2 | % | 20.3 | % | 21.6 | % | ||||||||||||||||||
| Company restaurant profit | $ | 137 | $ | 109 | $ | 244 | $ | 196 | ||||||||||||||||||
| Company restaurant margin % | 16.3 | % | 16.3 | % | 15.0 | % | 15.3 | % | ||||||||||||||||||
32
| Reconciliation of GAAP Operating Profit to Core Operating Profit | Quarter ended | Year to date | ||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Consolidated | ||||||||||||||||||||||||||
| GAAP Operating Profit | $ | 655 | $ | 622 | $ | 1,299 | $ | 1,170 | ||||||||||||||||||
| Detail of Special Items: | ||||||||||||||||||||||||||
Charges associated with Pizza Hut Strategic Options Review(a) | 44 | — | 81 | — | ||||||||||||||||||||||
Charges associated with Brand HQ Consolidation(b) | — | 10 | 1 | 17 | ||||||||||||||||||||||
Charges associated with Resource Optimization | — | 14 | — | 32 | ||||||||||||||||||||||
Income from Litigation Settlement(c) | — | — | (44) | — | ||||||||||||||||||||||
German acquisition and Turkey termination-related costs(d) | — | 5 | — | 7 | ||||||||||||||||||||||
| Special Items Expense - Operating Profit | 44 | 28 | 38 | 55 | ||||||||||||||||||||||
Positive Foreign Currency Impact on Division Operating Profit | (16) | N/A | (41) | N/A | ||||||||||||||||||||||
| Core Operating Profit | $ | 683 | $ | 650 | $ | 1,296 | $ | 1,225 | ||||||||||||||||||
| Special Items as shown above were recorded to the financial statement line items identified below. | ||||||||||||||||||||||||||
| Condensed Consolidated Statements of Income Line Item | ||||||||||||||||||||||||||
Decrease in Franchise and property revenues | $ | — | $ | — | $ | — | $ | 1 | ||||||||||||||||||
Increase in General and administrative expenses | 44 | 28 | 82 | 56 | ||||||||||||||||||||||
Increase in Other (income) expense | — | — | (44) | (2) | ||||||||||||||||||||||
| Special Items Expense - Operating Profit | $ | 44 | $ | 28 | $ | 38 | $ | 55 | ||||||||||||||||||
| KFC Division | ||||||||||||||||||||||||||
| GAAP Operating Profit | $ | 410 | $ | 363 | $ | 793 | $ | 694 | ||||||||||||||||||
Negative (Positive) Foreign Currency Impact | (14) | N/A | (37) | N/A | ||||||||||||||||||||||
| Core Operating Profit | $ | 395 | $ | 363 | $ | 756 | $ | 694 | ||||||||||||||||||
| Taco Bell Division | ||||||||||||||||||||||||||
| GAAP Operating Profit | $ | 311 | $ | 262 | $ | 591 | $ | 502 | ||||||||||||||||||
Negative (Positive) Foreign Currency Impact | — | N/A | (1) | N/A | ||||||||||||||||||||||
| Core Operating Profit | $ | 310 | $ | 262 | $ | 590 | $ | 502 | ||||||||||||||||||
| Pizza Hut Division | ||||||||||||||||||||||||||
| GAAP Operating Profit | $ | 70 | $ | 80 | $ | 135 | $ | 155 | ||||||||||||||||||
Negative (Positive) Foreign Currency Impact | (2) | N/A | (4) | N/A | ||||||||||||||||||||||
| Core Operating Profit | $ | 69 | $ | 80 | $ | 131 | $ | 155 | ||||||||||||||||||
Habit Burger & Grill Division | ||||||||||||||||||||||||||
GAAP Operating Profit (Loss) | $ | (4) | $ | 3 | $ | (11) | $ | 2 | ||||||||||||||||||
Negative (Positive) Foreign Currency Impact | — | N/A | — | N/A | ||||||||||||||||||||||
| Core Operating Profit (Loss) | $ | (4) | $ | 3 | $ | (11) | $ | 2 | ||||||||||||||||||
| Reconciliation of GAAP Net Income to Net Income excluding Special Items | ||||||||||||||||||||||||||
| GAAP Net Income | $ | 853 | $ | 374 | $ | 1,285 | $ | 628 | ||||||||||||||||||
| Special Items Expense - Operating Profit | 44 | 28 | 38 | 55 | ||||||||||||||||||||||
Special Items Tax (Benefit) Expense(e) | (449) | 3 | (456) | 88 | ||||||||||||||||||||||
| Net Income excluding Special Items | $ | 449 | $ | 405 | $ | 867 | $ | 771 | ||||||||||||||||||
33
| Quarter ended | Year to date | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Reconciliation of Diluted EPS to Diluted EPS excluding Special Items | ||||||||||||||||||||||||||
| Diluted EPS | $ | 3.08 | $ | 1.33 | $ | 4.62 | $ | 2.23 | ||||||||||||||||||
| Less Special Items Diluted EPS | 1.46 | (0.11) | 1.50 | (0.51) | ||||||||||||||||||||||
| Diluted EPS excluding Special Items | $ | 1.62 | $ | 1.44 | $ | 3.12 | $ | 2.74 | ||||||||||||||||||
| Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items | ||||||||||||||||||||||||||
| GAAP Effective Tax Rate | (60.1) | % | 25.1 | % | (22.5) | % | 32.4 | % | ||||||||||||||||||
| Impact on Tax Rate as a result of Special Items | (82.4) | % | 1.9 | % | (42.8) | % | 10.8 | % | ||||||||||||||||||
| Effective Tax Rate excluding Special Items | 22.3 | % | 23.2 | % | 20.3 | % | 21.6 | % | ||||||||||||||||||
(a) In 2025, we began a review of strategic options for the Pizza Hut brand. During the quarter and year to date ended June 30, 2026, we recorded charges of $44 million and $81 million, respectively, to Corporate and unallocated General and administrative expenses, which primarily included third-party advising costs associated with this strategic options review. Given the significance of the costs expected to be incurred through the course of this strategic options review, we have reflected such amounts as Special Items.
