Companies: 10,824     total market cap: $145.749 T
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Yum! Brands
YUM
#597
Rank
$41.33 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$149.97
Share price
-0.44%
Change (1 day)
1.19%
Change (1 year)
๐Ÿ” Restaurant chains๐Ÿด Food
Categories
  1. Yum! Brands
  2. Quarterly Reports (10-Q)
  3. Submitted on 2026-05-06

Yum! Brands - 10-Q quarterly report FY


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  
EXCHANGE ACT OF 1934 for the quarterly period ended
March 31, 2026
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ____________ to _________________
 
 Commission file number 1-13163
________________________
YUM! BRANDS, INC.
(Exact name of registrant as specified in its charter)
North Carolina13-3951308
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
1441 Gardiner Lane,Louisville,Kentucky40213
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:(502) 874-8300
Securities registered pursuant to Section 12(b) of the Act
 Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
 Common Stock, no par valueYUMNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
☒
Accelerated Filer
☐
Non-accelerated Filer
☐
Smaller Reporting Company
☐
Emerging Growth Company
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No x
The number of shares outstanding of the registrant’s Common Stock as of May 1, 2026, was 275,621,202 shares.


YUM! BRANDS, INC.

INDEX
 
  Page
  No.
Part I.Financial Information 
   
 Item 1 - Financial Statements 
  
 
Condensed Consolidated Statements of Income
4
  
Condensed Consolidated Statements of Comprehensive Income
5
 
Condensed Consolidated Statements of Cash Flows
6
  
 
Condensed Consolidated Balance Sheets
7
Condensed Consolidated Statements of Shareholders' Deficit
8
  
 
Notes to Condensed Consolidated Financial Statements
9
  
 
Item 2 - Management’s Discussion and Analysis of Financial Condition
and Results of Operations
22
  
 Item 3 - Quantitative and Qualitative Disclosures About Market Risk
35
  
 Item 4 - Controls and Procedures
35
  
 Report of Independent Registered Public Accounting Firm
37
  
Part II.Other Information and Signatures
  
 Item 1 - Legal Proceedings
38
  
 Item 1A - Risk Factors
38
  
 Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
38
Item 5 - Other Information
38
 Item 6 - Exhibits
40
  
 Signatures
41
2

PART I - FINANCIAL INFORMATION

Item 1.Financial Statements
3

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions, except per share data)
 Quarter ended
Revenues3/31/20263/31/2025
Company sales$785 $607 
Franchise and property revenues856 785 
Franchise contributions for advertising and other services418 395 
Total revenues2,059 1,787 
Costs and Expenses, Net
Company restaurant expenses677 520 
General and administrative expenses322 302 
Franchise and property expenses43 34 
Franchise advertising and other services expense419 396 
Refranchising (gain) loss(1)(5)
Other (income) expense(45)(8)
Total costs and expenses, net1,415 1,239 
Operating Profit644 548 
Investment (income) expense, net— (1)
Other pension (income) expense— — 
Interest expense, net128 120 
Income Before Income Taxes516 429 
Income tax provision84 176 
Net Income$432 $253 
Basic Earnings Per Common Share$1.56 $0.91 
Diluted Earnings Per Common Share$1.55 $0.90 
Dividends Declared Per Common Share$0.75 $0.71 
See accompanying Notes to Condensed Consolidated Financial Statements.

4

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
Quarter ended
3/31/20263/31/2025
Net Income$432 $253 
Other comprehensive income (loss), net of tax
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature
Adjustments and gains (losses) arising during the period
(4)25 
Reclassification of adjustments and (gains) losses into Net Income— — 
(4)25 
Tax (expense) benefit
— — 
(4)25 
Changes in pension and post-retirement benefits
Unrealized gains (losses) arising during the period
— — 
Reclassification of (gains) losses into Net Income
1 2 
1 2 
Tax (expense) benefit
(1)— 
— 2 
Changes in derivative instruments
Unrealized gains (losses) arising during the period
11 1 
Reclassification of (gains) losses into Net Income
(6)(8)
5 (7)
Tax (expense) benefit
(1)2 
4 (5)
Other comprehensive income (loss), net of tax
— 22 
Comprehensive Income$432 $275 
See accompanying Notes to Condensed Consolidated Financial Statements.

5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
 Quarter ended
 3/31/20263/31/2025
Cash Flows – Operating Activities   
Net Income$432 $253 
Depreciation and amortization60 45 
Refranchising (gain) loss(1)(5)
Deferred income taxes13 8 
Share-based compensation expense24 21 
Changes in accounts and notes receivable28 71 
Changes in prepaid expenses and other current assets(24)(57)
Changes in accounts payable and other current liabilities(75)(32)
Changes in income taxes payable(19)3 
Other, net(22)97 
Net Cash Provided by Operating Activities 416 404 
Cash Flows – Investing Activities
Capital spending(75)(71)
Acquisitions of franchise restaurants
(5)(16)
Proceeds from refranchising of restaurants— 15 
Maturities (purchases) of Short term investments, net— 90 
Other, net— (16)
Net Cash (Used in) Provided by Investing Activities
(80)2 
Cash Flows – Financing Activities
Repayments of long-term debt(8)(5)
Revolving credit facility, three months or less, net50 24 
Repurchase shares of Common Stock(185)(229)
Dividends paid on Common Stock(207)(198)
Other, net(25)(35)
Net Cash Used in Financing Activities
(375)(443)
Effect of Exchange Rates on Cash and Cash Equivalents5 10 
Net Decrease in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
(34)(25)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period923 807 
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period$889 $782 
 
See accompanying Notes to Condensed Consolidated Financial Statements.  

6

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
3/31/2026
12/31/2025
ASSETS  
Current Assets  
Cash and cash equivalents$689 $709 
Accounts and notes receivable, net828 841 
Prepaid expenses and other current assets513 490 
Total Current Assets2,030 2,040 
Property, plant and equipment, net1,622 1,605 
Goodwill971 969 
Intangible assets, net899 909 
Other assets1,738 1,708 
Deferred income taxes952 965 
Total Assets$8,211 $8,197 
LIABILITIES AND SHAREHOLDERS’ DEFICIT  
Current Liabilities  
Accounts payable and other current liabilities$1,342 $1,433 
Income taxes payable35 46 
Short-term borrowings1,741 38 
Total Current Liabilities3,118 1,516 
Long-term debt10,213 11,872 
Other liabilities and deferred credits2,164 2,133 
Total Liabilities15,494 15,521 
Shareholders’ Deficit  
Common Stock, no par value, 750 shares authorized; 276 shares issued in 2026 and 277 shares issued in 2025
— — 
Accumulated deficit(6,971)(7,014)
Accumulated other comprehensive loss(312)(311)
Total Shareholders’ Deficit(7,283)(7,325)
Total Liabilities and Shareholders’ Deficit$8,211 $8,197 
See accompanying Notes to Condensed Consolidated Financial Statements.  
7

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
Quarters ended March 31, 2026 and 2025
(in millions)
 Yum! Brands, Inc. 
 Issued Common StockAccumulated Deficit
Accumulated Other Comprehensive Loss
Total Shareholders' Deficit
 SharesAmount
Balance at December 31, 2025
277 $— $(7,014)$(311)$(7,325)
Net Income 432 432 
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature(4)(4)
Pension and post-retirement benefit plans (net of tax impact of $1 million)
— — 
Derivative instruments (net of tax impact of $1 million)
4 4 
Comprehensive Income 432 
Dividends declared(208)(208)
Repurchase of shares of Common Stock(1)
(1)(5)(181)(186)
Employee share-based award exercises 1 (23)(23)
Share-based compensation events28 28 
Balance at March 31, 2026
276 $— $(6,971)$(312)$(7,283)
Balance at December 31, 2024
279 $— $(7,256)$(392)$(7,648)
Net Income 253 253 
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature 25 25 
Pension and post-retirement benefit plans2 2 
Derivative instruments (net of tax impact of $2 million)
(5)(5)
Comprehensive Income 275 
Dividends declared(199)(199)
Repurchase of shares of Common Stock(1)
(2)— (229)(229)
Employee share-based award exercises 1 (26)(3)(29)
Share-based compensation events26 26 
Balance at March 31, 2025
278 $— $(7,434)$(371)$(7,804)
(1)Includes excise tax on share repurchases
See accompanying Notes to Condensed Consolidated Financial Statements.
8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Tabular amounts in millions, except per share data)

Note 1 - Financial Statement Presentation

We have prepared our accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information.  Accordingly, they do not include all of the information and footnotes required by Generally Accepted Accounting Principles in the United States (“GAAP”) for complete financial statements.  Therefore, we suggest that the accompanying Financial Statements be read in conjunction with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (“2025 Form 10-K”).  

Yum! Brands, Inc. and its Subsidiaries (collectively referred to herein as the “Company,” “YUM,” “we,” “us” or “our”) franchise or operate a system of over 63,000 restaurants in 155 countries and territories.  As of March 31, 2026, 97% of these restaurants were owned and operated by franchisees.  The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-inspired and pizza categories, respectively. The Habit Burger & Grill is a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more.

As of March 31, 2026, YUM consisted of four operating segments:  

•The KFC Division which includes our worldwide operations of the KFC concept
•The Taco Bell Division which includes our worldwide operations of the Taco Bell concept
•The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept
•The Habit Burger & Grill Division which includes our worldwide operations of the Habit Burger & Grill concept

In 2025, we began a review of strategic options for the Pizza Hut brand. The objective of the review is to create value for YUM, Pizza Hut and its franchise partners by determining the optimal approach to best capitalize on Pizza Hut's structural advantages — strong brand equity, experienced franchise partners and meaningful scale — in the highly fragmented pizza market. We currently intend to complete this strategic options review in 2026, and there can be no assurance this review will result in any specific outcome or transaction.

