Yum China's Q2 Earnings Call: Record Financial Performance and Strong System Growth Amid Challenges

Yum China Holdings reported record Q2 revenue and operating profits, with a 14% increase in operating profit to $304m. The company achieved a 1% same-store sales growth, 4% system sales growth, and expanded its KFC presence to over 12,000 stores. Delivery sales accounted for 45% of total sales, up from 38% the previous year. Despite facing higher rider costs and pressure on ticket averages, Yum China's strategic initiatives and positive aspects position it strongly in the market.

Yum China Holdings, Inc. (NYSE: YUMC and HKEX: 9987) recently announced its second-quarter 2025 results, showcasing robust financial performance and strategic initiatives. The company reported a 14% increase in operating profit to $304 million, marking a second-quarter record high. This growth was driven by a 1% increase in same-store sales and a 4% expansion in system sales, excluding foreign currency translation (F/X) [1].

Yum China's strategic focus on expanding its store portfolio and enhancing operational efficiency has paid off. The company added 336 net new stores, bringing the total store count to 16,978 as of June 30, 2025. KFC, a key brand under Yum China, expanded its presence to over 12,000 stores, while Pizza Hut grew to 3,864 stores [1].

Delivery sales accounted for 45% of total sales, up from 38% in the previous year. This significant growth was driven by the increasing demand for convenience and the company's robust digital sales platform, which reached $2.4 billion, with digital ordering accounting for approximately 94% of total sales [1].

Despite facing higher rider costs and pressure on ticket averages, Yum China's strategic initiatives, such as the expansion of KCOFFEE cafes and the introduction of IP-themed toys, have positioned the company strongly in the market. The company's focus on innovation and operational efficiency has resulted in a 100 basis point increase in operating profit margin to 10.9%, a record high for the second quarter [1].

Yum China's CEO, Joey Wat, commented on the company's performance, stating, "We achieved solid results in the second quarter. We turned same-store sales growth positive while expanding our store portfolio to nearly 17,000 locations. We delivered double-digit growth in operating profit and substantially expanded our margins. KFC stayed resilient and Pizza Hut sustained its momentum. Our dual focus on innovation and operational efficiency enabled us to deliver compelling value and experiences to our customers." [1]

The company is on track to return a total of $3 billion to shareholders in 2025 through 2026, in addition to the $1.5 billion delivered in 2024. This includes $274 million returned in the second quarter through share repurchases and cash dividends [1].

Yum China's strong performance and strategic initiatives position it well for continued growth. The company's focus on digitalization, operational efficiency, and innovation is likely to drive future success, particularly in the competitive fast-food market.

References:
[1] https://www.prnewswire.com/news-releases/yum-china-reports-second-quarter-2025-results-302520626.html