(b)In 2025, we decided to designate two brand headquarters in the U.S., located in Plano, Texas and Irvine, California, to foster greater collaboration among brands and employees. This involved relocating the KFC U.S. corporate office to the KFC Global headquarters and requiring the majority of our U.S.-based remote employees to relocate to an appropriate headquarter office. We also decided to relocate our YUM Corporate headquarters to a new space in Louisville, Kentucky and accordingly, donated our existing space. Costs incurred to date primarily include severance for the employees who chose not to relocate and consultant fees. As a result of these decisions, we recorded charges of approximately $10 million during the quarter ended June 30, 2025, and approximately $1 million and $17 million for the years to date ended June 30, 2026 and 2025, respectively to Corporate and unallocated General and administrative expenses. Due to their scope and size, these charges have been reflected as Special Items.
(c)During the quarter ended March 31, 2026, we received approximately $44 million, net of legal expenses, related to a credit card interchange fee litigation settlement in which we were a plaintiff. This settlement was recorded to Unallocated Other (income) expense. Due to the nature and size of the settlement, including the years to which the litigation related, it has been reflected as a Special Item within Other income.
(d)On January 8, 2025, we terminated our franchise agreements with franchisee IS Gida A.S. (IS Gida), the owner and operator of KFC and Pizza Hut restaurants in Turkey and a subsidiary of IS Holding A.S. (IS Holding), after failure by IS Gida to meet our standards. As a result, 283 KFC restaurants and 254 Pizza Hut restaurants in Turkey were closed during the first quarter of 2025. We also re-acquired the master franchise rights in Germany for KFC and Pizza Hut from the owner of IS Holding in December 2024. We recorded charges of $5 million and $7 million during the quarter and year to date ended June 30, 2025, respectively, to Corporate and unallocated General and administrative expenses consisting primarily of severance costs associated with re-acquiring the master franchise rights in Germany. Consistent with prior charges related to the matter, these charges have been reflected as Special Items.
(e)The below table includes the detail of Special Items Tax (Benefit) Expense:
| Quarter ended | Year to date | |||||||||||||||||||||||||
| 6/30/2026 | 6/30/2025 | 6/30/2026 | 6/30/2025 | |||||||||||||||||||||||
| Tax (Benefit) on Special Items Expense - Operating Profit | $ | (11) | $ | (7) | $ | (9) | $ | (14) | ||||||||||||||||||
| Tax (Benefit) - Income tax impacts from planned sale of Pizza Hut | (359) | — | (359) | — | ||||||||||||||||||||||
| Tax (Benefit) - Intra-entity transfers and valuations of intellectual property | (79) | — | (101) | — | ||||||||||||||||||||||
Tax Expense - Other Income tax impacts recorded as Special | — | — | 13 | — | ||||||||||||||||||||||
| Tax Expense - Foreign tax reserve | — | 10 | — | 102 | ||||||||||||||||||||||
Special Items Tax (Benefit) Expense | $ | (449) | $ | 3 | $ | (456) | $ | 88 | ||||||||||||||||||
34
Tax (Benefit) on Special Items Expense - Operating Profit was determined by assessing the tax impact of each individual component within Special Items based upon the nature of the item and jurisdictional tax law.
Tax (Benefit) - Income tax impacts from the planned sale of Pizza Hut in the quarter and year to date ended June 30, 2026, reflects a $359 million net deferred tax benefit recorded upon the recognition of certain tax basis in entities expected to be sold. Such recognition was triggered upon entering into definitive agreements during the quarter ended June 30, 2026 to sell Pizza Hut. The Pizza Hut sales are expected to close at significant book gains in the quarter ended September 30, 2026 resulting in the utilization of these deferred tax benefits.
Tax (Benefit) - Intra-entity transfers and valuations of intellectual property in the quarter and year to date ended June 30, 2026, reflects tax benefits of $91 million and $113 million, respectively, resulting from an internal reorganization to consolidate our Pizza Hut legal entities and assets into two isolated ownership structures by aligning the legal ownership, simplifying the organizational footprint and consolidating the Pizza Hut domestic and international businesses. As part of this reorganization, certain Pizza Hut intellectual property ("IP") rights from subsidiaries in the U.S. were transferred to international subsidiaries resulting in a step-up in amortizable tax basis of those IP rights. This reorganization began in the fourth quarter of 2025 in connection with our Pizza Hut strategic options review.
Additionally, Tax (Benefit) - Intra-entity transfers and valuations of intellectual property in the quarter and year to date ended June 30, 2026, includes $12 million of tax expense representing an adjustment to the valuation allowance on tax credits previously granted by local Swiss tax authorities in connection with transferred IP rights in Switzerland. Previously recorded impacts associated with this IP transfer were recorded as Special Items.
Tax Expense - Other Income tax impacts recorded as Special in the year to date ended June 30, 2026, includes a $13 million adjustment to tax expense associated with our decision to exit Russia. Consistent with previously recorded impacts associated with our decision to exit Russia, this adjustment was recorded as a Special Item.
Tax Expense - Foreign tax reserve in the quarter and year to date ended June 30, 2025, is associated with a reserve, and the related ongoing foreign exchange and inflationary adjustments, associated with a change in management's judgment around a Mexican subsidiary's ability to utilize losses to offset recapture gains triggered by a historical tax deconsolidation in Mexico. This expense was reflected as a Special Item due to its size and the time elapsed since the years to which the reserve relates.