YUM's fiscal year begins on January 1 and ends December 31 of each year, with each quarter comprised of three months. The majority of our U.S. subsidiaries and certain international subsidiaries operate on a weekly periodic calendar where the first three quarters of each fiscal year consist of 12 weeks and the fourth quarter consists of 16 weeks in fiscal years with 52 weeks and 17 weeks in fiscal years with 53 weeks. Our remaining international subsidiaries operate on a monthly calendar similar to that on which YUM operates.

Our preparation of the accompanying Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.

The accompanying Financial Statements include all normal and recurring adjustments considered necessary to present fairly, when read in conjunction with our 2025 Form 10-K, the results of the interim periods presented. Our results of operations, comprehensive income, cash flows and changes in shareholders' deficit for these interim periods are not necessarily indicative of the results to be expected for the full year.

Our significant interim accounting policies include the recognition of advertising and marketing costs, generally in proportion to revenue, and the recognition of income taxes using an estimated annual effective tax rate.

We have reclassified certain items in the Financial Statements for the prior periods to be comparable with the classification for the quarter ended March 31, 2026. These reclassifications had no effect on previously reported Net Income.

9

Note 2 - Restaurant Acquisitions

During the first quarter of 2026 and throughout 2025, we completed various restaurant acquisitions from franchisees, the most significant of which was the Taco Bell Southeast U.S. restaurant acquisition referenced below. In each transaction, the acquisition was accounted for as a business combination using the acquisition method of accounting. The allocation of the purchase price for each acquisition is based on management's analysis, which may include analysis performed by third party valuation specialists, as of the respective acquisition dates. In completing our purchase price allocations, we continue to obtain information to assist in determining the fair value of assets acquired and liabilities assumed during a one-year measurement period subsequent to the acquisition.

The financial results of all acquired restaurants have been included in our Condensed Consolidated Financial Statements since the respective dates of the acquisitions, which individually and in the aggregate, did not materially impact our results for the quarters ended March 31, 2026 and 2025, respectively. Pro forma financial information for the periods prior to acquisition is not presented due to the immaterial impact of the restaurant acquisitions on our Condensed Consolidated Financial Statements for both the 2026 and 2025 reporting periods.

Taco Bell Southeast U.S. Restaurant Acquisition

During the fourth quarter of 2025, we completed the acquisition of 128 Taco Bell restaurants across the Southeast U.S. from a franchisee. The acquisition provided YUM with an opportunity to improve and accelerate Taco Bell profitability, expand strategic leadership within the Taco Bell system and unlock significant unit development in the region. The purchase price to be allocated for accounting purposes was $666 million, which consisted of cash in the amount of $667 million, offset by the settlement of a net liability of $1 million related to our preexisting contractual relationship with the franchisee.

During the quarter ended March 31, 2026, we adjusted the preliminary estimate of identifiable net assets acquired (as recorded in the December 31, 2025 quarter of acquisition). The adjustments were not significant and we will continue to obtain information to assist in determining the fair value of net assets acquired during the remaining measurement period.

Note 3 - Earnings Per Common Share (“EPS”)
 Quarter ended
 20262025
Net Income$432 $253 
Weighted-average common shares outstanding (for basic calculation)277 280 
Effect of dilutive share-based employee compensation2 2 
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)279 282 
Basic EPS$1.56 $0.91 
Diluted EPS$1.55 $0.90 
Unexercised employee SARs, RSUs, PSUs and stock options (in millions) excluded from the diluted EPS computation(a)
1.1 1.5 

(a)These unexercised employee stock appreciation rights (“SARs”), restricted stock units (“RSUs”), performance share units (“PSUs”) and stock options were not included in the computation of diluted EPS because to do so would have been antidilutive for the periods presented.

10

Note 4 - Shareholders' Deficit

Under the authority of our Board of Directors, we repurchased shares of our Common Stock during the years to date ended March 31, 2026 and 2025 as indicated below.  All amounts exclude applicable transaction fees and excise taxes on share repurchases. 

 Shares Repurchased
(thousands)		Dollar Value of Shares
Repurchased		Remaining Dollar Value of Shares that may be Repurchased
Authorization Date2026202520262025
2026
May 2024
1,174 1,556 $185 $228 $874 
Total1,174 

1,556 

$185 

$228 

$874 

In May 2024, our Board of Directors authorized share repurchases of up to $2 billion (excluding applicable transaction fees and excise taxes) of our outstanding Common Stock through December 31, 2026. As of March 31, 2026 we have remaining capacity to repurchase up to $0.9 billion of Common Stock under the May 2024 authorization.

Changes in Accumulated other comprehensive loss (“AOCI”) are presented below.
Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term NaturePension and Post-Retirement BenefitsDerivative InstrumentsTotal
Balance at December 31, 2025, net of tax
$(161)$(132)$(18)$(311)
OCI, net of tax
Gains (losses) arising during the period classified into AOCI, net of tax
(4)(1)8 3 
(Gains) losses reclassified from AOCI, net of tax
— 1 (4)(3)
(4)— 4 — 
Balance at March 31, 2026, net of tax
$(166)$(132)$(14)$(312)
Note 5 - Other (Income) Expense
Quarter ended
 3/31/20263/31/2025
Foreign exchange net (gain) loss$— $(3)
Impairment and closure expense2 1 
Other(a)
(47)(5)
Other (income) expense$(45)$(8)

(a)    The quarter ended March 31, 2026, includes income of approximately $44 million related to a credit card interchange fee litigation settlement, net of legal expenses, in which we were a plaintiff. This settlement was recorded to Unallocated Other income.

11

Note 6 - Supplemental Balance Sheet Information

Accounts and Notes Receivable, net

The Company’s receivables are primarily generated from ongoing business relationships with our franchisees as a result of franchise and lease agreements. Trade receivables consisting of royalties from franchisees are generally due within 30 days of the period in which the corresponding sales occur and are classified as Accounts and notes receivable, net in our Condensed Consolidated Balance Sheets. Accounts and notes receivable, net also includes receivables generated from advertising cooperatives that we consolidate.
3/31/202612/31/2025
Accounts and notes receivable, gross$915 $901 
Allowance for doubtful accounts(88)(60)
Accounts and notes receivable, net$828 $841 

Prepaid Expenses and Other Current Assets
3/31/202612/31/2025
Income tax receivable
$118 $114 
Restricted cash
176 192 
Prepaid expenses
143 119 
Other current assets
75 65 
Prepaid expenses and other current assets
$513 $490 

Property, Plant and Equipment, net
3/31/202612/31/2025
Property, plant and equipment, gross$3,139 $3,091 
Accumulated depreciation and amortization(1,517)(1,485)
Property, plant and equipment, net$1,622 $1,605 


Other Assets3/31/202612/31/2025
Operating lease right-of-use assets(a)
$1,231 $1,213 
Franchise incentives216 209 
Other292 286 
Other assets$1,738 $1,708 

(a)    Non-current operating lease liabilities of $1,190 million and $1,174 million as of March 31, 2026 and December 31, 2025, respectively, are included in Other liabilities and deferred credits in our Condensed Consolidated Balance Sheets.

Reconciliation of Cash and Cash Equivalents for Condensed Consolidated Statements of Cash Flows
3/31/202612/31/2025
Cash and cash equivalents as presented in Condensed Consolidated Balance Sheets$689 $709 
Restricted cash included in Prepaid expenses and other current assets(a)
176 192 
Restricted cash and restricted cash equivalents included in Other assets(b)
22 23 
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents as presented in Condensed Consolidated Statements of Cash Flows$889 $923 

(a)    Restricted cash within Prepaid expenses and other current assets reflects the cash related to advertising cooperatives which we consolidate that can only be used to settle obligations of the respective cooperatives and cash held in reserve for Taco Bell Securitization interest payments.
12


(b)    Primarily trust accounts related to our self-insurance program.

Note 7 - Income Taxes
 Quarter ended
 20262025
Income tax provision
$84 $176 
Effective tax rate16.2 %41.0 %

Our first quarter 2026 effective tax rate was impacted by:

•Favorable impacts from newly effective provisions of the One Big Beautiful Bill Act;
•The continuation of our internal reorganization to consolidate our Pizza Hut legal entities and assets into two isolated ownership structures by aligning the legal ownership, simplifying the organizational footprint and consolidating the Pizza Hut domestic and international businesses. As a result, we recorded a net tax benefit of $22 million primarily resulting from recording a deferred tax asset associated with a step-up in amortizable tax basis in intellectual property rights that were transferred to international subsidiaries;
•A $16 million deferred tax benefit associated with releasing valuation allowances against deferred tax assets in certain foreign jurisdictions; and
•A $13 million unfavorable adjustment to tax expense associated with our decision to exit Russia in 2022.

Our first quarter 2025 effective tax rate was unfavorably impacted by $92 million in tax expense related to establishing a reserve associated with a Mexican subsidiary's ability to utilize certain losses to offset recapture gains.

Note 8 - Revenue Recognition

Disaggregation of Total Revenues

The following tables disaggregate revenue by Concept, for our two most significant markets based on Operating Profit and for all other markets. We believe this disaggregation best reflects the extent to which the nature, amount, timing and uncertainty of our revenues and cash flows are impacted by economic factors.
Quarter ended 3/31/2026
KFC DivisionTaco Bell DivisionPizza Hut Division
Habit Burger & Grill Division
Total
U.S.
Company sales$26 $368 $13 $126 $532 
Franchise revenues42 226 56 2 327 
Property revenues3 8 1 1 13 
Franchise contributions for advertising and other services11 170 65 1 248 
China
Franchise revenues76 — 19 — 96 
Other
Company sales230 3 19 — 252 
Franchise revenues327 17 65 — 409 
Property revenues12 — — — 12 
Franchise contributions for advertising and other services151 4 14 — 170 
$879 $797 $253 $130 $2,059 

13

Quarter ended 3/31/2025
KFC DivisionTaco Bell DivisionPizza Hut Division
Habit Burger & Grill Division
Total
U.S.
Company sales$23 $261 $3 $125 $412 
Franchise revenues42 211 63 2 318 
Property revenues3 9 1 1 14 
Franchise contributions for advertising and other services9 157 69 1 236 
China
Franchise revenues69 — 17 — 86 
Other
Company sales193 2 — — 195 
Franchise revenues283 14 61 — 358 
Property revenues10 — — — 10 
Franchise contributions for advertising and other services140 3 16 — 159 
$773 $657 $231 $128 $1,788 
(a)
(a)    Does not include a charge of $1 million to Unallocated Franchise revenues during the quarter ended March 31, 2025.
Contract Liabilities

Our contract liabilities are comprised of unamortized upfront fees received from franchisees and are presented within Accounts payable and other current liabilities and Other liabilities and deferred credits in our Condensed Consolidated Balance Sheets. A summary of significant changes to the contract liability balance during 2026 is presented below.

