Yum! Brands

Yum! Brands owns KFC, Taco Bell, and Habit Burger & Grill. After it sold Pizza Hut in 2026, it has more than 44,000 restaurants in 151 countries. Franchisees run almost all of them.

Yum makes most of its money from franchise fees and royalties, which are a percentage of each restaurant's sales. So franchisees pay most of the cost to build and run the stores. KFC is the biggest brand, with about 34,700 restaurants, and about 90% of them are outside the US. KFC also makes the most profit: $1.5 billion of division operating profit in 2025, against $1.1 billion for Taco Bell.

Most Taco Bell restaurants are in the US. Yum also builds its own restaurant software, called Byte by Yum!, for ordering, kitchens, and delivery. Digital orders were more than 60% of system sales in Q2 2026, not counting Pizza Hut.

Yum Brands trades at a discount because a large Cyclospora outbreak at Taco Bell in July 2026 raised doubt about how fast the brand recovers. State health officials called it the largest US Cyclospora outbreak on record, with 12,883 cases. Taco Bell makes about 43% of Yum's division profit without Pizza Hut. Yum said Taco Bell US same-store sales fell 2% in Q3 through July 27, a period that includes the first weeks of the outbreak, and it expects a lower Taco Bell US restaurant margin in Q3.

Higher interest rates add a second pressure. The 10-year Treasury yield rose from about 4% in February 2026 to above 5% from mid-September 2026, and this lowers the price investors pay for steady franchise royalties. Yum also carries about $12.3 billion of below-investment-grade debt. KFC is the larger profit engine and was not affected by the outbreak, but its same-store sales grew only 2% in Q2 2026.

For the gap to close, Taco Bell US same-store sales must turn positive again by Q1 2027. KFC unit growth must stay at 5% or more. Yum must use the about $2.3 billion from the Pizza Hut sale to repay its $675 million revolver and buy back shares, and refinance about $1.6 billion of debt that matures in 2027 at a reasonable cost. The first test is Yum's Q3 2026 report, expected in early November 2026, and above all what management says about October sales.

If Taco Bell recovers on that path, the discount can close over the next two to four quarters. The main risk is that customer trust returns more slowly than the outbreak ended, while low-income customers cut back and competitors fight on price.

1. Sep 1, 2026Passed

   Pizza Hut sale to LongRange Capital completesClosing of both Pizza Hut sales with about $2.3 billion of net proceeds passes; a failed or delayed closing fails.Outcome: Yum completed the sale on September 1, 2026, after the Yum China part closed on August 7, for $2.7 billion in total plus an earn-out of up to $75 million.
2. Nov 3, 2026 · est.Pending

   Q3 2026 results: Taco Bell recovery after the outbreakTaco Bell US same-store sales that improve each month to positive in October, and a Taco Bell US margin within 19% to 21%, pass; a deeper decline or a lower margin fails.
3. Feb 2027 · est.Pending

   Repay $884 million of securitization notes due February 2027Repaying or refinancing the notes on time at a reasonable rate passes; a missed date, which makes all the securitization notes start to pay down principal early, fails.
4. Mar 2, 2027Pending

   Refinance June 2027 subsidiary notes before springing maturityRepaying or refinancing at least $500 million of the $750 million notes by this date at a reasonable rate passes; a missed date, which makes the Term Loan A and the revolver come due, fails.
5. Apr 2027 · est.Pending

   Q1 2027 results: Taco Bell US same-store sales positivePositive Taco Bell US same-store sales and KFC unit growth of 5% or more pass; negative Taco Bell sales fail.

Every passed and failed checkpoint across all picks

Yum had a shareholders' deficit of $7.1 billion at June 30, 2026, because for years it has used debt to fund large buybacks and dividends. The debt supports buybacks, but it leaves little room if Taco Bell profit falls, and ratings are below investment grade. Read more

• Taco Bell makes about 43% of Yum's division profit without Pizza Hut. The July 2026 Cyclospora outbreak pushed its US same-store sales down, and Yum expects a lower margin at its own US Taco Bell restaurants in Q3. If customers stay away longer than expected, Yum's profit growth slows. Several proposed class-action lawsuits also add legal costs.
• Higher interest rates lower the price investors pay for steady franchise royalties. The 10-year Treasury yield rose from about 4% in February 2026 to above 5% in September 2026. The direct cost is small, because about 96% of Yum's debt, not counting the revolver, had a fixed rate at June 30, 2026, after swaps.
• Yum had about $12.3 billion of debt at June 30, 2026, with a below-investment-grade credit rating (BB+ at S&P, Ba2 at Moody's). It targets net debt of about 4 times EBITDA. About $1.6 billion matures in 2027: $884 million of securitization notes at 1.95% in February and $750 million of notes at 4.75% in June. Refinancing will cost more. If Yum does not refinance most of its June 2027 notes by March 2, 2027, its Term Loan A and its revolver also come due early.
• Lower-income customers are cutting back on fast food, and competitors such as McDonald's and Burger King push low-price deals. Weight-loss drugs such as GLP-1s can also reduce how much people eat out. These trends can slow traffic and lower prices at Taco Bell.
• KFC same-store sales grew only 2% in Q2 2026, and KFC US system sales fell 2%. In 2026, Yum stopped reporting KFC US and international same-store sales separately. KFC's growth depends more and more on new stores outside the US, and China is about 26% of KFC system sales.
• Yum has a new CEO and a new CFO since October 2025, and its COO leaves on November 1, 2026. It still provides its Byte by Yum! software and other services to Pizza Hut after the sale, and a $75 million part of the price depends on Pizza Hut profit targets through 2029.

• September 17, 2026Third-party foot-traffic data (Placer.ai) showed Taco Bell US visits per restaurant down 12.2% from a year earlier, on average, from July 6 to September 11, 2026. This average includes the worst days of the outbreak. On July 17, visits were about 31% below the average for the same weekday from January 1 to July 6. The data does not show the level in mid-September.
• September 11, 2026The CDC declared the Cyclospora outbreak over. It counted 12,883 illnesses in 21 states, 570 hospitalizations, and 2 deaths. The source was processed iceberg lettuce from Taylor Farms de Mexico. State health officials and news reports called it the largest US Cyclospora outbreak on record.
• September 9, 2026At the Barclays Global Consumer Staples Conference, Yum's CFO, Ranjith Roy, said Taco Bell's recovery "remains on plan," with several days of positive sales in the US. He also said that it was too early to declare a full recovery.