| Reconciliation of GAAP Operating Profit to Company Restaurant Profit | ||||||||||||||||||||||||||||||||||||||
Quarter ended 6/30/2026 | ||||||||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Corporate and Unallocated | Consolidated | |||||||||||||||||||||||||||||||||
| GAAP Operating Profit (Loss) | $ | 410 | $ | 311 | $ | 70 | $ | (4) | $ | (132) | $ | 655 | ||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||||||||
| Franchise and property revenues | 477 | 271 | 143 | 3 | — | 895 | ||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | 172 | 185 | 80 | 1 | — | 438 | ||||||||||||||||||||||||||||||||
| Add: | ||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 88 | 53 | 56 | 12 | 114 | 324 | ||||||||||||||||||||||||||||||||
| Franchise and property expenses | 18 | 9 | 13 | 1 | — | 41 | ||||||||||||||||||||||||||||||||
| Franchise advertising and other services expense | 169 | 187 | 87 | 1 | — | 444 | ||||||||||||||||||||||||||||||||
| Refranchising (gain) loss | — | — | — | — | (1) | (1) | ||||||||||||||||||||||||||||||||
| Other (income) expense | (2) | (1) | (3) | 6 | 6 | 6 | ||||||||||||||||||||||||||||||||
Company restaurant profit (loss) | $ | 33 | $ | 103 | $ | 1 | $ | 13 | $ | (13) | $ | 137 | ||||||||||||||||||||||||||
| Company sales | $ | 275 | $ | 396 | $ | 31 | $ | 135 | $ | — | $ | 837 | ||||||||||||||||||||||||||
| Company restaurant margin % | 12.0 | % | 25.9 | % | 2.2 | % | 9.8 | % | N/A | 16.3 | % | |||||||||||||||||||||||||||
35
Quarter ended 6/30/2025 | ||||||||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Corporate and Unallocated | Consolidated | |||||||||||||||||||||||||||||||||
| GAAP Operating Profit (Loss) | $ | 363 | $ | 262 | $ | 80 | $ | 3 | $ | (85) | $ | 622 | ||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||||||||
| Franchise and property revenues | 437 | 248 | 147 | 3 | — | 835 | ||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | 167 | 176 | 85 | 1 | — | 428 | ||||||||||||||||||||||||||||||||
| Add: | ||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 89 | 49 | 54 | 13 | 97 | 302 | ||||||||||||||||||||||||||||||||
| Franchise and property expenses | 20 | 7 | 10 | 1 | — | 39 | ||||||||||||||||||||||||||||||||
| Franchise advertising and other services expense | 162 | 176 | 90 | 1 | — | 428 | ||||||||||||||||||||||||||||||||
| Refranchising (gain) loss | — | — | — | — | (11) | (11) | ||||||||||||||||||||||||||||||||
| Other (income) expense | — | — | (3) | — | (4) | (7) | ||||||||||||||||||||||||||||||||
Company restaurant profit (loss) | $ | 30 | $ | 70 | $ | — | $ | 14 | $ | (4) | $ | 109 | ||||||||||||||||||||||||||
| Company sales | $ | 245 | $ | 287 | $ | 7 | $ | 130 | $ | — | $ | 669 | ||||||||||||||||||||||||||
| Company restaurant margin % | 12.1 | % | 24.3 | % | (6.6) | % | 10.7 | % | N/A | 16.3 | % | |||||||||||||||||||||||||||
Year to date 6/30/2026 | ||||||||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Corporate and Unallocated | Consolidated | |||||||||||||||||||||||||||||||||
| GAAP Operating Profit (Loss) | $ | 793 | $ | 591 | $ | 135 | $ | (11) | $ | (209) | $ | 1,299 | ||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||||||||
| Franchise and property revenues | 938 | 522 | 285 | 6 | — | 1,751 | ||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | 334 | 360 | 159 | 2 | — | 856 | ||||||||||||||||||||||||||||||||
| Add: | ||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 174 | 106 | 116 | 25 | 225 | 646 | ||||||||||||||||||||||||||||||||
| Franchise and property expenses | 37 | 15 | 31 | 2 | — | 85 | ||||||||||||||||||||||||||||||||
| Franchise advertising and other services expense | 329 | 361 | 171 | 2 | — | 863 | ||||||||||||||||||||||||||||||||
| Refranchising (gain) loss | — | — | — | — | (2) | (2) | ||||||||||||||||||||||||||||||||
| Other (income) expense | (2) | — | (6) | 8 | (39) | (39) | ||||||||||||||||||||||||||||||||
Company restaurant profit (loss) | $ | 59 | $ | 191 | $ | 1 | $ | 18 | $ | (25) | $ | 244 | ||||||||||||||||||||||||||
| Company sales | $ | 530 | $ | 768 | $ | 63 | $ | 260 | $ | — | $ | 1,622 | ||||||||||||||||||||||||||
| Company restaurant margin % | 11.2 | % | 24.8 | % | 2.0 | % | 6.9 | % | N/A | 15.0 | % | |||||||||||||||||||||||||||
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Year to date 6/30/2025 | ||||||||||||||||||||||||||||||||||||||
| KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger & Grill Division | Corporate and Unallocated | Consolidated | |||||||||||||||||||||||||||||||||
| GAAP Operating Profit (Loss) | $ | 694 | $ | 502 | $ | 155 | $ | 2 | $ | (183) | $ | 1,170 | ||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||||||||
| Franchise and property revenues | 844 | 482 | 290 | 5 | (1) | 1,620 | ||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | 316 | 336 | 169 | 1 | — | 823 | ||||||||||||||||||||||||||||||||
| Add: | ||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 169 | 98 | 109 | 26 | 202 | 604 | ||||||||||||||||||||||||||||||||
| Franchise and property expenses | 36 | 13 | 21 | 2 | — | 73 | ||||||||||||||||||||||||||||||||
| Franchise advertising and other services expense | 311 | 333 | 179 | 1 | — | 824 | ||||||||||||||||||||||||||||||||
| Refranchising (gain) loss | — | — | — | — | (16) | (16) | ||||||||||||||||||||||||||||||||
| Other (income) expense | — | — | (5) | — | (10) | (15) | ||||||||||||||||||||||||||||||||
Company restaurant profit (loss) | $ | 50 | $ | 129 | $ | (1) | $ | 25 | $ | (7) | $ | 196 | ||||||||||||||||||||||||||
| Company sales | $ | 461 | $ | 550 | $ | 10 | $ | 255 | $ | — | $ | 1,277 | ||||||||||||||||||||||||||
| Company restaurant margin % | 10.8 | % | 23.4 | % | (6.4) | % | 9.6 | % | N/A | 15.3 | % | |||||||||||||||||||||||||||
Items Impacting Reported Results and Reasonably Likely to Impact Future Results
The following items impacted reported results in 2026 and/or 2025 and/or are reasonably likely to impact future results. See also the Detail of Special Items in this MD&A for other items impacting results in 2026 or 2025.
Public Health Issue
On July 17, 2026, after communication with state and federal health officials, Taco Bell U.S. announced that it had preemptively and voluntarily removed certain lettuce provided by its vendor, Taylor Farms, which Taylor Farms subsequently recalled. We removed the lettuce from our nationwide supply chain quickly and transparently, and before the recall, because the safety and well-being of our consumers is always our top priority.
