Yum Brands Inc
Q1 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: +6.60%.
Did YUM Beat Earnings? Q1 2026 Results
Yum! Brands kicked off fiscal 2026 with a stronger-than-expected quarter, posting adjusted diluted EPS of $1.50, beating the $1.39 consensus estimate by 7.95%, while revenue of $2.06 billion edged past the $2.04 billion forecast and climbed 15.2% year over year. The primary engine behind the beat was Taco Bell, where U.S. same-store sales surged 8% and total division revenue jumped 21% to $797 million, with company restaurant margins expanding 1.2 percentage points to 23.6%. KFC added further momentum, contributing 7% unit growth across 45 countries and 6% system sales growth excluding foreign exchange. Pizza Hut remained a drag, with U.S. same-store sales falling 4% and division operating profit declining 14% to $64 million, prompting management to incur $37 million in advisory costs tied to an ongoing strategic review of the brand. Looking ahead, Yum! reiterated its long-term algorithm targeting 5% unit growth, 7% system sales growth ex-FX, and at least 8% core operating profit growth, citing global consumer demand and expanding technology capabilities as key supports.
- Taco Bell U.S. same-store sales growth of 8%, meaningfully ahead of QSR industry
- KFC unit growth of 7% with 648 gross new restaurants across 45 countries
- Worldwide system sales grew 6% excluding foreign currency translation
- Digital system sales approached $11 billion with record 63% digital mix
- KFC company-owned restaurant margins improved 100 basis points to 10.3%
- Taco Bell International system sales grew 16% ex-FX with 5% same-store sales growth
- Foreign currency translation favorably impacted divisional operating profit by $25 million
- $44 million net litigation settlement from credit card interchange fees
- Effective tax rate excluding Special Items improved to 18.0% from 19.8%
“We delivered solid topline momentum to start the year, with our fundamentals as strong as ever. Taco Bell delivered an outstanding 8% same-store sales growth, meaningfully ahead of the QSR industry, building off a very strong Q1 same-store sales growth rate in 2025. KFC delivered impressive unit growth and resilient same-store growth, with many KFC markets growing system sales double-digits. Yum! is incredibly well positioned to sustain sales momentum thanks to strong global consumer appeal for our brands, long-term consumption tailwinds, and our tech and AI capabilities.”
Yum Brands CEO, on the earnings call
Forward Guidance & Outlook
Yum! Brands reiterated its long-term growth algorithm targeting 5% unit growth, 7% system sales growth excluding foreign currency translation, and at least 8% core operating profit growth, which it believes it can achieve over an extended period of time, on average. The company stated it is 'incredibly well positioned to sustain sales momentum thanks to strong global consumer appeal for our brands, long-term consumption tailwinds, and our tech and AI capabilities.' The strategic options review for the Pizza Hut brand remains ongoing.
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Figures from SEC filings and company reports. Not investment advice.