Fast-food company Yum! Brands (NYSE: YUM) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 6.4% year on year to $2.51 billion. Its non-GAAP profit of $1.73 per share was 1.5% below analysts’ consensus estimates.
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Yum! Brands (YUM) Q4 CY2025 Highlights:
- Revenue: $2.51 billion vs analyst estimates of $2.45 billion (6.4% year-on-year growth, 2.5% beat)
- Adjusted EPS: $1.73 vs analyst expectations of $1.76 (1.5% miss)
- Operating Margin: 29.4%, up from 27.8% in the same quarter last year
- Free Cash Flow Margin: 33.9%, up from 17.2% in the same quarter last year
- Locations: 62,901 at quarter end, up from 61,346 in the same quarter last year
- Same-Store Sales rose 3% year on year (1% in the same quarter last year)
- Market Capitalization: $44.07 billion
Company Overview
Spun off as an independent company from PepsiCo, Yum! Brands (NYSE: YUM) is a multinational corporation that owns KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $8.21 billion in revenue over the past 12 months, Yum! Brands is one of the most widely recognized restaurant chains and benefits from customer loyalty, a luxury many don’t have. Its scale also gives it negotiating leverage with suppliers, enabling it to source its ingredients at a lower cost. However, its scale is a double-edged sword because there are only a finite of number places to build restaurants, making it harder to find incremental growth. For Yum! Brands to boost its sales, it likely needs to adjust its prices, launch new chains, or lean into foreign markets.
As you can see below, Yum! Brands’s sales grew at a mediocre 6.6% compounded annual growth rate over the last six years.
This quarter, Yum! Brands reported year-on-year revenue growth of 6.4%, and its $2.51 billion of revenue exceeded Wall Street’s estimates by 2.5%.
Looking ahead, sell-side analysts expect revenue to grow 8.7% over the next 12 months, an acceleration versus the last six years. This projection is above the sector average and indicates its newer menu offerings will fuel better top-line performance.
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Restaurant Performance
Number of Restaurants
Yum! Brands sported 62,901 locations in the latest quarter. Over the last two years, it has opened new restaurants at a rapid clip by averaging 4.1% annual growth, among the fastest in the restaurant sector. Furthermore, one dynamic making expansion more seamless is the company’s franchise model, where franchisees are primarily responsible for opening new restaurants while Yum! Brands provides support.
When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations.
Same-Store Sales
A company's restaurant base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales is an industry measure of whether revenue is growing at those existing restaurants and is driven by customer visits (often called traffic) and the average spending per customer (ticket).
Yum! Brands’s demand within its existing dining locations has barely increased over the last two years as its same-store sales were flat. Yum! Brands should consider improving its foot traffic and efficiency before expanding its restaurant base.
In the latest quarter, Yum! Brands’s same-store sales rose 3% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.
Key Takeaways from Yum! Brands’s Q4 Results
We enjoyed seeing Yum! Brands beat analysts’ revenue expectations this quarter. We were also glad its same-store sales outperformed Wall Street’s estimates. On the other hand, its EPS slightly missed. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 1.1% to $160.50 immediately following the results.
Yum! Brands had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