Deferred Franchise Fees
Balance at December 31, 2025
$443 
Revenue recognized that was included in unamortized upfront fees received from franchisees at the beginning of the period(21)
Increase for upfront fees associated with contracts that became effective during the period, net of amounts recognized as revenue during the period14 
Other(a)
(1)
Balance at March 31, 2026
$434 

(a)    Primarily includes the impact of foreign currency translation.

We expect to recognize contract liabilities as revenue over the remaining term of the associated franchise agreement as follows:

Less than 1 year$74 
1 - 2 years65 
2 - 3 years57 
3 - 4 years50 
4 - 5 years44 
Thereafter144 
Total$434 

14

Note 9 - Reportable Operating Segments

The Company's operating segments maintain separate financial information, and our Chief Operating Decision Maker (“CODM”), the Company's Chief Executive Officer, evaluates the operating segments' operating results on a regular basis in deciding how to allocate resources among the segments and in assessing segment performance. The CODM evaluates the performance of the Company's segments based on Divisional Operating Profit and is involved in determining and reviewing forecasted Divisional Operating Profit as part of the annual plan process. Throughout the year, the CODM considers forecast to actual results and variances on a monthly and quarterly basis to allocate resources for the segments' operations. The CODM also considers this information in determining how to prioritize capital allocation, including investments in restaurant development, technology and human capital, while maintaining a strong and flexible balance sheet, offering a competitive dividend and returning excess cash to shareholders. Our CODM manages assets on a consolidated basis. Accordingly, segment assets are not reported to our CODM or used in his decisions to allocate resources or assess performance of the segments. Therefore, total segment assets and long-lived assets have not been disclosed. The significant expense categories and amounts presented in the tables below align with the segment-level information that is regularly provided to the CODM.

Quarter ended 3/31/2026
KFC DivisionTaco Bell DivisionPizza Hut DivisionHabit Burger & Grill DivisionTotal
Company Sales
$255 $372 $32 $126 $785 
Franchise and property revenues
461 251 142 3 856 
Franchise contributions for advertising and other services
163 175 80 1 418 
879 797 253 130 2,059 
Less:
Company restaurant expenses229 284 31 121 665 
General and administrative expenses87 53 59 13 211 
Franchise and property expenses19 6 17 1 43 
Franchise advertising and other services expense161 173 84 1 419 
Other (income) expense— 1 (3)1 — 
Division Operating Profit (Loss)
$383 $281 $64 $(7)$721 
Unallocated amounts:(a)
Corporate and unallocated G&A expenses(b)
$(111)
Unallocated Company restaurant expenses(c)
(12)
Unallocated Refranchising gain (loss)1 
Unallocated Other income (expense)(d)
45 
Consolidated Operating Profit644 
Investment income (expense), net— 
Other pension income (expense)— 
Interest expense, net(128)
Income before income taxes$516 

15

Other Segment Disclosures
KFC DivisionTaco Bell DivisionPizza Hut DivisionHabit Burger & Grill DivisionCorporate and UnallocatedTotal
Depreciation and Amortization(e)
$13 $28 $6 $7 $6 $60 
Capital Spending25 22 2 15 12 (75)
Quarter ended 3/31/2025
KFC DivisionTaco Bell DivisionPizza Hut DivisionHabit Burger & Grill DivisionTotal
Company Sales
$216 $263 $3 $125 $607 
Franchise and property revenues
407 234 143 2 786 
Franchise contributions for advertising and other services
149 160851 395 
773 657 231 128 1,788 
Less:
Company restaurant expenses196 204 4 114 518 
General and administrative expenses80 49 55 13 197 
Franchise and property expenses16 6 11 1 34 
Franchise advertising and other services expense149 157 89 1 396 
Other (income) expense— — (2)— (2)
Division Operating Profit (Loss)
$331 $241 $74 $(1)$646 
Unallocated amounts:(a)
Corporate and unallocated G&A expenses(b)
$(105)
Unallocated Company restaurant expenses(c)
(3)
Unallocated Franchise and property revenues
(1)
Unallocated Refranchising gain (loss)5 
Unallocated Other income (expense)
6 
Consolidated Operating Profit548 
Investment income (expense), net
1 
Other pension income (expense)— 
Interest expense, net(120)
Income before income taxes$429 
Other Segment Disclosures

KFC DivisionTaco Bell DivisionPizza Hut DivisionHabit Burger & Grill DivisionCorporate and UnallocatedTotal
Depreciation and Amortization(e)
$11 $16 $4 $7 $7 $45 
Capital Spending
18 31 5 6 11 71 

16





Revenues by Country(f)
Quarter ended
20262025
United States$1,120 $980 
United Kingdom255 206 
Other684 601 
$2,059 $1,787 

(a)Amounts have not been allocated to any segment for performance reporting purposes.

(b)Corporate and unallocated G&A expenses include charges of $37 million in the quarter ended March 31, 2026, related to our Pizza Hut strategic options review, a charge of $17 million in the quarter ended March 31, 2025, related to our resource optimization program and charges of $1 million and $7 million in the quarters ended March 31, 2026 and 2025, respectively, related to our brand headquarters consolidation.

(c)Unallocated Company restaurant expenses include amortization of reacquired franchise rights.

(d)Unallocated Other income (expense) includes income of $44 million, net of legal expenses, in the quarter ended March 31, 2026, related to a credit card interchange fee litigation settlement in which we were a plaintiff.

(e)The amounts of depreciation and amortization disclosed by reportable segment are primarily included within the segment expense captions of Company restaurant expenses and G&A expenses.

(f)The United States and United Kingdom represented 10% or more of our total revenues for all periods presented.

Note 10 - Pension Benefits

We sponsor qualified and supplemental (non-qualified) noncontributory defined benefit pension plans covering certain full-time salaried and hourly U.S. employees. The most significant of these plans, the YUM Retirement Plan (the “Plan”), is funded. We fund our other U.S. plans as benefits are paid. Our two significant U.S. plans, including the Plan and a supplemental plan, were previously amended such that any salaried employee hired or rehired by YUM after September 30, 2001, is not eligible to participate in those plans. Additionally, these two plans in the U.S. are currently closed to new hourly participants.  

The components of net periodic benefit cost associated with our U.S. pension plans are as follows:
 Quarter ended
 20262025
Service cost$1 $1 
Interest cost10 11 
Expected return on plan assets(12)(13)
Amortization of net (gain) / loss1 — 
Net periodic benefit cost (income)
$— $(1)
Additional loss recognized due to settlements(a)
$— $1 

(a)Loss is a result of settlement transactions which exceeded the sum of annual service and interest costs for the applicable plan. This loss was recorded in Other pension (income) expense.

17

Note 11 - Short-term Borrowings and Long-term Debt

Short-term Borrowings3/31/202612/31/2025
Current maturities of long-term debt$1,751 $39 
Other
— 2 
1,751 41 
Less current portion of debt issuance costs and discounts(10)(3)
Short-term borrowings$1,741 $38 
Long-term Debt  
Securitization Notes$4,306 $4,306 
Subsidiary Senior Unsecured Notes750 750 
Revolving Facility350 300 
Term Loan A Facility491 494 
Term Loan B Facility1,425 1,429 
YUM Senior Unsecured Notes4,550 4,550 
Finance lease obligations146 148 
$12,018 $11,976 
Less long-term portion of debt issuance costs and discounts(56)(66)
Less current maturities of long-term debt(1,751)(39)
Long-term debt$10,213 $11,872 

The Term Loan A Facility and the Revolving Facility will mature on the earliest of (i) April 26, 2029, (ii) the date that is 91 days prior to the March 15, 2028 maturity of the existing Term Loan B Facility if more than $250 million of such Term Loan B remains outstanding as of such date or (iii) the date that is 91 days prior to the June 1, 2027 maturity of the existing Subsidiary Senior Unsecured Notes if more than $250 million of such Subsidiary Senior Unsecured Notes remain outstanding as of such date. Given the $750 million in Subsidiary Senior Unsecured Notes outstanding at March 31, 2026, the maturity date of the Term Loan A Facility and Revolving Facility will occur less than 12 months from the balance sheet date of these Condensed Consolidated Financial Statements if the Company has not paid nor refinanced at least $500 million of the Subsidiary Senior Unsecured Notes 91 days prior to June 1, 2027. As such, the outstanding borrowings of the Term Loan A Facility and the Revolving Facility have been classified as Short-term borrowings in the Condensed Consolidated Balance Sheets as of March 31, 2026.

Details of our Short-term borrowings and Long-term debt as of December 31, 2025 can be found within our 2025 Form 10-K.

Cash paid for interest during the quarters ended March 31, 2026 and 2025, was $107 million and $102 million, respectively.

