Yum! Brands (YUM) Q1 2025 earnings summary

Executive summary

• Q1 total revenues rose 12% to $1.79B, with 8% core operating profit growth driven by Taco Bell US and KFC International, while Pizza Hut declined.

• Net income declined 19% to $253M, with diluted EPS at $0.90, impacted by a higher tax rate and special items; adjusted EPS was $1.30, up 13%.

• Digital system sales neared $9B, representing 55% of total sales, with digital transformation advanced by Byte by Yum! and an AI partnership with NVIDIA.

• CEO announced retirement plans for Q1 2026, with succession planning underway.

• Net units declined by 460, primarily due to 537 closures in Turkey after franchise agreement terminations.

Financial highlights

• Core operating profit reached $586M, up 8% year-over-year; GAAP operating profit was $548M, up 5%.

• System sales grew 5% in Q1, driven by 3% same-store sales and 3% unit growth, led by Taco Bell (+11%) and KFC (+5%).

• Ex-special EPS was $1.30; reported EPS was $0.90, impacted by a $92M Mexican tax reserve.

• Company restaurant margin was 14.3%, down from 15.6% year-over-year.

• Cash flow from operations was $404M, up from $363M in Q1 2024.

Outlook and guidance

• Confident in delivering at least 8% core operating profit growth for 2025, excluding the 53rd week benefit.

• Long-term targets include 5% unit growth and 7% system sales growth (ex-FX, 53rd week).

• Expect lower profit growth in Q2 due to one-time expenses, with higher growth in the second half of the year.

• On track for 5% unit growth (excluding Turkey) and 100 net new Taco Bell international units in 2025.

• FX expected to provide a $10M tailwind to operating profit for the remainder of the year.