yum-20260630



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	June 30, 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 Carolina

13-3951308

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

1441 Gardiner Lane,

Louisville,

Kentucky

40213

(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 Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
	Common Stock, no par value	YUM	New 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 July 30, 2026, was 272,901,085 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	27

	Item 3 - Quantitative and Qualitative Disclosures About Market Risk	45

	Item 4 - Controls and Procedures	45

	Report of Independent Registered Public Accounting Firm	46

Part II.	Other Information and Signatures

	Item 1 - Legal Proceedings	47

	Item 1A - Risk Factors	47

	Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	47

	Item 5 - Other Information	48

	Item 6 - Exhibits	49

	Signatures	50

PART I - FINANCIAL INFORMATION

Item 1.Financial Statements


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions, except per share data)
	Quarter ended				Year to date
Revenues	6/30/2026		6/30/2025		6/30/2026		6/30/2025
Company sales	$	837	$	669	$	1,622	$	1,277
Franchise and property revenues	895		835		1,751		1,620
Franchise contributions for advertising and other services	438		428		856		823
Total revenues	2,169		1,933		4,228		3,720
Costs and Expenses, Net
Company restaurant expenses	700		560		1,378		1,081
General and administrative expenses	324		302		646		604
Franchise and property expenses	41		39		85		73
Franchise advertising and other services expense	444		428		863		824
Refranchising (gain) loss	(1)		(11)		(2)		(16)
Other (income) expense	6		(7)		(39)		(15)
Total costs and expenses, net	1,514		1,311		2,930		2,550
Operating Profit	655		622		1,299		1,170
Investment (income) expense, net	(6)		—		(6)		(1)
Other pension (income) expense	—		(1)		—		(1)
Interest expense, net	128		123		257		243
Income Before Income Taxes	533		499		1,049		929
Income tax (benefit) provision	(320)		125		(236)		301
Net Income	$	853	$	374	$	1,285	$	628

Basic Earnings Per Common Share	$	3.10	$	1.34	$	4.65	$	2.25

Diluted Earnings Per Common Share	$	3.08	$	1.33	$	4.62	$	2.23

Dividends Declared Per Common Share	$	0.75	$	0.71	$	1.50	$	1.42

See accompanying Notes to Condensed Consolidated Financial Statements.


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
	Quarter ended				Year to date
	6/30/2026		6/30/2025		6/30/2026		6/30/2025

Net Income	$	853	$	374	$	1,285	$	628
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	2		51		(2)		76
Reclassification of adjustments and (gains) losses into Net Income	—		—		—		—
	2		51		(2)		76
Tax (expense) benefit	—		—		—		—
	2		51		(2)		76
Changes in pension and post-retirement benefits
Unrealized gains (losses) arising during the period	—		—		—		—
Reclassification of (gains) losses into Net Income	1		—		2		2
	1		—		2		2
Tax (expense) benefit	—		—		(1)		—
	1		—		1		2
Changes in derivative instruments
Unrealized gains (losses) arising during the period	10		3		21		4
Reclassification of (gains) losses into Net Income	4		(3)		(2)		(11)
	14		—		19		(7)
Tax (expense) benefit	(4)		—		(5)		2
	10		—		14		(5)

Other comprehensive income (loss), net of tax	13		51		13		73
Comprehensive Income	$	866	$	426	$	1,298	$	701

See accompanying Notes to Condensed Consolidated Financial Statements.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
	Year to date
	6/30/2026		6/30/2025
Cash Flows – Operating Activities
Net Income	$	1,285	$	628
Depreciation and amortization	119		89
Refranchising (gain) loss	(2)		(16)
Deferred income taxes	(411)		12
Share-based compensation expense	35		37
Changes in accounts and notes receivable	16		34
Changes in prepaid expenses and other current assets	(43)		(47)
Changes in accounts payable and other current liabilities	(71)		(42)
Changes in income taxes payable	(17)		21
Other, net	12		134
Net Cash Provided by Operating Activities	923		850