Note 12 - Derivative Instruments

We use derivative instruments to manage certain of our market risks related to fluctuations in foreign currency exchange rates, interest rates and deferred compensation liabilities. As a result of the use of derivative instruments, the Company is exposed to risk that the counterparties will fail to meet their contractual obligations. To mitigate the counterparty credit risk, we only enter into contracts with major financial institutions carefully selected based upon their credit ratings and other factors, and continually assess the creditworthiness of counterparties. At March 31, 2026, all of the counterparties to our derivative instruments had investment grade ratings according to the three major ratings agencies. To date, all counterparties have performed in accordance with their contractual obligations.

Foreign Currency Contracts

We utilized foreign currency forward contracts with a U.S. dollar notional amount of approximately $75 million to reduce the foreign currency exposure relating to our net investment in certain Indian rupee functional currency operations during the quarter ended March 31, 2026. These forward contracts are designated as a net investment hedge and the related mark-to-market adjustments are being recorded as a cumulative translation adjustment within AOCI. These foreign currency forward contracts did not have a material impact on our Condensed Consolidated Financial Statements for the quarter ended March 31, 2026.
18


Interest Rate Swaps

We have utilized interest rate swaps to fix the interest rate on $1.5 billion of borrowings, primarily under our Term Loan B Facility, through March 2028. The interest rate swaps have been designated as a cash flow hedge and to date have been highly effective. The current rate on the swapped portion of the Term Loan B Facility (excluding debt issuance costs) is 5.09%.

Gains or losses on the interest rate swaps are reported as a component of AOCI and reclassified into Interest expense, net in our Condensed Consolidated Statements of Income in the same period or periods during which the related hedged interest payments affect earnings.

Gains and losses on these interest rate swaps recognized in OCI and reclassifications from AOCI into Net Income were as follows:
 Quarter ended
 Gains/(Losses) Recognized in OCI (Gains)/Losses Reclassified from AOCI into Net Income
 2026 2025 2026 2025
Interest rate swaps$10 $— $(1)$(5)
Income tax benefit/(expense)(3)— — 1 

As of March 31, 2026, the estimated net gain included in AOCI related to our interest rate swaps that will be reclassified into earnings in the next 12 months is $4 million, based on current Secured Overnight Financing (“SOFR”) interest rates.

Total Return Swaps

We have entered into total return swap derivative contracts, with the objective of reducing our exposure to market-driven changes in certain of the liabilities associated with compensation deferrals into our Executive Income Deferral (“EID”) plan. While these total return swaps represent economic hedges, we have not designated them as hedges for accounting purposes. As a result, the changes in the fair value of these derivatives are recognized immediately in earnings within General and administrative expenses in our Condensed Consolidated Statements of Income largely offsetting the changes in the associated EID liabilities. The fair value associated with the total return swaps as of both March 31, 2026 and December 31, 2025, was not significant.

See Note 13 for the fair value of our derivative assets and liabilities.

Note 13 - Fair Value Disclosures

As of March 31, 2026, the carrying values of cash and cash equivalents, restricted cash, accounts receivable, short-term borrowings, accounts payable and borrowings under our Revolving Facility approximated their fair values because of the short-term nature of these instruments. The fair value of our notes receivable, net of allowances, and lease guarantees, less reserves for expected losses, approximates their carrying value. The following table presents the carrying value and estimated fair value of the Company’s debt obligations:

3/31/202612/31/2025
Carrying ValueFair Value (Level 2)Carrying ValueFair Value (Level 2)
Securitization Notes(a)
$4,306 $4,151 $4,306 $4,160 
Subsidiary Senior Unsecured Notes(b)
750 762 750 753 
Term Loan A Facility(b)
491 489 494 492 
Term Loan B Facility(b)
1,425 1,434 1,429 1,440 
YUM Senior Unsecured Notes(b)
4,550 4,478 4,550 4,581 
19

(a)    We estimated the fair value of the Securitization Notes using market quotes and calculations. The markets in which the Securitization Notes trade are not considered active markets.

(b)    We estimated the fair value of the YUM and Subsidiary Senior Unsecured Notes, Term Loan A Facility and Term Loan B Facility using market quotes and calculations based on market rates.

Recurring Fair Value Measurements

The fair values of the assets and liabilities of the Company that are required to be measured at fair value on a recurring basis (see Note 12 for discussion regarding derivative instruments) were not significant at March 31, 2026 or December 31, 2025.

Note 14 - Contingencies

Internal Revenue Service Proposed Adjustment

Following an Internal Revenue Service (“IRS”) audit for the 2013 to 2015 fiscal years, we were unable to resolve underpayments of tax that the IRS proposed resulting from that audit using the IRS Appeals process, a pre-litigation, alternative dispute resolution tool. The IRS asserts an underpayment of tax of approximately $2.1 billion plus $418 million in penalties for fiscal year 2014. Both amounts are subject to interest, with interest of approximately $2.2 billion accruing through March 31, 2026. Those amounts relate primarily to a series of reorganizations that we undertook in 2014 in connection with the business realignment of our corporate and management reporting structure along brand lines. The IRS asserts that these transactions resulted in taxable distributions of approximately $6.0 billion.

We disagree with the IRS’s position and are contesting that position vigorously. On June 4, 2025, we filed a petition in the United States Tax Court disputing the IRS's position as set forth in a Notice of Deficiency. The IRS filed its Answer on September 12, 2025. The litigation is ongoing.

The Company does not expect resolution of this matter within twelve months and cannot predict with certainty the timing of such resolution. The Company believes that it is more likely than not the Company’s tax position will be sustained; therefore, no reserve is recorded with respect to this matter.

An unfavorable resolution of this matter could have a material, adverse impact on our Condensed Consolidated Financial Statements in future periods.

Lease Guarantees

As a result of having assigned our interest in obligations under real estate leases as a condition to the refranchising of certain Company-owned restaurants, and guaranteeing certain other leases, we are frequently secondarily liable on lease agreements.  These leases have varying terms, the latest of which expires in 2065.  As of March 31, 2026, the potential amount of undiscounted payments we could be required to make in the event of non-payment by the primary lessee was approximately $325 million. The present value of these potential payments discounted at our pre-tax cost of debt at March 31, 2026, was approximately $275 million.  Our franchisees are the primary lessees under the vast majority of these leases.  We generally have cross-default provisions with these franchisees that would put them in default of their franchise agreement in the event of non-payment under the lease.  We believe these cross-default provisions significantly reduce the risk that we will be required to make payments under these leases, although such risk may not be reduced in the context of a bankruptcy or other similar restructuring of a large franchisee or group of franchisees.  The liability recorded for our expected losses under such leases as of March 31, 2026, was not material.

Legal Proceedings

We are subject to various claims and contingencies related to lawsuits, real estate, environmental and other matters arising in the normal course of business. An accrual is recorded with respect to claims or contingencies for which a loss is determined to be probable and reasonably estimable.

20

India Regulatory Matter

Yum! Restaurants India Private Limited (“YRIPL”), a YUM subsidiary that operates KFC and Pizza Hut restaurants in India, is the subject of a regulatory enforcement action in India (the “Action”). The Action alleges, among other things, that KFC International Holdings, Inc. and Pizza Hut International failed to satisfy certain conditions imposed by the Secretariat for Industrial Approval in 1993 and 1994 when those companies were granted permission for foreign investment and operation in India. The conditions at issue include an alleged minimum investment commitment and store build requirements as well as limitations on the remittance of fees outside of India.

The Action originated with a complaint and show cause notice filed in 2009 against YRIPL by the Deputy Director of the Directorate of Enforcement (“DOE”) of the Indian Ministry of Finance following an income tax audit for the years 2002 and 2003. The matter was argued at various hearings in 2015, but no order was issued. Following a change in the incumbent official holding the position of Special Director of DOE (the “Special Director”), the matter resumed in 2018 and several additional hearings were conducted.

On January 29, 2020, the Special Director issued an order imposing a penalty on YRIPL and certain former directors of approximately Indian Rupee 11 billion, or approximately $120 million. Of this amount, $115 million relates to the alleged failure to invest a total of $80 million in India within an initial seven-year period. We have been advised by external counsel that the order is flawed and have filed a writ petition with the Delhi High Court, which granted an interim stay of the penalty order on March 5, 2020. In November 2022, YRIPL was notified that an administrative tribunal bench had been constituted to hear an appeal by DOE of certain findings of the January 2020 order, including claims that certain charges had been wrongly dropped and that an insufficient amount of penalty had been imposed. Hearings before an administrative tribunal as well as the Delhi High Court have been continued and rescheduled, and the stay order remains in effect. We deny liability and intend to continue vigorously defending this matter. We do not consider the risk of any significant loss arising from this order to be probable.

Other Matters

We are currently engaged in various other legal proceedings and have certain unresolved claims pending, the ultimate liability for which, if any, cannot be determined at this time. However, based upon consultation with legal counsel, we are of the opinion that such proceedings and claims are not expected to have a material adverse effect, individually or in the aggregate, on our Condensed Consolidated Financial Statements.
21

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction and Overview

The following Management's Discussion and Analysis (“MD&A”), should be read in conjunction with the unaudited Condensed Consolidated Financial Statements (“Financial Statements”), the Forward-Looking Statements and our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, (“2025 Form 10-K”). All Note references herein refer to the Notes to the Financial Statements.  Tabular amounts are displayed in millions of U.S. dollars except per share and unit count amounts, or as otherwise specifically identified.

Yum! Brands, Inc. and its Subsidiaries (collectively referred to herein as the “Company,” “YUM,” “we,” “us” or “our”) franchise or operate a system of over 63,000 restaurants in 155 countries and territories, primarily under the concepts of KFC, Taco Bell, Pizza Hut and The Habit Burger & Grill (collectively, the “Concepts”).  The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-inspired and pizza categories, respectively. The Habit Burger & Grill, is a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. Of the over 63,000 restaurants, 97% are operated by franchisees.

