Yum China (YUMC) Q1 2025 earnings summary

Executive summary

• Achieved record or strong Q1 2025 results with revenue of $2.98 billion, net income of $292 million, and diluted EPS of $0.77, with both KFC and Pizza Hut reaching 100% of prior-year same-store sales index for the first time since Q1 2024.

• System sales grew 2% year-over-year, driven by net new unit growth and digital sales, with same-store transactions growing for the ninth consecutive quarter.

• Operating profit increased 7% to $399 million, with margin improving to 13.4% and restaurant margin expanding by 100 basis points to 18.6%.

• Digital sales reached $2.6 billion, accounting for 93% of total sales, and membership exceeded 540 million.

• Returned $262 million to shareholders in Q1 2025 through share repurchases and dividends.

Financial highlights

• Total revenues for Q1 2025 were $2.98 billion, up 1% year-over-year; system sales grew 2% year-over-year excluding FX.

• Operating profit rose to $399 million, up 7% year-over-year, with an operating margin of 13.4%.

• Restaurant margin improved to 18.6%, up 100 basis points year-over-year.

• Adjusted EBITDA reached $514 million; net income was $292 million, up 2% year-over-year.

• Diluted EPS increased 8% to $0.77, or 12% year-over-year excluding FX and mark-to-market impacts.

Outlook and guidance

• Reiterated 2025 guidance for mid-single-digit system sales growth and plans to open 1,600–1,800 net new stores, targeting 20,000 stores by 2026.

• Capital expenditures for FY2025 expected to be $700–800 million, focused on store expansion, remodeling, and digital investments.

• Plans to return $3 billion to shareholders in 2025–2026, in addition to $1.5 billion returned in 2024.

• Franchise mix of net new stores expected to rise to 40–50% for KFC and 20–30% for Pizza Hut over the next few years.

• Restaurant margin at KFC expected to remain healthy and stable; Pizza Hut margin to improve mid- to long-term.