Taco Bell U.S. saw a meaningful near-term impact on sales as a result of the issue. Sales are improving from their low-point and we believe that they will continue to improve through the quarter ended September 30, 2026, due to the underlying strength of the brand and recovery plan being implemented by the Taco Bell team. While it is difficult to forecast with certainty the impacts of this issue, we believe Taco Bell Company restaurant margin percentage in the U.S. will range between 19% to 21% in the quarter ended September 30, 2026.
Pizza Hut Strategic Options Review
In 2025, we began a review of strategic options for the Pizza Hut brand. The objective of the review was to create value for YUM, Pizza Hut and its franchise partners by determining the optimal approach to best capitalize on Pizza Hut's structural advantages — strong brand equity, experienced franchise partners and meaningful scale — in the highly fragmented pizza market.
In January 2026, we launched the Hut Forward program that represents a bridge to a longer-term acceleration of the Pizza Hut brand. This program includes alignment on a vibrant marketing plan, modernization of certain technology and franchise agreements and a YUM contribution to marketing support, along with the approval of some targeted closures of underperforming units. The YUM contribution for incremental marketing in the quarter ended March 31, 2026, is being recognized as advertising expense throughout 2026.
On June 16, 2026, we entered into definitive agreements to sell Pizza Hut in two separate transactions completing our strategic options review. Pizza Hut excluding Mainland China (“Pizza Hut Ex-China”) will be acquired by LongRange Capital, a private equity firm, and Pizza Hut in Mainland China will be acquired by Yum China Holdings, Inc., which will remain YUM’s master franchisee for KFC and Taco Bell in Mainland China.
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We anticipate both transactions will close in August 2026, subject to customary closing conditions, including receipt of required regulatory approvals. Across the two transactions, we expect to receive approximately $2.3 billion of net proceeds after taxes, closing adjustments and transaction-contingent fees. Additionally, YUM has the opportunity to receive an earn-out from LongRange Capital of $75 million by 2030. We will continue to provide Byte by Yum!, our proprietary technology, to Pizza Hut Ex-China subsequent to the sale. Additionally, following the closing of the transaction, we will provide certain enterprise technology and finance services to Pizza Hut Ex-China under a transition services agreement.
We incurred certain other costs during the quarter and year to date ended June 30, 2026 associated with this strategic review (see Detail of Special Items section of this MD&A) and we expect to incur further expenses of approximately $40 million during the remainder of 2026.
KFC Division
The KFC Division has 34,747 units, 90% of which are located outside the U.S. Additionally, 99% of the KFC Division units were operated by franchisees as of June 30, 2026.
| Quarter ended | Year to date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| % B/(W) | % B/(W) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Reported | Ex FX | 2026 | 2025 | Reported | Ex FX | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| System Sales | $ | 9,566 | $ | 8,721 | 10 | 6 | $ | 18,894 | $ | 17,061 | 11 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Same-Store Sales Growth (Decline) % | 2 | 2 | N/A | N/A | 2 | 2 | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Company sales | $ | 275 | $ | 245 | 12 | 8 | $ | 530 | $ | 461 | 15 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchise and property revenues | 477 | 437 | 9 | 6 | 938 | 844 | 11 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | 172 | 167 | 3 | (1) | 334 | 316 | 6 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 924 | $ | 849 | 9 | 5 | $ | 1,802 | $ | 1,622 | 11 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Company restaurant profit | $ | 33 | $ | 30 | 11 | 5 | $ | 59 | $ | 50 | 19 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Company restaurant margin % | 12.0 | % | 12.1 | % | (0.1) | ppts. | (0.3) | ppts. | 11.2 | % | 10.8 | % | 0.4 | ppts. | 0.2 | ppts. | ||||||||||||||||||||||||||||||||||||||||||||||
| G&A expenses | $ | 88 | $ | 89 | 1 | 3 | $ | 174 | $ | 169 | (3) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchise and property expenses | 18 | 20 | 12 | 14 | 37 | 36 | (1) | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchise advertising and other services expense | 169 | 162 | (4) | — | 329 | 311 | (6) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Profit | $ | 410 | $ | 363 | 13 | 9 | $ | 793 | $ | 694 | 14 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| % Increase (Decrease) | |||||||||||||||||||||||||||||
| Unit Count | 6/30/2026 | 6/30/2025 | |||||||||||||||||||||||||||
| Franchise | 34,227 | 31,887 | 7 | ||||||||||||||||||||||||||
| Company-owned | 520 | 482 | 8 | ||||||||||||||||||||||||||
| Total | 34,747 | 32,369 | 7 | ||||||||||||||||||||||||||
Company sales and Company restaurant margin %
The quarterly increase in Company sales, excluding the impacts of foreign currency translation, was driven by Company same-store sales growth of 5%, unit growth and acquisitions of restaurants from franchisees.
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The year to date increase in Company sales, excluding the impacts of foreign currency translation, was driven by Company same-store sales growth of 5%, acquisitions of restaurants from franchisees and unit growth.
The quarterly decrease in Company restaurant margin percentage was driven by lower margins associated with new builds inside the U.S., partially offset by Company same-store sales growth.
The year to date increase in Company restaurant margin percentage was driven by Company same-store sales growth, partially offset by higher restaurant operating costs and lower margins associated with new builds inside the U.S.
Franchise and property revenues
The quarterly and year to date increases in Franchise and property revenues, excluding the impacts of foreign currency translation, were driven by unit growth and franchise same-store sales growth of 2%.
G&A
The quarterly decrease in G&A, excluding the impacts of foreign currency translation, was driven by lower professional fees.
G&A, excluding the impacts of foreign currency translation, was flat year to date.
Operating Profit
The quarterly and year to date increases in Operating Profit, excluding the impacts of foreign currency translation, were driven by same-store sales growth and unit growth.
Taco Bell Division
The Taco Bell Division has 9,046 units, 86% of which are in the U.S. The Company owned 8% of the Taco Bell Division units in the U.S. as of June 30, 2026.
