Fast-food company Yum! Brands (NYSE: YUM) fell short of the markets revenue expectations in Q3 CY2025, but sales rose 8.4% year on year to $1.98 billion. Its non-GAAP profit of $1.58 per share was 6.7% above analysts’ consensus estimates.

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Company Overview

Spun off as an independent company from PepsiCo, Yum! Brands (NYSE: YUM) is a multinational corporation that owns KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $8.06 billion in revenue over the past 12 months, Yum! Brands is one of the most widely recognized restaurant chains and benefits from customer loyalty, a luxury many don’t have. Its scale also gives it negotiating leverage with suppliers, enabling it to source its ingredients at a lower cost. However, its scale is a double-edged sword because it’s harder to find incremental growth when your existing restaurant banners have penetrated most of the market. To accelerate system-wide sales, Yum! Brands likely needs to optimize its pricing or lean into new chains and international expansion.

As you can see below, Yum! Brands’s 6.7% annualized revenue growth over the last six years (we compare to 2019 to normalize for COVID-19 impacts) was mediocre.

This quarter, Yum! Brands’s revenue grew by 8.4% year on year to $1.98 billion, missing Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 5.7% over the next 12 months, similar to its six-year rate. This projection is underwhelming and suggests its newer menu offerings will not catalyze better top-line performance yet. At least the company is tracking well in other measures of financial health.

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Restaurant Performance

Number of Restaurants

The number of dining locations a restaurant chain operates is a critical driver of how quickly company-level sales can grow.

Yum! Brands operated 61,639 locations in the latest quarter. It has opened new restaurants at a rapid clip over the last two years, averaging 4.5% annual growth, much faster than the broader restaurant sector. Furthermore, one dynamic making expansion more seamless is the company’s franchise model, where franchisees are primarily responsible for opening new restaurants while Yum! Brands provides support.

When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations.

Same-Store Sales

The change in a company's restaurant base only tells one side of the story. The other is the performance of its existing locations, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales is an industry measure of whether revenue is growing at those existing restaurants and is driven by customer visits (often called traffic) and the average spending per customer (ticket).

Yum! Brands’s demand within its existing dining locations has barely increased over the last two years as its same-store sales were flat. Yum! Brands should consider improving its foot traffic and efficiency before expanding its restaurant base.

In the latest quarter, Yum! Brands’s same-store sales rose 3% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.

Key Takeaways from Yum! Brands’s Q3 Results

We liked how Yum! Brands beat analysts’ EPS expectations this quarter. We were also happy its same-store sales rose and were in line with Wall Street’s estimates. On the other hand, its revenue slightly missed. The company announced that it will explore strategic options for Pizza Hut, and options include outright divestiture, selling a stake in the chain or a joint venture. Overall, this print had some key positives. The stock traded up 2.3% to $142.50 immediately following the results.

Indeed, Yum! Brands had a rock-solid quarterly earnings result, but is this stock a good investment here? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.