YUM currently consists of four operating segments:

•The KFC Division which includes our worldwide operations of the KFC concept
•The Taco Bell Division which includes our worldwide operations of the Taco Bell concept
•The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept
•The Habit Burger & Grill Division which includes our worldwide operations of the Habit Burger & Grill concept

Through our Recipe for Good Growth, our mission is to grow iconic restaurant brands globally that are loved, trusted and connected:

Loved: We grow by delighting customers with craveable food and a distinctive experience.

Trusted: We operate responsibly with consistency and efficiency in our restaurants, across our system and in our communities. This includes a commitment to our priorities for social responsibility, risk management and sustainable stewardship of resources.

Connected: We use our teamwork, technology and global scale to serve every customer, everywhere, anytime.

In 2026 and beyond, we intend to drive the next chapter of growth for YUM by Raising the B.A.R. through three clear priorities that reflect bold aspirations and a commitment to industry-leading performance:

•Battle for the future consumer by staying relentlessly focused on their needs and wants.
•Accelerate restaurant unit economics for our franchisees and maximize performance of every restaurant, serving as a catalyst for new unit development and keeping our franchise system healthy.
•Reach the full potential of Byte by Yum! by effectively operating, innovating and expanding our connected platform built by restaurant operators for restaurant operators to unlock its full potential for our franchise partners and our business.

Key to our success fueling brand performance and franchise success is our unrivaled culture and talent and leading with smart, heart and courage.

We intend to drive long-term growth and shareholder returns primarily through consistent same-store sales growth and new unit development across all of our Concepts. We intend to support this growth and development through a capital and operating structure that:

•Invests capital in a manner consistent with an asset light, franchisor model;

•Allocates G&A in an efficient manner that provides leverage to operating profit growth while at the same time opportunistically investing in strategic growth initiatives;

•Targets a consolidated net leverage ratio that balances shareholder returns, cost of capital and flexibility against various risk factors; and
22


•Maximizes shareholder return through a combination of paying a competitive dividend and returning excess cash flow through share repurchases.

We intend for this MD&A to provide the reader with information that will assist in understanding our results of operations, including performance metrics that management uses to assess the Company's performance. Throughout this MD&A, we commonly discuss the following performance metrics:

•Same-store sales growth is the estimated percentage change in system sales of all restaurants that have been open and in the YUM system for one year or more, including those temporarily closed. From time-to-time restaurants may be temporarily closed due to remodeling or image enhancement, rebuilding, natural disasters, health epidemic or pandemic, landlord disputes, boycotts, social or civil unrest or other issues. The system sales of restaurants we deem temporarily closed remain in our base for purposes of determining same-store sales growth and the restaurants remain in our unit count (see below). We believe same-store sales growth is useful to investors because our results are heavily dependent on the results of our Concepts' existing store base. Additionally, same-store sales growth is reflective of the strength of our Brands, the effectiveness of our operational and advertising initiatives and local economic and consumer trends.

•Gross unit openings reflects new openings by us and our franchisees. Net new unit growth reflects gross unit openings offset by permanent store closures, by us and our franchisees. To determine whether a restaurant meets the definition of a unit we consider whether the restaurant has operations that are ongoing and independent from another YUM unit, serves the primary product of one of our Concepts, operates under a separate franchise agreement (if operated by a franchisee) and has substantial and sustainable sales. We believe gross unit openings and net new unit growth are useful to investors because we depend on new units for a significant portion of our growth. Additionally, gross unit openings and net new unit growth are generally reflective of the economic returns to us and our franchisees from opening and operating our Concept restaurants.

•System sales and System sales excluding the impacts of foreign currency translation (“FX”) reflect the results of all restaurants regardless of ownership, including Company-owned and franchise restaurants. Sales at franchise restaurants typically generate ongoing franchise and license fees for the Company at a rate of 3% to 6% of sales. Increasingly, customers are paying a fee to a third party to deliver or facilitate the ordering of our Concepts' products. We also include in System sales any portion of the amount customers pay these third parties for which the third party is obligated to pay us a license fee as a percentage of such amount. Franchise restaurant sales and fees paid by customers to third parties to deliver or facilitate the ordering of our Concepts' products are not included in Company sales on the Condensed Consolidated Statements of Income; however, any resulting franchise and license fees we receive are included in the Company's revenues. We believe System sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates our primary revenue drivers, Company and franchise same-store sales as well as net new unit growth.

In addition to the results provided in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”), the Company provides the following non-GAAP measurements:

•Diluted Earnings Per Share excluding Special Items (as defined below);

•Effective Tax Rate excluding Special Items;

•Core Operating Profit. Core Operating Profit excludes Special Items and FX and we use Core Operating Profit for the purposes of evaluating performance internally;

•Net Income excluding Special Items;

•Company restaurant profit and Company restaurant margin as a percentage of sales (as defined below).

These non-GAAP measurements are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measurements provide additional information to investors to facilitate the comparison of past and present operations.

Special Items are not included in any of our Division segment results as the Company does not believe they are indicative of our ongoing operations due to their size and/or nature. Our chief operating decision maker does not consider the impact of Special Items when assessing segment performance.
23


Company restaurant profit is defined as Company sales less Company restaurant expenses, both of which appear on the face of our Condensed Consolidated Statements of Income. Company restaurant expenses include those expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, cost of restaurant-level labor, rent, depreciation and amortization of restaurant-level assets and advertising expenses incurred by and on behalf of that Company restaurant. Company restaurant margin as a percentage of sales (“Company restaurant margin %”) is defined as Company restaurant profit divided by Company sales. We use Company restaurant profit for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe Company restaurant profit provides useful information to investors as to the profitability of our Company-owned restaurants. In calculating Company restaurant profit, the Company excludes revenues and expenses directly associated with our franchise operations as well as non-restaurant-level costs included in General and administrative expenses, some of which may support Company-owned restaurant operations. The Company also excludes restaurant-level asset impairment and closures expenses, which have historically not been significant, from the determination of Company restaurant profit as such expenses are not believed to be indicative of ongoing operations. Further, while we generally include depreciation and amortization of restaurant-level assets within Divisional Company restaurant expenses used to derive Divisional Company restaurant profit, we record amortization of reacquired franchise rights arising from acquisition accounting within Corporate and unallocated Company restaurant expenses as such amortization is not believed to be indicative of ongoing Divisional results as well as to enhance comparability of acquired stores' margins with those of existing restaurants. Company restaurant profit and Company restaurant margin % as presented may not be comparable to other similarly titled measures of other companies in the industry.

Certain performance metrics and non-GAAP measurements are presented excluding the impact of FX. These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the FX impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.

Results of Operations

Summary  

All comparisons within this summary are versus the same period a year ago.

Quarterly Financial Highlights:
% Change
System Sales, ex FXSame-Store SalesUnitsGAAP Operating ProfitCore Operating Profit
KFC Division+6+2+7+16+9
Taco Bell Division+10+8+3+16+16
Pizza Hut DivisionEvenEven+1(14)(16)
Worldwide
+6+3+5+17+6
Additionally:

•Foreign currency translation positively impacted Divisional Operating Profit by $25 million for the quarter ended March 31, 2026.
•Gross unit openings for the quarter were 1,030 units resulting in 400 net new units.

First Quarter
20262025% Change
GAAP EPS$1.55$0.90+72
Less Special Items EPS
$0.05$(0.40)NM
EPS Excluding Special Items$1.50$1.30+15

24

Worldwide

GAAP Results
 Quarter ended
 20262025% B/(W)
Company sales$785 $607 29 
Franchise and property revenues856 785 9 
Franchise contributions for advertising and other services418 395 6 
Total revenues2,059 1,787 15 
Company restaurant expenses677 520 (30)
G&A expenses322 302 (7)
Franchise and property expenses43 34 (28)
Franchise advertising and other services expense419 396 (6)
Refranchising (gain) loss(1)(5)(79)
Other (income) expense(45)(8)NM
Total costs and expenses, net1,415 1,239 (14)
Operating Profit644 548 17 
Investment (income) expense, net— (1)(94)
Other pension (income) expense— — (7)
Interest expense, net128 120 (7)
Income before income taxes516 429 20 
Income tax provision
84 176 52 
Net Income$432 $253 71 
Diluted EPS(a)
$1.55 $0.90 72 
Effective tax rate16.2 %41.0 %24.8 ppts.
(a)See Note 3 for the number of shares used in this calculation.


Performance Metrics
Unit Count3/31/20263/31/2025% Increase (Decrease)
Franchise62,053 59,581 4 
Company-owned1,632 1,305 25 
Total63,685 60,886 5 

Quarter ended
 20262025
Same-store Sales Growth (Decline) %3 3 
System Sales Growth %, reported
10 3 
System Sales Growth %, excluding FX
6 5 

25

Our system sales breakdown by Company and franchise sales was as follows:
Quarter ended
20262025
Consolidated
Company sales(a)
$785 $607 
Franchise sales16,218 14,896 
System sales17,003 15,503 
Negative (Positive) Foreign Currency Impact(b)
(586)N/A
System sales, excluding FX$16,417 $15,503 
KFC Division
Company sales(a)
$255 $216 
Franchise sales9,073 8,124 
System sales9,328 8,340 
Negative (Positive) Foreign Currency Impact(b)
(476)N/A
System sales, excluding FX$8,852 $8,340 
Taco Bell Division
Company sales(a)
$372 $263 
Franchise sales4,022 3,717 
System sales4,394 3,980 
Negative (Positive) Foreign Currency Impact(b)
(16)N/A
System sales, excluding FX$4,378 $3,980 
Pizza Hut Division
Company sales(a)
$32 $3 
Franchise sales3,083 3,025 
System sales3,114 3,028 
Negative (Positive) Foreign Currency Impact(b)
(94)N/A
System sales, excluding FX$3,020 $3,028 
Habit Burger & Grill Division
Company sales(a)
$126 $125 
Franchise sales40 30 
System sales166 155 
Negative (Positive) Foreign Currency Impact(b)
— N/A
System sales, excluding FX$166 $155 

(a)Company sales represents sales from our Company-operated stores as presented on our Condensed Consolidated Statements of Income.