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| Quarter ended | Year to date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| % B/(W) | % B/(W) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Reported | Ex FX | 2026 | 2025 | Reported | Ex FX | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| System Sales | $ | 4,677 | $ | 4,275 | 9 | 9 | $ | 9,071 | $ | 8,255 | 10 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Same-Store Sales Growth % | 7 | 4 | N/A | N/A | 8 | 6 | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Company sales | $ | 396 | $ | 287 | 38 | 38 | $ | 768 | $ | 550 | 40 | 40 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchise and property revenues | 271 | 248 | 9 | 9 | 522 | 482 | 8 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | 185 | 176 | 5 | 5 | 360 | 336 | 7 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 853 | $ | 711 | 20 | 20 | $ | 1,650 | $ | 1,368 | 21 | 21 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Company restaurant profit | $ | 103 | $ | 70 | 47 | 47 | $ | 191 | $ | 129 | 48 | 48 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Company restaurant margin % | 25.9 | % | 24.3 | % | 1.6 | ppts. | 1.6 | ppts. | 24.8 | % | 23.4 | % | 1.4 | ppts. | 1.4 | ppts. | ||||||||||||||||||||||||||||||||||||||||||||||
| G&A expenses | $ | 53 | $ | 49 | (8) | (8) | $ | 106 | $ | 98 | (8) | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchise and property expenses | 9 | 7 | (24) | (23) | 15 | 13 | (13) | (12) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchise advertising and other services expense | 187 | 176 | (7) | (7) | 361 | 333 | (8) | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Profit | $ | 311 | $ | 262 | 19 | 19 | $ | 591 | $ | 502 | 18 | 18 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| % Increase (Decrease) | |||||||||||||||||||||||||||||
| Unit Count | 6/30/2026 | 6/30/2025 | |||||||||||||||||||||||||||
| Franchise | 8,370 | 8,235 | 2 | ||||||||||||||||||||||||||
| Company-owned | 676 | 521 | 30 | ||||||||||||||||||||||||||
| Total | 9,046 | 8,756 | 3 | ||||||||||||||||||||||||||
Company sales and Company restaurant margin %
The quarterly and year to date increases in Company sales were driven by acquisitions of restaurants from franchisees and company same-store sales growth of 6%.
The quarterly and year to date restaurant margin percentage increase was driven by same store sales growth and the margin percentages of restaurants acquired from franchisees, partially offset by other restaurant operating costs, higher labor costs, and commodity inflation (primarily beef).
Franchise and property revenues
The quarterly and year to date increases in Franchise and property revenues were driven by franchise same-store sales growth of 7% and 8% for the quarter and year to date, respectively, and unit growth partially offset by the impact of our acquisition of restaurants from franchisees.
G&A
The quarterly and year to date increases in G&A were driven by higher headcounts including headcount associated with operating restaurants acquired from franchisees, higher digital and technology expenses, and higher legal and professional fees.
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Operating Profit
The quarterly and year to date increases in Operating Profit were driven by same store sales growth, the impact of restaurants acquired from franchisees and unit growth, partially offset by higher restaurant operating costs and higher G&A.
Pizza Hut Division
The Pizza Hut Division has 19,985 units, 70% of which are located outside the U.S. The Pizza Hut Division uses multiple distribution channels including delivery, dine-in and express (e.g. airports) and includes units operating under both the Pizza Hut and Telepizza brands. Additionally, over 99% of the Pizza Hut Division units were operated by franchisees as of June 30, 2026.
| Quarter ended | Year to date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| % B/(W) | % B/(W) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Reported | Ex FX | 2026 | 2025 | Reported | Ex FX | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| System Sales | $ | 3,108 | $ | 3,116 | Even | (2) | $ | 6,223 | $ | 6,144 | 1 | (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Same-Store Sales Growth (Decline) % | (1) | (1) | N/A | N/A | (1) | (1) | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Company sales | $ | 31 | $ | 7 | 348 | 346 | $ | 63 | $ | 10 | 505 | 492 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchise and property revenues | 143 | 147 | (3) | (4) | 285 | 290 | (2) | (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchise contributions for advertising and other services | 80 | 85 | (6) | (6) | 159 | 169 | (6) | (6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 254 | $ | 239 | 6 | 6 | $ | 507 | $ | 470 | 8 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Company restaurant profit (loss) | $ | 1 | $ | — | 252 | 250 | $ | 1 | $ | (1) | 289 | 281 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Company restaurant margin % | 2.2 | % | (6.6) | % | 8.8 | ppts. | 8.8 | ppts. | 2.0 | % | (6.4) | % | 8.4 | ppts. | 8.4 | ppts. | ||||||||||||||||||||||||||||||||||||||||||||||
| G&A expenses | $ | 56 | $ | 54 | (5) | (5) | $ | 116 | $ | 109 | (6) | (5) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchise and property expenses | 13 | 10 | (29) | (28) | 31 | 21 | (44) | (42) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchise advertising and other services expense | 87 | 90 | 3 | 3 | 171 | 179 | 5 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Profit | $ | 70 | $ | 80 | (12) | (14) | $ | 135 | $ | 155 | (13) | (15) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| % Increase (Decrease) | |||||||||||||||||||||||||||||
| Unit Count | 6/30/2026 | 6/30/2025 | |||||||||||||||||||||||||||
| Franchise | 19,855 | 19,709 | 1 | ||||||||||||||||||||||||||
| Company-owned | 130 | 59 | 120 | ||||||||||||||||||||||||||
| Total | 19,985 | 19,768 | 1 | ||||||||||||||||||||||||||
Franchise and property revenues
The quarterly and year to date decreases in Franchise and property revenues, excluding the impact of foreign currency translation, were primarily driven by franchise same-store sales declines of 1% and the impact of our acquisition of restaurants from franchisees.
G&A
The quarterly and year to date increases in G&A, excluding the impact of foreign currency translation, were driven by the impact of G&A associated with operating restaurants acquired from franchisees and higher expense associated with annual
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incentive compensation plans, partially offset by lower professional and legal expenses and lapping expenses associated with the bi-annual Global Franchise Convention held in the prior year.
Operating Profit
The quarterly and year to date decreases in Operating Profit, excluding the impact of foreign currency translation, were driven by higher advertising costs associated with the Pizza Hut U.S. Hut Forward program, the impact of operating restaurants acquired from franchisees and same-store sales declines.
