Yum China's Q2 2025 Earnings Call: Unpacking Contradictions in Competition, Store Openings, and Pricing Strategies

Impact of delivery platform competition on sales and margins, impact of smaller store openings on revenue growth, delivery subsidies and margin impact, franchise store model expectations, pricing strategy and ticket averages are the key contradictions discussed in Yum China's latest 2025Q2 earnings call.



Strong Financial Performance:
- Yum China Holdings, Inc. achieved record highs in revenue, operating profit, and OP margin in Q2 2025.
- The dual focus on same-store sales and system sales growth contributed significantly to this performance.

KFC and Pizza Hut Sales and Margin Expansion:
- KFC maintained resilient performance with 5% system sales growth and a healthy restaurant margin, while Pizza Hut achieved 2% same-store sales growth and improved its menu resonance by 17%.
- Both brands benefitted from operational efficiency and innovation, such as the introduction of KCOFFEE Cafes and new menu offerings.

Store Expansion and Franchise Growth:
- The company opened 336 net new stores in Q2, contributing to a store count of 12,238 for KFC and 3,864 for Pizza Hut.
- The franchise store mix of net new openings surpassed previous guidance, aligning with the strategy to focus on lower-tier cities and strategic channel locations.

Digital and Delivery Strategies:
- Delivery sales comprised 45% of the total sales mix, up from 38% last year, driven by due promotions on owned channels and delivery platforms.
- The company leverages delivery platforms to enhance brand visibility while managing price perception and long-term benefits.