(b)    The foreign currency impact on System sales is presented in relation only to the immediately preceding year presented. When determining applicable System sales growth percentages, the System sales excluding FX for the current year should be compared to the prior year System sales.

Non-GAAP Items
Non-GAAP Items, along with the reconciliation to the most comparable GAAP financial measure, as presented below.
Quarter ended
20262025
Core Operating Profit Growth %
6 8 
Diluted EPS Growth %, excluding Special Items
15 13 
Effective Tax Rate excluding Special Items18.0 %19.8 %
Company restaurant profit$107 $87 
Company restaurant margin % 13.7 %14.3 %
26

Reconciliation of GAAP Operating Profit to Core Operating ProfitQuarter ended
20262025
Consolidated
GAAP Operating Profit $644 $548 
Detail of Special Items:
Charges associated with Pizza Hut Strategic Options Review(a)
37 — 
Charges associated with Brand HQ Consolidation(b)
1 7 
Charges associated with Resource Optimization
— 17 
Income from Litigation Settlement(c)
(44)— 
Other Special Items (Income) Expense
— 2 
Special Items (Benefit) Expense - Operating Profit
(6)27 
Positive Foreign Currency Impact on Division Operating Profit
(25)N/A
Core Operating Profit$612 $575 
Special Items as shown above were recorded to the financial statement line items identified below.
Condensed Consolidated Statements of Income Line Item
Decrease in Franchise and property revenues
$— $1 
Increase in General and administrative expenses
38 28 
Increase in Other (income) expense
(44)(2)
Special Items (Benefit) Expense - Operating Profit
$(6)$27 
KFC Division
GAAP Operating Profit$383 $331 
Negative (Positive) Foreign Currency Impact
(23)N/A
Core Operating Profit$361 $331 
Taco Bell Division
GAAP Operating Profit$281 $241 
Negative (Positive) Foreign Currency Impact
(1)N/A
Core Operating Profit$280 $241 
Pizza Hut Division
GAAP Operating Profit$64 $74 
Negative (Positive) Foreign Currency Impact
(2)N/A
Core Operating Profit$62 $74 
Habit Burger & Grill Division
GAAP Operating Profit (Loss)
$(7)$(1)
Negative (Positive) Foreign Currency Impact
— N/A
Core Operating Profit (Loss)$(7)$(1)
Reconciliation of GAAP Net Income to Net Income excluding Special Items
GAAP Net Income$432 $253 
Special Items (Benefit) Expense - Operating Profit
(6)27 
Special Items Tax (Benefit) Expense(d)
(8)86 
Net Income excluding Special Items$418 $366 
27

Quarter ended
20262025
Reconciliation of Diluted EPS to Diluted EPS excluding Special Items
Diluted EPS$1.55 $0.90 
Less Special Items Diluted EPS0.05 (0.40)
Diluted EPS excluding Special Items$1.50 $1.30 
Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items
GAAP Effective Tax Rate16.2 %41.0 %
Impact on Tax Rate as a result of Special Items(1.8)%21.2 %
Effective Tax Rate excluding Special Items18.0 %19.8 %

(a)    In 2025, we began a review of strategic options for the Pizza Hut brand. During the quarter ended March 31, 2026, we incurred charges of $37 million to Corporate and unallocated General and administrative expenses, which primarily included third-party advising costs associated with this strategic options review. Given the significance of the costs expected to be incurred through the course of this strategic options review, we have reflected such amounts as Special Items.

(b)In 2025, we decided to designate two brand headquarters in the U.S., located in Plano, Texas and Irvine, California, to foster greater collaboration among brands and employees. This involved relocating the KFC U.S. corporate office to the KFC Global headquarters and requiring the majority of our U.S.-based remote employees to relocate to an appropriate headquarter office. We also decided to relocate our YUM Corporate headquarters to a new space in Louisville, Kentucky and accordingly, donated our existing space. Costs incurred to date primarily include severance for the employees who chose not to relocate and consultant fees. As a result of these decisions, we recorded charges of approximately $1 million and $7 million during the quarters ended March 31, 2026 and 2025, respectively, to Corporate and unallocated General and administrative expenses. Due to their scope and size, these charges have been reflected as Special Items.

(c)During the quarter ended March 31, 2026, we received approximately $44 million, net of legal expenses, related to a credit card interchange fee litigation settlement in which we were a plaintiff. This settlement was recorded to Unallocated Other (income) expense. Due to the nature and size of the settlement, including the years to which the litigation related, it has been reflected as a Special Item within Other income.

(d)The below table includes the detail of Special Items Tax (Benefit) Expense:

Quarter ended
3/31/20263/31/2025
Tax Expense (Benefit) on Special Items (Benefit) Expense - Operating Profit
$2 $(7)
Tax Expense - Foreign tax reserve
— 92 
Tax (Benefit) - Intra-entity transfers and valuations of intellectual property
(22)— 
Tax Expense - Other Income tax impacts recorded as Special
13 — 
Special Items Tax (Benefit) Expense
$(8)$86 

Tax Expense (Benefit) on Special Items (Benefit) Expense - Operating Profit was determined by assessing the tax impact of each individual component within Special Items based upon the nature of the item and jurisdictional tax law.

Tax (Benefit) - Intra-entity transfers and valuations of intellectual property in the quarter ended March 31, 2026, reflects the tax benefit resulting from an internal reorganization to consolidate our Pizza Hut legal entities and assets into two isolated ownership structures by aligning the legal ownership, simplifying the organizational footprint and consolidating the Pizza Hut domestic and international business. As part of this reorganization, certain Pizza Hut intellectual property ("IP") rights from subsidiaries in the U.S. were transferred to international subsidiaries resulting in a step-up in amortizable tax basis of those IP rights. This reorganization began in the fourth quarter of 2025 in connection with our Pizza Hut strategic options review.

Tax Expense - Other Income tax impacts recorded as Special in the quarter ended March 31, 2026, includes a $13 million adjustment to tax expense associated with our decision to exit Russia. Consistent with previously recorded impacts associated with our decision to exit Russia, this adjustment was recorded as a Special Item.
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Tax Expense - Foreign tax reserve in the quarter ended March 31, 2025, is associated with a reserve, and the related ongoing foreign exchange and inflationary adjustments, associated with a change in management's judgment around a Mexican subsidiary's ability to utilize losses to offset recapture gains triggered by a historical tax deconsolidation in Mexico. This expense was reflected as a Special Item due to its size and the time elapsed since the years to which the reserve relates.

Reconciliation of GAAP Operating Profit to Company Restaurant Profit
Quarter ended 3/31/2026
KFC DivisionTaco Bell DivisionPizza Hut Division
Habit Burger & Grill Division
Corporate and UnallocatedConsolidated
GAAP Operating Profit (Loss)$383 $281 $64 $(7)$(77)$644 
Less:
Franchise and property revenues461 251 142 3 — 856 
Franchise contributions for advertising and other services163 175 80 1 — 418 
Add:
General and administrative expenses87 53 59 13 111 322 
Franchise and property expenses19 6 17 1 — 43 
Franchise advertising and other services expense161 173 84 1 — 419 
Refranchising (gain) loss— — — — (1)(1)
Other (income) expense— 1 (3)1 (45)(45)
Company restaurant profit (loss)
$26 $88 $1 $5 $(12)$107 
Company sales$255 $372 $32 $126 $— $785 
Company restaurant margin %10.3 %23.6 %1.8 %3.7 %N/A13.7 %
Quarter ended 3/31/2025
KFC DivisionTaco Bell DivisionPizza Hut Division
Habit Burger & Grill Division
Corporate and UnallocatedConsolidated
GAAP Operating Profit (Loss) $331 $241 $74 $(1)$(98)$548 
Less:
Franchise and property revenues407 234 143 2 (1)785 
Franchise contributions for advertising and other services149 160 85 1 — 395 
Add:
General and administrative expenses80 49 55 13 105 302 
Franchise and property expenses16 6 11 1 — 34 
Franchise advertising and other services expense149 157 89 1 — 396 
Refranchising (gain) loss— — — — (5)(5)
Other (income) expense— — (2)— (6)(8)
Company restaurant profit (loss)
$20 $59 $— $11 $(3)$87 
Company sales$216 $263 $3 $125 $— $607 
Company restaurant margin % 9.3 %22.4 %(6.1)%8.6 %N/A14.3 %


29

Items Impacting Reported Results and Reasonably Likely to Impact Future Results

The following items impacted reported results in 2026 and/or 2025 and/or are reasonably likely to impact future results. See also the Detail of Special Items in this MD&A for other items impacting results in 2026 or 2025.

Pizza Hut Strategic Options Review

In 2025, we began a review of strategic options for the Pizza Hut brand. The objective of the review is to create value for YUM, Pizza Hut and its franchise partners by determining the optimal approach to best capitalize on Pizza Hut's structural advantages — strong brand equity, experienced franchise partners and meaningful scale — in the highly fragmented pizza market. We currently intend to complete this strategic options review in 2026, and there can be no assurance this review will result in any specific outcome or transaction.

In January 2026, we launched the Hut Forward program that represents a bridge to a longer-term acceleration of the Pizza Hut brand. This program includes alignment on a vibrant marketing plan, modernization of certain technology and franchise agreements and a YUM contribution to marketing support, along with the approval of some targeted closures of underperforming units. The YUM contribution for incremental marketing in the quarter ended March 31, 2026, is being recognized as advertising expense throughout 2026.

Additionally, we incurred certain other costs during the quarter ended March 31, 2026 associated with this strategic review (see Detail of Special Items section of this MD&A) and expect to incur further costs of a currently indeterminate amount as this strategic options review progresses.

KFC Division

The KFC Division has 34,332 units, 90% of which are located outside the U.S. Additionally, 98% of the KFC Division units were operated by franchisees as of March 31, 2026.