Habit Burger & Grill Division
The Habit Burger & Grill Division has 388 units, all of which are in the U.S. The Company owned 78% of the Habit Burger & Grill Division units as of June 30, 2026.
| Quarter ended | Year to date | |||||||||||||||||||||||||||||||||||||||||||||||||
| % B/(W) | % B/(W) | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Reported | 2026 | 2025 | Reported | |||||||||||||||||||||||||||||||||||||||||||||
| System Sales | $ | 177 | $ | 166 | 7 | $ | 343 | $ | 321 | 7 | ||||||||||||||||||||||||||||||||||||||||
Same-Store Sales Growth (Decline) % | 3 | (4) | N/A | 4 | (3) | N/A | ||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 139 | $ | 134 | 4 | $ | 269 | $ | 262 | 3 | ||||||||||||||||||||||||||||||||||||||||
| Operating Profit (Loss) | $ | (4) | $ | 3 | NM | $ | (11) | $ | 2 | NM | ||||||||||||||||||||||||||||||||||||||||
| Unit Count | 6/30/2026 | 6/30/2025 | % Increase (Decrease) | ||||||||||||||||||||
| Franchise | 84 | 76 | 11 | ||||||||||||||||||||
| Company-owned | 304 | 303 | — | ||||||||||||||||||||
| Total | 388 | 379 | 2 | ||||||||||||||||||||
Corporate & Unallocated
| Quarter ended | Year to date | |||||||||||||||||||||||||||||||||||||||||||
| (Expense) / Income | 2026 | 2025 | % B/(W) | 2026 | 2025 | % B/(W) | ||||||||||||||||||||||||||||||||||||||
| Corporate and unallocated G&A | $ | ( | $ | ( | (18) | $ | ( | $ | ( | (11) | ||||||||||||||||||||||||||||||||||
Unallocated Company restaurant expenses | ( | ( | (241) | ( | ( | (279) | ||||||||||||||||||||||||||||||||||||||
Unallocated Franchise and property revenues | NM | ( | NM | |||||||||||||||||||||||||||||||||||||||||
| Unallocated Refranchising gain (loss) | (88) | (85) | ||||||||||||||||||||||||||||||||||||||||||
| Unallocated Other income (expense) (See Note 6) | ( | NM | NM | |||||||||||||||||||||||||||||||||||||||||
Investment income (expense), net | NM | NM | ||||||||||||||||||||||||||||||||||||||||||
Other pension income (expense) | (93) | (74) | ||||||||||||||||||||||||||||||||||||||||||
| Interest expense, net | ( | ( | (4) | ( | ( | (6) | ||||||||||||||||||||||||||||||||||||||
| Income tax benefit (provision) (See Note 8) | 320 | (125) | 356 | 236 | (301) | 178 | ||||||||||||||||||||||||||||||||||||||
| Effective tax rate (See Note 8) | ( | % | % | 85.1 | ppts. | ( | % | % | 55.0 | ppts. | ||||||||||||||||||||||||||||||||||
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Corporate and unallocated G&A
The quarterly and year to date increases in Corporate and Unallocated G&A expense were driven by costs associated with the Pizza Hut Strategic Options Review, partially offset by lapping costs associated with our Resource Optimization Program and Brand Headquarters Consolidation.
Unallocated Company restaurant expenses
Unallocated Company restaurant expenses include amortization of reacquired franchise rights. The quarterly and year to date increases were driven by the acquisition of restaurants from franchisees in 2025.
Interest expense, net
The quarterly and year to date increases in Interest expense, net were driven by higher outstanding borrowings.
Consolidated Cash Flows
Net cash provided by operating activities was $923 million in 2026 versus $850 million in 2025. The increase was primarily driven by an increase in Operating Profit, partially offset by higher incentive compensation payments and higher income tax payments.
Net cash used in investing activities was $169 million in 2026 versus $130 million in 2025. The change was primarily driven by lapping maturities of short-term investments in the prior year and higher current year capital spending, partially offset by lower current year spending on restaurant acquisitions.
Net cash used in financing activities was $757 million in 2026 versus $741 million in 2025. The change was primarily driven by higher current year share repurchases, partially offset by higher current year net borrowings.
Consolidated Financial Condition
Our Condensed Consolidated Balance Sheet was impacted by the held for sale classification of assets and liabilities associated with the Pizza Hut divestitures (See Note 3).
Liquidity and Capital Resources
We have historically generated substantial cash flows from our extensive franchise operations, which require a limited YUM investment, and from the operations of our Company-owned stores. Our annual operating cash flows were in excess of $2.0 billion in 2025 and we expect continued strong operating cash flows in 2026. It is our intent to use these operating cash flows to continue to invest in growing our business and pay a competitive dividend, with any remaining excess then returned to shareholders through share repurchases. Subject to market conditions, we expect to maintain our consolidated net leverage ratio at approximately 4.0x Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") over the medium term by issuing incremental debt as our business grows.
To the extent operating cash flows plus other sources of cash do not cover our anticipated cash needs, we maintain a $1.5 billion Revolving Facility under our Credit Agreement which had $675 million outstanding as of June 30, 2026. Borrowings under our Revolving Facility in 2026 had original maturities of three months or less. We believe that our ongoing cash from operations, cash on hand, which was $674 million at June 30, 2026, and availability under our Revolving Facility will be sufficient to fund our cash requirements over the next twelve months.
There have been no material changes to the disclosures made in Item 7 of the Company's 2025 Form 10-K regarding our material cash requirements. Due to the ongoing significance of our debt obligations, we are providing the update below.
Pizza Hut Divestitures
On June 16, 2026 we entered into definitive agreements to sell Pizza Hut in two separate transactions. We anticipate both transactions will close in August 2026, subject to customary closing conditions, including receipt of required regulatory approvals. Across the two transactions, we expect to receive approximately $2.3 billion of net proceeds after taxes, closing adjustments and transaction-contingent fees.
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With the anticipated net proceeds from the Pizza Hut transactions, we expect to pay down the current drawings on the Revolving Facility and the majority of the remainder will be set aside for share repurchases with timing subject to market conditions. Accordingly, in June 2026, our Board of Directors authorized incremental share repurchases of up to $4 billion through June 30, 2028 (see Note 5).
Debt Obligations and Interest Payments
As of June 30, 2026, approximately 96%, including the impact of interest rate swaps, of our $11.5 billion of total debt outstanding, excluding the Revolving Facility balance, finance leases and debt issuance costs and discounts, is fixed with an effective overall interest rate of approximately 4.5%. We target a capital structure which we believe provides an attractive balance between optimized interest rates, duration and flexibility with diversified sources of liquidity and maturities spread over multiple years and as mentioned above, we expect to maintain our net leverage ratio at approximately 4.0x EBITDA over the medium term by issuing incremental debt as our business grows. We have credit ratings of BB+ (Standard & Poor's)/Ba2 (Moody's).
