Yum! Brands NYSE: YUM opened 2026 with what CEO Chris Turner described as “a solid start to the year,” pointing to strong top-line performance, improved KFC restaurant-level margins, disciplined general and administrative spending, and progress integrating newly acquired company-owned Taco Bell restaurants.
Across the portfolio, Turner said the company is focused on its newly introduced “Raise the Bar” priorities: “battling for the future consumer, accelerating restaurant unit economics, and reaching the full potential of Byte.” He added that the company expects the priorities to “come to life over time,” but said the momentum reflected in the first quarter was encouraging.
First-quarter results and brand performance
CFO Ranjith Roy said Yum! system sales grew 6% in the first quarter, driven by 5% unit growth and 3% global same-store sales growth. Digital mix rose to 63% and digital sales approached $11 billion, according to management.
Turner highlighted KFC, which he said represents 53% of divisional operating profit, delivering 6% system sales growth in the quarter. He said KFC is leaning into menu innovation and collaborations while expanding its sauces platform, building on learnings from “Saucy by KFC.” Eight of KFC’s top 20 markets are “reactivating or launching one of these sauce platforms in 2026,” including South Africa, India, Germany, the U.K., France, and the Middle East, he said.
Turner also cited performance in the U.K., where KFC posted 7% first-quarter same-store sales growth and saw momentum into the second quarter, driven by a pickle-themed menu promotion. He said the “Picklemania” offer was “the most successful limited time offer in KFC U.K. history” and was drawn from a “global innovation pantry” after a successful launch in Canada in 2025.
KFC unit development was another focal point. Turner said KFC delivered 7% unit growth in the quarter and a record number of first-quarter gross builds, adding stores in 45 countries. Roy said KFC opened 648 new stores in Q1, helped by a “strong start in China” and development across those 45 countries.
Taco Bell, which Turner said represents 39% of divisional operating profit, posted 8% U.S. same-store sales growth, which management said meaningfully outperformed the industry. Turner said the quarter marked Taco Bell’s eighth consecutive quarter of U.S. same-store sales growth ahead of the industry, and he pointed to 18% two-year same-store sales growth in the U.S. Turner said same-store sales growth included 3 percentage points of transaction growth and credited the “successful launch of the Luxe Value Menu.” Roy said Taco Bell U.S. restaurant-level margins were 23.9% and noted the brand’s ability to expand margins “despite significant inflation.”
At Habit Burger & Grill, Turner said the company was “pleased with the top-line momentum” driven by value moves and menu innovation, while continuing to manage “the ongoing bottom-line impact of inflation, particularly from beef prices.” Roy added that Yum! expects about $5 million of non-cash closure expenses for Habit as the company “opportunistically optimize[s] our store network by making a small number of closures in subscale markets.”
Digital growth and Byte by Yum! expansion
Management repeatedly returned to digital and technology as a key driver. Turner said digital mix increased to 63% in the quarter, with digital sales approaching $11 billion. He also said expanding loyalty is “fundamental” to growing the digital business, noting KFC plans to expand loyalty to 20 additional markets this year, which he said would put the brand “on a path to triple its 90-day active user base.”
Turner and Roy highlighted Byte by Yum! as the company’s proprietary technology platform behind digital ordering and restaurant operations tools. In Q1, Taco Bell U.K. became the first international market to roll out both digital ordering and the Smart Ops bundles, management said, with Turner stating that moving away from disparate third-party technologies to a “single unified platform” improves agility and execution consistency.
Roy said KFC’s U.K. and Australia markets are on track to roll out Byte bundles this year, representing “2,000 incremental restaurant locations native to Byte once that rollout is complete.”
AI initiatives and operational productivity
Roy said Yum! is embedding AI into consumer-facing technologies and restaurant operations. He noted Taco Bell U.S. piloted AI-driven A/B testing in the drive-thru during Q1, with plans to roll it out nationwide this year. Roy said the capability can “dynamically change the layout, content, and visuals on a car-by-car basis,” allowing the brand to generate insights faster.
Turner said the company’s AI focus starts with growth and also includes enabling employees to be more productive. He cited examples from KFC U.K., including “10 different AI agents” used in the organization, such as a virtual team member assisting with permitting on the development team and another supporting corporate learning and development.
Roy also said AI is helping the company build technology more efficiently, noting that Yum! is developing an enhanced version of Byte’s kitchen display system “with an overall team that is half the size of what it would have been in the past.”
