- Price
- $138.63 → $137.73(−0.6%)
- Discount
- 10.6% → 11.1%(+0.6 pts)
- Next earnings
- 2026-11-02 → 2026-10-30
- Next earnings is estimate
- No → Yes
- About
- Yum! Brands owns KFC, Taco Bell, and Habit Burger & Grill. ItAfter it sold Pizza Hut in 2026, it has more than 6444,000 restaurants in about 155151 countries. Franchisees run about 97%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 by store count, with about 34,700 restaurants, mostlyand about 90% of them are outside the US. Taco Bell isKFC also makes the most profitable brand, and mostprofit: $1.5 billion of its sales come fromdivision 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. Yum sold Pizza Hut in 2026: Pizza Hut in Mainland China went to Yum China, and the rest ofnot counting Pizza Hut went to the private equity firm LongRange Capital.
- Thesis
- Yum Brands trades at a discount because a large Cyclospora health scareoutbreak 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. Third-party foot-traffic data still showedYum said Taco Bell US visits well below last year's level in mid-September 2026, nearly two months after the outbreak. So the market wants official same-store sales to prove a full recoveryfell 2% in the weeks after the outbreak, not justand it expects a slowing declinelower Taco Bell US restaurant margin in Q3. Investors also worry about KFC, whose sameHigher interest rates add a second pressure. The 10-store sales growth slowedyear Treasury yield rose from about 4% in February 2026 to 2above 5% in Q2September 2026 as Yum stopped reporting KFC US sales on their own, and this lowers the price investors pay for steady franchise royalties. Yum also carries about $1112.53 billion of below-investment-grade debt. KFC is the larger profit engine and was not affected by the outbreak, which limits flexibility ifbut its same-store sales stay softgrew only 2% in Q2 2026. For the gap to close, Taco Bell's US same-store sales need tomust turn positive again in a quarter Yum reports after the outbreakby Q1 2027. KFC needs to show its international unit growth can offset a sloweroutside the US businessmust stay at 5% or more. Selling Pizza Hut, completed in mid-2026, already removed Yum's weakest brand and freed must spend most of the about $2.3 billion for debt paydownfrom the Pizza Hut sale on buybacks, and a newrefinance about $41.6 billion buybackof debt that matures in 2027 at a reasonable cost. The next scheduledfirst test is Yum's Q3 2026 earnings report, expected aroundin early November 2, 2026, which should show whether Taco Bell traffic and same-storeabove all what management says about October sales have recovered. If the recovery holds up inTaco Bell recovers on that report and KFC's international store growth continuespath, the discount can close over the next two to threefour quarters. The main risk is that customer trust takes longer to recoverreturns more slowly than the health scare itself. Loweroutbreak ended, while low-income consumers may also keep pullingcustomers cut back and competitors fight on fast food, so Taco Bell's recovery could take longer than the market expectsprice.
- Risks
- Taco Bell makes mostabout 43% of Yum's division profit without Pizza Hut. The July 2026 Cyclospora outbreak pushed its US same-store sales down 2%, and Yum expects a lower margin at its own US Taco Bell restaurants in the weeks afterQ3. If customers stay away longer than expected, Yum's profit growth slows.
Third Several proposed class-party footaction lawsuits also add legal costs.
Higher interest rates lower the price investors pay for steady franchise royalties. The 10-traffic data showed Taco Bell US same-store visits stillyear Treasury yield rose from about 124% below last year throughin February 2026 to above 5% in September 11, 2026, nearly two months after the July Cyclospora outbreak. This suggests the sales recoveryThe direct cost is slower than management described in late July.
small, because about 96% of Yum's term debt has a fixed rate.
Yum had about $1112.53 billion of debt andat 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 while it spends. About $41.6 billion on buybacksmatures in 2027 at rates of 1. This leaves less room if sales drop.
KFC same-store sales grew only 295% in Q2 2026, and Yum no longer reports KFC US sales on their own4. KFC's growth depends75%, so refinancing will cost more and more on new stores outside the US. 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 weightcompetitors 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. BothThese 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 brandsgrowth 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. The separation adds some short-term complexity.
- Recent events
- 2026-09-1517: Third-party foot-traffic data (Placer.ai) showed Taco Bell US same-store visits running aboutper restaurant down 12.2% below lastfrom a year earlier, on average, from July 6 throughto September 11, 2026. This average includes the worst days of the outbreak, nearly two months afterdown 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 Q3 restaurant marginown 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 98.5% in mid-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.