Quarter ended
% B/(W)
20262025ReportedEx FX
System Sales $9,328 $8,340 12 6 
Same-Store Sales Growth (Decline) %2 2 N/AN/A
Company sales$255 $216 18 10 
Franchise and property revenues461 407 13 7 
Franchise contributions for advertising and other services163 149 9 1 
Total revenues$879 $773 14 7 
Company restaurant profit$26 $20 30 18 
Company restaurant margin %10.3 %9.3 %1.0 ppts.0.8 ppts.
G&A expenses$87 $80 (8)(4)
Franchise and property expenses19 16 (19)(12)
Franchise advertising and other services expense161 149 (8)— 
Operating Profit$383 $331 16 9 
% Increase (Decrease)
Unit Count3/31/20263/31/2025
Franchise33,815 31,524 7 
Company-owned517 474 9 
Total34,332 31,998 7 

Company sales and Company restaurant margin %

30

The quarterly increase in Company sales, excluding the impacts of foreign currency translation, was driven by Company same-store sales growth of 5%, acquisitions of restaurants from franchisees and unit growth.

The quarterly increase in Company restaurant margin percentage was driven by Company same-store sales growth, partially offset by higher labor and other restaurant operating costs.

Franchise and property revenues

The quarterly increase in Franchise and property revenues, excluding the impacts of foreign currency translation, was driven by unit growth and franchise same-store sales growth of 2%.

G&A

The quarterly increase in G&A, excluding the impacts of foreign currency translation, was driven by higher headcount.

Operating Profit

The quarterly increase in Operating Profit, excluding the impacts of foreign currency translation, was driven by same-store sales growth and unit growth.

Taco Bell Division

The Taco Bell Division has 9,021 units, 86% of which are in the U.S. The Company owned 9% of the Taco Bell Division units in the U.S. as of March 31, 2026.

Quarter ended
% B/(W)
20262025ReportedEx FX
System Sales $4,394 $3,980 10 10 
Same-Store Sales Growth %8 9 N/AN/A
Company sales$372 $263 41 41 
Franchise and property revenues251 234 7 7 
Franchise contributions for advertising and other services175 160 9 9 
Total revenues$797 $657 21 21 
Company restaurant profit$88 $59 49 49 
Company restaurant margin %23.6 %22.4 %1.2 
ppts.
1.3 
ppts.
G&A expenses$53 $49 (8)(8)
Franchise and property expenses6 6 Even1 
Franchise advertising and other services expense173 157 (10)(10)
Operating Profit$281 $241 1616

% Increase (Decrease)
Unit Count3/31/20263/31/2025
Franchise8,346 8,218 2 
Company-owned675 505 34 
Total9,021 8,723 3 

Company sales and Company restaurant margin %

The quarterly increase in Company sales was driven by acquisitions of restaurants from franchisees, company same-store sales growth of 6%, and unit growth.
31


The quarterly increase in Company restaurant margin percentage was driven by same store sales growth and the margin percentages of restaurants acquired from franchisees, partially offset by higher labor and other restaurant operating costs and commodity inflation (primarily beef).

Franchise and property revenues

The quarterly increase in Franchise and property revenues was driven by franchise same-store sales growth of 8% and unit growth partially offset by acquisitions.

G&A

The quarterly increase in G&A was driven by higher professional and legal fees and higher headcount.

Operating Profit

The quarterly increase in Operating Profit was driven by same-store sales growth, the impact of restaurants acquired from franchisees and unit growth, partially offset by higher restaurant operating costs and higher G&A.

Pizza Hut Division

The Pizza Hut Division has 19,944 units, 69% of which are located outside the U.S. The Pizza Hut Division uses multiple distribution channels including delivery, dine-in and express (e.g. airports) and includes units operating under both the Pizza Hut and Telepizza brands. Additionally, over 99% of the Pizza Hut Division units were operated by franchisees as of March 31, 2026.

Quarter ended
% B/(W)
20262025ReportedEx FX
System Sales $3,114 $3,028 3 Even
Same-Store Sales Growth (Decline) %Even(2)N/AN/A
Company sales$32 $3 825 789 
Franchise and property revenues142 143 (1)(3)
Franchise contributions for advertising and other services80 85 (6)(6)
Total revenues$253 $231 10 7 
Company restaurant profit (loss)
$1 $— 370 350 
Company restaurant margin %1.8 %(6.1)%7.9 ppts.7.8 ppts.
G&A expenses$59 $55 (8)(6)
Franchise and property expenses17 11 (59)(56)
Franchise advertising and other services expense84 89 6 6 
Operating Profit$64 $74 (14)(16)

% Increase (Decrease)
Unit Count3/31/20263/31/2025
Franchise19,809 19,763 — 
Company-owned135 23 487 
Total19,944 19,786 1 

32

Franchise and property revenues

The quarterly decrease in Franchise and property revenues, excluding the impact of foreign currency translation, was primarily driven by the impact of our acquisitions of restaurants from franchisees. Franchise same-store sales were flat in the quarter.

G&A

The quarterly increase in G&A, excluding the impact of foreign currency translation, was driven by the impact of G&A associated with operating restaurants acquired from franchisees.

Operating Profit

The quarterly decrease in Operating Profit, excluding the impact of foreign currency translation, was driven by higher advertising costs associated with the Pizza Hut U.S. Hut Forward program and the impact of operating restaurants acquired from franchisees.

Habit Burger & Grill Division

The Habit Burger & Grill Division has 388 units, all of which are in the U.S. The Company owned 79% of the Habit Burger & Grill Division units as of March 31, 2026. 


Quarter ended
% B/(W)
20262025Reported
System Sales$166 $155 7 
Same-Store Sales Growth (Decline) %
5 (3)N/A
Total revenues$130 $128 1 
Operating Profit (Loss)$(7)$(1)(934)

Unit Count3/31/20263/31/2025% Increase (Decrease)
Franchise83 76 9 
Company-owned305 303 1 
Total388 379 2 

Corporate & Unallocated
Quarter ended
(Expense) / Income 20262025% B/(W)
Corporate and unallocated G&A$(111)$(105)(5)
Unallocated Company restaurant expenses
(12)(3)(330)
Unallocated Franchise and property revenues
— (1)NM
Unallocated Refranchising gain (loss)1 5 (79)
Unallocated Other income (expense) (See Note 5)
45 6 NM
Investment income (expense), net
— 1 (94)
Other pension income (expense)
— — (7)
Interest expense, net(128)(120)(7)
Income tax provision (See Note 7)(84)(176)52 
Effective tax rate (See Note 7)16.2 %41.0 %24.8 ppts.

33

Corporate and unallocated G&A

The quarterly increase in Corporate and Unallocated G&A expense was driven by costs associated with the Pizza Hut Strategic Options Review, partially offset by lapping costs associated with our Resource Optimization Program and Brand Headquarters Consolidation.

Unallocated Company restaurant expenses

Unallocated Company restaurant expenses include amortization of reacquired franchise rights. The quarterly increase was driven by the acquisitions of restaurants from franchisees in 2025.

Interest expense, net

The quarterly increase in Interest expense, net was driven by higher outstanding borrowings.

Consolidated Cash Flows

Net cash provided by operating activities was $416 million in 2026 versus $404 million in 2025. The increase was primarily driven by an increase in Operating Profit, partially offset by higher incentive compensation payments, the timing of spending on advertising and higher income tax payments.

Net cash used in investing activities was $80 million in 2026 versus net cash provided by investing activities of $2 million in 2025. The change was primarily driven by lapping maturities of short-term investments in the prior year.

Net cash used in financing activities was $375 million in 2026 versus $443 million in 2025. The change was primarily driven by lower current year share repurchases and higher current year net borrowings.

Liquidity and Capital Resources

We have historically generated substantial cash flows from our extensive franchise operations, which require a limited YUM investment, and from the operations of our Company-owned stores. Our annual operating cash flows were in excess of $2.0 billion in 2025 and we expect continued strong operating cash flows in 2026. It is our intent to use these operating cash flows to continue to invest in growing our business and pay a competitive dividend, with any remaining excess then returned to shareholders through share repurchases. Subject to market conditions, we expect to maintain our consolidated net leverage ratio at approximately 4.0x Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") over the medium term by issuing incremental debt as our business grows.

To the extent operating cash flows plus other sources of cash do not cover our anticipated cash needs, we maintain a $1.5 billion Revolving Facility under our Credit Agreement which had $350 million outstanding as of March 31, 2026. Borrowings under our Revolving Facility in 2026 had original maturities of three months or less. We believe that our ongoing cash from operations, cash on hand, which was approximately $700 million at March 31, 2026, and availability under our Revolving Facility will be sufficient to fund our cash requirements over the next twelve months.

There have been no material changes to the disclosures made in Item 7 of the Company's 2025 Form 10-K regarding our material cash requirements. Due to the ongoing significance of our debt obligations, we are providing the update below.

Debt Obligations and Interest Payments

As of March 31, 2026, approximately 96%, including the impact of interest rate swaps, of our $11.5 billion of total debt outstanding, excluding the Revolving Facility balance, finance leases and debt issuance costs and discounts, is fixed with an effective overall interest rate of approximately 4.5%. We target a capital structure which we believe provides an attractive balance between optimized interest rates, duration and flexibility with diversified sources of liquidity and maturities spread over multiple years and as mentioned above, we expect to maintain our net leverage ratio at approximately 4.0x EBITDA over the medium term by issuing incremental debt as our business grows. We have credit ratings of BB+ (Standard & Poor's)/Ba2 (Moody's).

The following table summarizes the future maturities of our outstanding long-term debt, excluding finance leases and debt issuance costs and discounts, as of March 31, 2026.