The following table summarizes the future maturities of our outstanding long-term debt, excluding finance leases and debt issuance costs and discounts, as of June 30, 2026.
| 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2037 | 2043 | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securitization Notes | $ | 884 | $ | 595 | $ | 590 | $ | 1,000 | $ | 737 | $ | 500 | $ | 4,306 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Credit Agreement | $ | 14 | 34 | 1,424 | 438 | 1,909 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revolving Facility | 675 | 675 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subsidiary Senior Unsecured Notes | 750 | 750 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| YUM Senior Unsecured Notes | 800 | 1,050 | 2,100 | $ | 325 | $ | 275 | 4,550 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 14 | $ | 1,668 | $ | 2,019 | $ | 1,702 | $ | 1,800 | $ | 1,787 | $ | 2,600 | $ | 325 | $ | 275 | $ | 12,190 | ||||||||||||||||||||||||||||||||||||||||||
A Term Loan A Facility that is part of the Credit Agreement and the Revolving Facility will mature on the earliest of (i) April 26, 2029, (ii) the date that is 91 days prior to the March 15, 2028 maturity of the existing Term Loan B Facility if more than $250 million of such Term Loan B Facility remains outstanding as of such date or (iii) the date that is 91 days prior to the June 1, 2027 maturity of the existing Subsidiary Senior Unsecured Notes if more than $250 million of such Subsidiary Senior Unsecured Notes remain outstanding as of such date. Given the $750 million in Subsidiary Senior Unsecured Notes outstanding as of June 30, 2026, the maturity date of the Term Loan A Facility and the Revolving Facility will occur less than 12 months from the balance sheet date of these Condensed Consolidated Financial Statements if the Company has not paid nor refinanced at least $500 million of the Subsidiary Senior Unsecured Notes 91 days prior to June 1, 2027. As such, the outstanding borrowings of the Term Loan A Facility and the Revolving Facility as of June 30, 2026 have been classified as Short-term borrowings in the Condensed Consolidated Balance Sheets as of June 30, 2026. We expect to refinance the $750 million of the existing Subsidiary Senior Unsecured Notes before 91 days prior to June 1, 2027, and as such, the table above reflects the April 26, 2029 anticipated repayment date for the Term Loan A Facility and the Revolving Facility.
See Note 12 for details on the Securitization Notes, the Credit Agreement, Revolving Facility, Subsidiary Senior Unsecured Notes and YUM Senior Unsecured Notes.
New Accounting Pronouncements Not Yet Adopted
In November 2024, the Financial Accounting Standards Board ("FASB") issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40), which requires new financial statement disclosures disaggregating prescribed expense categories within relevant income statement expense captions. The standard is effective for the Company's Annual Report on Form 10-K for fiscal 2027, and subsequent interim periods, with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is permitted. We are currently evaluating the impact of the standard on our disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends certain aspects of the accounting for software costs, including removing software development project stages and requiring companies to capitalize costs when both 1) management authorizes or commits to funding a software project and 2) it is probable that the project will be completed and the software will be used to perform the function intended. The standard is effective for the Company in our first quarter of fiscal 2028, with early adoption permitted and can be applied on a prospective, retrospective or modified prospective basis. We are currently evaluating the impact of the standard on our condensed consolidated financial statements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
There were no material changes during the quarter ended June 30, 2026, to the disclosures made in Item 7A of the Company’s 2025 Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based on the evaluation, performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the “CFO”), the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by the report.
Changes in Internal Control
There were no changes with respect to the Company’s internal control over financial reporting or in other factors that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended June 30, 2026.
Forward-Looking Statements
Forward-looking statements can generally be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as “expect,” “expectation,” “believe,” “anticipate,” “may,” “could,” “intend,” “belief,” “plan,” “estimate,” “target,” “predict,” “likely,” “seek,” “project,” “model,” “ongoing,” “will,” “should,” “forecast,” “outlook” or similar terminology. Forward-looking statements are based on and reflect our current expectations, estimates, assumptions and/or projections, our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections will be achieved. Factors that could cause actual results and events to differ materially from our expectations and forward-looking statements include (i) the factors described in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part I, Item 2 of this report, (ii) any risks and uncertainties described in the Risk Factors included in Part II, Item 1A of this report, (iii) the factors described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Form 10-K for the year ended December 31, 2025, and (iv) the risks and uncertainties described in the Risk Factors included in Part I, Item 1A of our Form 10-K for the year ended December 31, 2025. You should not place undue reliance on forward-looking statements, which speak only as of the date hereof. We are not undertaking to update any of these statements.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Yum! Brands, Inc.:
Results of Review of Interim Financial Information
We have reviewed the condensed consolidated balance sheets of Yum! Brands, Inc. and subsidiaries (YUM) as of June 30, 2026, the related condensed consolidated statements of income, comprehensive income, and shareholders’ deficit for the three-month and six-month periods ended June 30, 2026 and June 30, 2025, the related condensed consolidated statements of cash flows for the six-month periods ended June 30, 2026 and June 30, 2025, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of YUM as of December 31, 2025, and the related consolidated statements of income, comprehensive income, cash flows, and shareholders’ deficit for the year then ended (not presented herein); and in our report dated February 20, 2026, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheets as of December 31, 2025 is fairly stated, in all material respects, in relation to the consolidated balance sheets from which it has been derived.
Basis for Review Results
This consolidated interim financial information is the responsibility of YUM’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to YUM in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ KPMG LLP
Louisville, Kentucky
August 4, 2026
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PART II – OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings
Information regarding legal proceedings is incorporated by reference from Note 15 to the Company’s Condensed Consolidated Financial Statements set forth in Part I of this report.
Item 1A. Risk Factors
We face a variety of risks that are inherent in our business and our industry, including operational, legal, regulatory and product risks. Such risks could cause our actual results to differ materially from our forward-looking statements, expectations and historical trends. Information about our most significant risk factors is disclosed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. At June 30, 2026, there have been no material changes to this information, except for the expanded discussion around the multistate outbreak of Cyclospora, included below.
