- Company name
- Yum! Brands
- Sector
- Restaurants
- About
- 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 61% of sales in Q2 2026, not counting Pizza Hut.
- Thesis
- 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. It was the largest US Cyclospora outbreak on record, with 12,883 cases. Taco Bell makes about 43% of Yum's division profit without Pizza Hut, and most of Yum's US profit. Yum said Taco Bell US same-store sales fell 2% in the weeks after 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% in 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 outside the US must stay at 5% or more. Yum must spend most of the about $2.3 billion from the Pizza Hut sale on buybacks, 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.
- Risks
- 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 term debt has a fixed rate.
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 at rates of 1.95% and 4.75%, so refinancing will cost more. If Yum does not refinance its June 2027 notes in time, its bank loans 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, CFO, and Taco Bell CEO 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 part of the price depends on an earn-out through 2030.
- Recent events
- 2026-09-17: Third-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, down about 31% on July 17. It does not show the level in mid-September.
2026-09-11: The CDC declared the Cyclospora outbreak over. It counted 12,883 illnesses in 21 states, at least 570 hospitalizations, and 2 deaths. The source was iceberg lettuce from Taylor Farms de Mexico. This was the largest US Cyclospora outbreak on record.
2026-09-09: At an investor conference, Yum's CFO said Taco Bell's recovery was "tracking as planned," with several days of positive same-store sales. He said growth among households earning under $100,000 was slightly slower. Yum did not change its guidance.
2026-09-01: Yum completed the sale of Pizza Hut outside Mainland China to LongRange Capital, for $1.488 billion in cash plus up to $75 million more by 2030, based on future results. Yum now has more than 44,000 restaurants in 151 countries.
2026-08-11: Taco Bell, Taylor Farms, and a franchisee were named in several proposed class-action lawsuits over the Cyclospora outbreak.
2026-08-07: Yum China completed its purchase of the Pizza Hut brand in Mainland China from Yum! Brands, for $1.2 billion.
2026-07-30: Yum reported Q2 2026 results. Revenue was $2.17 billion, up 12% from last year. Adjusted EPS was $1.62. Excluding Pizza Hut, system sales grew 7% and core operating profit grew 8%. Taco Bell US same-store sales grew 7%, and KFC same-store sales grew 2%.
2026-07-30: Management said Taco Bell US same-store sales were down 2% in Q3 through July 27, after the Cyclospora outbreak, but that the decline was getting smaller. It expects the margin at Taco Bell's own US restaurants to be 19% to 21% in Q3, against 26.2% in Q2.
2026-07-17: A multistate Cyclospora outbreak, traced to lettuce from a supplier, was linked to Taco Bell restaurants. Taco Bell traffic dropped, and YUM shares fell about 8.5% from July 13 to July 17.
2026-06-16: Yum agreed to sell Pizza Hut for $2.7 billion in total: Pizza Hut in Mainland China to Yum China for $1.2 billion, and the rest of Pizza Hut to LongRange Capital, plus an earn-out of up to $75 million. The board also approved a new $4 billion share buyback that runs until June 30, 2028.
2026-06-02: Yum said its Chief Operating Officer, Tracy Skeans, will step down on November 1, 2026.
2026-04-29: Yum reported Q1 2026 results. Revenue was $2.06 billion and adjusted EPS was $1.50, up 15% from last year. Taco Bell same-store sales grew 8%.
2025-11-04: Yum started a review of strategic options for Pizza Hut, after Pizza Hut same-store sales fell for most of 2025.
2025-10-01: Chris Turner, formerly Yum's CFO and Chief Franchise Officer, became CEO. He replaced David Gibbs, who retired.