34

202620272028202920302031203220372043Total
Securitization Notes$884 $595 $590 $1,000 $737 $500 $4,306 
Credit Agreement$21 341,424 4381,916 
Revolving Facility350 350 
Subsidiary Senior Unsecured Notes750 750 
YUM Senior Unsecured Notes800 1,050 2,100 $325 $275 4,550 
Total$21 $1,668 $2,019 $1,377 $1,800 $1,787 $2,600 $325 $275 $11,872 

A Term Loan A Facility that is part of the Credit Agreement and the Revolving Facility will mature on the earliest of (i) April 26, 2029, (ii) the date that is 91 days prior to the March 15, 2028 maturity of the existing Term Loan B Facility if more than $250 million of such Term Loan B Facility remains outstanding as of such date or (iii) the date that is 91 days prior to the June 1, 2027 maturity of the existing Subsidiary Senior Unsecured Notes if more than $250 million of such Subsidiary Senior Unsecured Notes remain outstanding as of such date. Given the $750 million in Subsidiary Senior Unsecured Notes oustanding as of March 31, 2026, the maturity date of the Term Loan A Facility and the Revolving Facility will occur less than 12 months from the balance sheet date of these Condensed Consolidated Financial Statements if the Company has not paid nor refinanced at least $500 million of the Subsidiary Senior Unsecured Notes 91 days prior to June 1, 2027. As such, the outstanding borrowings of the Term Loan A Facility and the Revolving Facility as of March 31, 2026 have been classified as Short-term borrowings in the Condensed Consolidated Balance Sheets as of March 31, 2026. We expect to refinance the $750 million of the existing Subsidiary Senior Unsecured Notes before 91 days prior to June 1, 2027, and as such, the table above reflects the April 26, 2029 anticipated repayment date for the Term Loan A Facility and the Revolving Facility.

See Note 11 for details on the Securitization Notes, the Credit Agreement, Revolving Facility, Subsidiary Senior Unsecured Notes and YUM Senior Unsecured Notes.

New Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board ("FASB") issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40), which requires new financial statement disclosures disaggregating prescribed expense categories within relevant income statement expense captions. The standard is effective for the Company's Annual Report on Form 10-K for fiscal 2027, and subsequent interim periods, with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is permitted. We are currently evaluating the impact of the standard on our disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends certain aspects of the accounting for software costs, including removing software development project stages and requiring companies to capitalize costs when both 1) management authorizes or commits to funding a software project and 2) it is probable that the project will be completed and the software will be used to perform the function intended. The standard is effective for the Company in our first quarter of fiscal 2028, with early adoption permitted and can be applied on a prospective, retrospective or modified prospective basis. We are currently evaluating the impact of the standard on our condensed consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There were no material changes during the quarter ended March 31, 2026, to the disclosures made in Item 7A of the Company’s 2025 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as of the end of the period covered by this report.  Based on the evaluation, performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the “CFO”), the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by the report.

35

Changes in Internal Control

There were no changes with respect to the Company’s internal control over financial reporting or in other factors that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended March 31, 2026.

Forward-Looking Statements

Forward-looking statements can generally be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as “expect,” “expectation,” “believe,” “anticipate,” “may,” “could,” “intend,” “belief,” “plan,” “estimate,” “target,” “predict,” “likely,” “seek,” “project,” “model,” “ongoing,” “will,” “should,” “forecast,” “outlook” or similar terminology. Forward-looking statements are based on and reflect our current expectations, estimates, assumptions and/or projections, our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections will be achieved. Factors that could cause actual results and events to differ materially from our expectations and forward-looking statements include (i) the factors described in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part I, Item 2 of this report, (ii) any risks and uncertainties described in the Risk Factors included in Part II, Item 1A of this report, (iii) the factors described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Form 10-K for the year ended December 31, 2025, and (iv) the risks and uncertainties described in the Risk Factors included in Part I, Item 1A of our Form 10-K for the year ended December 31, 2025. You should not place undue reliance on forward-looking statements, which speak only as of the date hereof. We are not undertaking to update any of these statements.
36




Report of Independent Registered Public Accounting Firm


To the Shareholders and Board of Directors
Yum! Brands, Inc.:

Results of Review of Interim Financial Information

We have reviewed the condensed consolidated balance sheets of Yum! Brands, Inc. and subsidiaries (YUM) as of March 31, 2026, the related condensed consolidated statements of income, comprehensive income, cash flows, and shareholders’ deficit for the three-month periods ended March 31, 2026 and 2025, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of YUM as of December 31, 2025, and the related consolidated statements of income, comprehensive income, cash flows, and shareholders’ deficit for the year then ended (not presented herein); and in our report dated February 20, 2026, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheets as of December 31, 2025, is fairly stated, in all material respects, in relation to the consolidated balance sheets from which it has been derived.

Basis for Review Results

This consolidated interim financial information is the responsibility of YUM’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to YUM in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.


/s/ KPMG LLP

Louisville, Kentucky
May 5, 2026
37

PART II – OTHER INFORMATION AND SIGNATURES

Item 1. Legal Proceedings

Information regarding legal proceedings is incorporated by reference from Note 14 to the Company’s Condensed Consolidated Financial Statements set forth in Part I of this report.

Item 1A. Risk Factors

We face a variety of risks that are inherent in our business and our industry, including operational, legal, regulatory and product risks. Such risks could cause our actual results to differ materially from our forward-looking statements, expectations and historical trends. There have been no material changes from the risk factors disclosed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following tables provides information as of March 31, 2026, with respect to shares of Common Stock repurchased by the Company during the quarter then ended:

Fiscal PeriodsTotal number of shares purchased
(thousands)		Average price paid per shareTotal number of shares purchased as part of publicly announced plans or programs
(thousands)		Approximate dollar value of shares that may yet be purchased under the plans or programs
(millions)
1/1/26-1/31/26
402$153.95402$997
2/1/26-2/28/26
218$161.43218$962
3/1/26-3/31/26
554$158.62554$874
Total1,174$157.541,174$874

In May 2024, our Board of Directors authorized share repurchases of up to $2 billion (excluding applicable transaction fees and excise taxes) of our outstanding Common Stock through December 31, 2026. As of March 31, 2026, we have remaining capacity to repurchase up to $0.9 billion of Common Stock under the May 2024 authorization.

Item 5. Other Information

Securities Trading Plans

During the three months ended March 31, 2026, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408 (c) of Regulation S-K, except as follows:
38

Name/TitleType of PlanAdoption DateEnd DateAggregate Number of
Securities to be Sold		Plan Description
Tracy Skeans / Chief Operating Officer & Chief People & Culture Officer
Rule 10b5-1 trading plan
February 7, 2026December 31, 2026
6,088 (1)
Sale Shares of Common Stock
10,472 (2)
Sale of Shares of Common Stock
26,660 (3)
Exercise of Stock Appreciation Rights and Sale of Resulting Shares of Common Stock
David Russell /SVP, Finance & Corporate Controller
Rule 10b5-1 trading plan
February 12, 2026August 31, 2027
41,312(3)
Exercise of Stock Appreciation Rights and Sale of Resulting Shares of Common Stock
Aaron Powell / Chief Executive Officer, Pizza Hut Division
Rule 10b5-1 trading plan
February 17, 2026December 31, 2026
24,005 (1)
Sale of Shares of Common Stock

(1)Represents the number of shares of common stock specified in the plan.

(2)Represents the target number of common shares underlying Performance Share Units specified in the Plan. The actual number of shares received and sold following distribution will depend on the target quantity adjusted based on performance multipliers. The shares distributed may be equal to, greater than, or less than the target quantity specified in the Plan.

(3)Represents the number of shares of common stock underlying the stock appreciation rights awards specified in the plan. The actual number of shares of common stock to be received and sold following the exercise of the awards will depend upon the appreciation in the value of the awards and the number of shares withheld for any taxes.
39


Item 6. Exhibits
(a)Exhibit Index
Exhibit No.Exhibit Description
15
Letter from KPMG LLP regarding Unaudited Interim Financial Information (Acknowledgement of Independent Registered Public Accounting Firm).
10.1†
YUM! Brands Executive Income Deferral Program, Plan Document for the 409A Program, as effective January 1, 2005, and as Amended and Restated as of January 1, 2026, as attached herein.
10.2†
YUM! Brands, Inc. 2025 Long Term Incentive Plan Form of Global YUM! Non-Qualified Stock Option Agreement (2026), as attached herein.
10.3†
YUM! Brands, Inc. 2025 Long Term Incentive Plan Form of Global YUM! Stock Appreciation Rights Agreement (2026), as attached herein.
10.4†
YUM! Brands, Inc. 2025 Long Term Incentive Plan Form of Global Restricted Stock Unit Agreement (2026), as attached herein.
10.5†
YUM! Brands Inc. 2025 Long Term Incentive Plan Form of Global Performance Share Unit Agreement (2026), as attached herein.
10.6†
YUM! Brands, Inc. 2025 Long Term Incentive Plan Form of Global Restricted Stock Unit Agreement – Three Year Cliff Vesting (2026), as attached herein.
10.7†
YUM! Brands, Inc. 2025 Long Term Incentive Plan Form of Global Restricted Stock Unit Agreement – Sign on (2026), as attached herein.
10.8†
YUM! Brands, Inc. 2025 Long Term Incentive Plan Form of Global Restricted Stock Unit Agreement – CEO Award (2026), as attached herein.
10.9†
YUM! Brands Leadership Retirement Plan, Plan Document for the 409A Program, as effective January 1, 2005, and as amended and restated as of January 1, 2026, as attached herein.
10.10†
Retention Bonus Agreement dated October 26, 2025, between the Company and Aaron Powell, as attached herein.
31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
†Indicates a management contract or compensatory plan.
40

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, duly authorized officer of the registrant.


 YUM! BRANDS, INC.
 (Registrant)



Date:May 5, 2026
/s/ David Russell
  Senior Vice President, Finance and Corporate Controller
  (Principal Accounting Officer)
41

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