Development outlook and franchisee appetite amid geopolitical uncertainty
Analysts asked about development and demand trends globally in light of geopolitical issues. Turner said Yum! is “pleased with the progression” in KFC International and noted acceleration on a two-year same-store sales basis over the past four quarters. He pointed to strong performance in markets such as the U.K. and Korea and said KFC’s new international CEO, Scott Aschenbrenner, is setting “a very high aspiration” with specific targets and strategies, though Turner cautioned the plan will take time across roughly 150 markets.
On franchisee appetite for development, Turner said the company has “high confidence” in unit development outlooks and reiterated there was “no change” to KFC’s unit development plan. Roy said the Middle East conflict has had a “relatively minor” impact on development so far, including short-term delays in permits and equipment procurement in select markets such as the UAE and Turkey. He added that 90% of KFC development outside China is contractual via development agreements with a “well-capitalized franchisee base.”
Roy also cited KFC’s historical unit development through periods of disruption, saying net new unit growth was 8% and 11% in 2021 and 2022 amid supply chain disruption, and 7% in 2024 and 2025 excluding the impact of Turkey and Russia exits. He said the entire Middle East represents “less than 150 units in our current pipeline” and that partners in the region “expect no change to plans.”
For Taco Bell development, Roy said the brand opened 30 gross units in Q1, including 14 in the U.S. and 16 internationally. Turner reiterated Taco Bell’s international growth story and said the company’s long-term aspiration is to “sustain or even accelerate” its unit development pace. Roy said Taco Bell total international system sales were up 16% in Q1, with two-year stacked same-store sales growth of 23% in the U.K., 18% in Canada, and 45% in India. He also said success in larger markets is spurring interest from partners to expand Taco Bell into additional markets such as Poland and Germany.
Capital allocation, guidance updates, and Pizza Hut review
Roy said first-quarter gross capital expenditures totaled $75 million, and Yum!’s net leverage ratio ended the quarter at approximately 3.8x. During the quarter, the company repurchased about 1.2 million shares for $185 million. Roy also reiterated a run rate of approximately $1.8 billion in operating cash flow excluding Pizza Hut and outlined capital priorities that include strategic investments, balance sheet strength, a competitive dividend, and returning excess cash to shareholders. He said the company intends to potentially upsize debt offerings as it refinances upcoming maturities, subject to market conditions.
For 2026, Roy said the company expects full-year interest expense of $510 million to $520 million, excluding any potential debt issuances. He said Yum! remains “very confident” in meeting or exceeding each component of its long-term growth algorithm excluding Pizza Hut.
Roy also raised guidance for Taco Bell U.S. restaurant-level margins to 24.5% to 25.5%, citing better top-line momentum and higher margins than originally planned from acquired Taco Bell stores. He said second-quarter ex-special, ex-Pizza Hut G&A is expected to reflect high single-digit growth year over year due to timing of project spend.
On Pizza Hut, Roy said the brand saw strength across several international markets, citing 11% system sales growth in the Middle East and 8% in both China and Latin America. He said Pizza Hut’s first-quarter core operating profit growth was in line with guidance and that the company expects second-quarter core operating profit of about $70 million, with both Q1 and Q2 including expense related to the previously disclosed one-time “Hut Forward” investment.
Roy said the strategic options review for Pizza Hut has progressed and remains on track to be completed in 2026. He said the objective is to “create value for Yum!, Pizza Hut, and its franchise partners” by determining the best approach to capitalize on the brand’s “structural advantages,” equity, franchise partners, and scale.
In closing remarks, Turner said Yum! is still early in 2026 and called the environment “dynamic,” but said the company remains confident as teams execute against the Raise the Bar priorities.
About Yum! Brands NYSE: YUM
Yum! Brands, Inc NYSE: YUM is a global quick-service restaurant company that develops, operates and franchises a portfolio of well-known restaurant brands. The company's principal brands are KFC, Pizza Hut and Taco Bell, each focused on distinct product categories—KFC on fried chicken and related menu items, Pizza Hut on pizza and complementary offerings, and Taco Bell on Mexican-inspired quick-service food. Yum! is headquartered in Louisville, Kentucky and was formed as Tricon Global Restaurants in 1997 when PepsiCo spun off its restaurant businesses, later adopting the Yum! Brands name.
The company's operating model centers on brand development, system growth and franchising; a large portion of its restaurants are operated by independent franchisees, and Yum! generates revenue through franchise royalties and fees in addition to sales from company-operated locations.
Further Reading
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Yum! Brands, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Yum! Brands wasn't on the list.
While Yum! Brands currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Click the link to see MarketBeat's guide to investing in 5G and which 5G stocks show the most promise.
Get This Free Report