Food safety and food- or beverage-borne illness concerns may have an adverse effect on our business and/or our growth prospects.
Food or beverage-borne illnesses (that can be caused by food-borne pathogens such as E. coli, Listeria, Salmonella, Cyclospora and Trichinosis) and food safety issues (such as food tampering and contamination including with respect to allergens or adulteration) have occurred and may occur within our system from time to time. For example, in July 2026, there was a multistate outbreak of Cyclospora and Taco Bell U.S. removed certain lettuce from its nationwide supply chain that was later recalled by its vendor. Any report linking our or our Concepts’ franchisees’ restaurants, our suppliers or distributors or otherwise involving the types of products used at our restaurants, or linking our competitors, suppliers, distributors or the retail food industry generally, to instances of food- or beverage-borne illness or food safety issues or substances having perceived health or environmental risks have resulted and could result in adverse publicity and otherwise adversely affect us and lead to consumer complaints, litigation and/or governmental investigations. There is also a risk that we or our Concepts’ franchisees’ restaurants, suppliers or distributors underreport food safety incidents or system failures, which could hinder response and tracking of such risks. Moreover, our Concepts’ restaurants' reliance on third-party food suppliers and distributors and increasing reliance on food delivery aggregators may increase the risk that food- or beverage-borne illness incidents and food safety issues could be caused by factors outside of our control. If a customer is believed to have become ill from food or beverage-borne illnesses or as a result of food safety issues, remediation efforts could include temporary closure of restaurants, which could disrupt our operations and adversely affect our reputation, business and/or our growth prospects. The occurrence of food-borne pathogens in restaurant products or food safety issues could also adversely affect the price and availability of affected ingredients, which could result in disruptions in our supply chain and/or lower margins for us and our Concepts’ franchisees. In addition, the health and environmental risks of certain ubiquitous substances (including per-and-polyfluoroalkyl substances (PFAS)) commonly found in packaging have been the subject of increased regulatory scrutiny and lawsuits against us and other restaurant companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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The following table provides information as of June 30, 2026, with respect to shares of Common Stock repurchased by the Company during the quarter then ended:
| Fiscal Periods | Total number of shares purchased (thousands) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs (thousands) | Approximate dollar value of shares that may yet be purchased under the plans or programs (millions) | ||||||||||||||||||||||
| 4/1/26-4/30/26 | 399 | $159.23 | 399 | $811 | ||||||||||||||||||||||
| 5/1/26-5/31/26 | 1,710 | $153.32 | 1,710 | $549 | ||||||||||||||||||||||
| 6/1/26-6/30/26 | 1,062 | $149.93 | 1,062 | $4,389 | ||||||||||||||||||||||
| Total | 3,171 | $152.93 | 3,171 | |||||||||||||||||||||||
In May 2024, our Board of Directors authorized share repurchases of up to $2 billion (excluding applicable transaction fees and excise taxes) of our outstanding Common Stock through December 31, 2026. In June 2026, our Board of Directors authorized share repurchases of up to $4 billion (excluding applicable transaction fees and excise taxes) of our outstanding Common Stock from the earlier of the exhaustion or expiration of the May 2024 authorization through June 30, 2028. As of June 30, 2026, we have remaining capacity to repurchase up to $0.4 billion of Common Stock under the May 2024 authorization.
Item 5. Other Information
Securities Trading Plans
During the three months ended June 30, 2026, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408 (c) of Regulation S-K, except as follows:
| Name / Title | Type of Plan | Adoption / Termination Date | End Date | Aggregate Number of Securities to be Sold | Plan Description | |||||||||||||||||||||||||||
| Tracy Skeans / Chief Operating Officer & Chief People & Culture Officer | Rule 10b5-1 trading plan | May 21, 2026 (1) | December 31, 2026 | 3,494 (2) | Sale of Shares of Common Stock | |||||||||||||||||||||||||||
26,660 (3) | Exercise of Stock Appreciation Rights and Sales of Resulting Shares of Common Stock | |||||||||||||||||||||||||||||||
(1)On May 21, 2026, Tracy Skeans, Chief Operating Officer and Chief People & Culture Officer, modified a trading arrangement she had previously adopted with respect to the sale of securities of the Company's common stock (a "Rule 10b5-1 Trading Plan"). Ms. Skeans' initial Rule 10b5-1 Trading Plan was adopted on February 7, 2026. The modification reduced the number of shares covered by 3,495 shares. The plan includes a minimum 90-day cooling off period from the date of modification.
(2)Represents the number of shares of common stock specified in the modified plan.
(3)Represents the number of shares of common stock underlying the stock appreciation rights awards specified in the modified plan. The actual number of shares of common stock to be received and sold following the exercise of the awards will depend upon the appreciation in the value of the awards and the number of shares withheld for any taxes.
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Item 6. Exhibits
| (a) | Exhibit Index | ||||||||||||||||
| Exhibit No. | Exhibit Description | ||||||||||||||||
| 2.1* | Equity Purchase Agreement, dated as of June 16, 2026, by and between Yum! Brands, Inc. and Toppings TopCo, LLC. | ||||||||||||||||
| 2.2* | Membership Interest Purchase Agreement, dated as of June 16, 2026, between Yum China Holdings, Inc. and Yum! Brands, Inc. | ||||||||||||||||
| 10.1† | Transition and Retirement Agreement, dated May 28, 2026, between the Company and Tracy Skeans, as attached herein | ||||||||||||||||
| 15 | Letter from KPMG LLP regarding Unaudited Interim Financial Information (Acknowledgement of Independent Registered Public Accounting Firm). | ||||||||||||||||
| 31.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||||||||||||
| 31.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||||||||||||
| 32.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||||||||||||||
| 32.2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||||||||||||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||||||||||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | ||||||||||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||||||||||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||||||||
| † | Indicates a management contract or compensatory plan. | ||||||||||||||||
| * | Schedules (or similar attachments) have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplemental copies of any of the omitted schedules (or similar attachments) upon request by the U.S. Securities and Exchange Commission. | ||||||||||||||||
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, duly authorized officer of the registrant.
| YUM! BRANDS, INC. | |||||
| (Registrant) | |||||
| Date: | August 4, 2026 | /s/ David Russell | ||||||
| Senior Vice President, Finance and Corporate Controller | ||||||||
| (Principal Accounting Officer) | ||||||||
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