Yum China provides three-year financial outlook at investor day

Yum China (YUMC) hosted its investor day in Shenzhen, China. The company sets the following financial targets: 2025 full year outlook: operating margin: 10.8%-10.9%; restaurant margin: 16.2%-16.3% for Yum China, around 17.3% for KFC and around 12.7% for Pizza Hut and free cash flow per share: $2.20 to $2.30. Growth targets from 2026 to 2028, compared to the 2025 base year: same-store sales index of 100 to 102 year-over-year; mid- to high-single-digit CAGR for system sales; high-single-digit CAGR for operating profit; double-digit CAGR for diluted EPS and double-digit CAGR for free cash flow per share. Growth targets by 2028: total stores to exceed 25,000; operating margin: at least 11.5% for Yum China; restaurant margin: at least 16.7% for Yum China, at least 17.3% for KFC and at least 14.5% for Pizza Hut; average annual capital expenditure of approximately $600M to $700M from 2026 to 2028. Yum China, with a commitment for favorable capital returns to shareholders, is on track to return $1.5B each year from 2024 to 2026. Beginning in 2027, the company plans to return approximately 100% of annual free cash flow after subsidiaries’ dividend payments to non-controlling interests. This is anticipated to translate into an average annual return of approximately $900M to over $1B in 2027 and 2028, and to exceed $1B in 2028.