Cash Flows – Investing Activities
Capital spending	(175)		(142)
Acquisitions of franchise restaurants	(5)		(98)
Proceeds from refranchising of restaurants	1		32
Maturities (purchases) of Short term investments, net	—		91
Other, net	10		(13)
Net Cash Used in Investing Activities	(169)		(130)

Cash Flows – Financing Activities
Repayments of long-term debt	(14)		(12)
Revolving credit facility, three months or less, net	375		50
Repurchase shares of Common Stock	(674)		(338)
Dividends paid on Common Stock	(413)		(395)
Other, net	(31)		(46)
Net Cash Used in Financing Activities	(757)		(741)
Effect of Exchange Rates on Cash and Cash Equivalents	(4)		31
Net (Decrease) Increase in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, including Balances Classified within Assets held for sale	(7)		11
Less: Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents Classified within Assets held for sale	(32)		—
Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	(39)		11
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period	923		807
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period	$	884	$	818





See accompanying Notes to Condensed Consolidated Financial Statements.


CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
	6/30/2026		12/31/2025
ASSETS
Current Assets
Cash and cash equivalents	$	674	$	709
Accounts and notes receivable, net	623		841
Prepaid expenses and other current assets	498		489
Assets held for sale	746		1
Total Current Assets	2,541		2,040

Property, plant and equipment, net	1,614		1,605
Goodwill	716		969
Intangible assets, net	807		909
Other assets	1,629		1,708
Deferred income taxes	1,373		965
Total Assets	$	8,682	$	8,197

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and other current liabilities	$	1,191	$	1,433
Income taxes payable	26		46
Short-term borrowings	2,813		38
Liabilities held for sale	262		—
Total Current Liabilities	4,292		1,516

Long-term debt	9,462		11,872
Other liabilities and deferred credits	2,035		2,133
Total Liabilities	15,789		15,521

Shareholders’ Deficit
Common Stock, no par value, 750 shares authorized; 273 shares issued in 2026 and 277 shares issued in 2025	—		—
Accumulated deficit	(6,809)		(7,014)
Accumulated other comprehensive loss	(298)		(311)
Total Shareholders’ Deficit	(7,107)		(7,325)
Total Liabilities and Shareholders’ Deficit	$	8,682	$	8,197

See accompanying Notes to Condensed Consolidated Financial Statements.


CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
Quarters and years to date ended June 30, 2026 and 2025
(in millions)
	Yum! Brands, Inc.
	Issued Common Stock			Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Shareholders' Deficit
	Shares	Amount
Balance at March 31, 2026	276	$	—	$	(6,971)	$	(312)	$	(7,283)
Net Income				853				853
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature						2		2
Pension and post-retirement benefit plans						1		1
Derivative instruments (net of tax impact of $4 million)						10		10
Comprehensive Income								866
Dividends declared				(206)				(206)
Repurchase of shares of Common Stock(1)	(3)	(6)		(484)				(490)
Employee share-based award exercises	—	(6)						(6)
Share-based compensation events		12						12
Balance at June 30, 2026	273	$	—	$	(6,809)	$	(298)	$	(7,107)

Balance at December 31, 2025	277	$	—	$	7,014	$	(311)	$	(7,325)
Net Income				1,285				1,285
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature						(2)		(2)
Pension and post-retirement benefit plans (net of tax impact of $1 million)						1		1
Derivative instruments (net of tax impact of $5 million)						14		14
Comprehensive Income								1,298
Dividends declared				(414)				(414)
Repurchase of shares of Common Stock(1)	(4)	(11)		(665)				(676)
Employee share-based award exercises	1	(29)						(29)
Share-based compensation events		40						40
Balance at June 30, 2026	273	$	—	$	(6,809)	$	(298)	$	(7,107)

Balance at March 31, 2025	278	$	—	$	(7,434)	$	(371)	$	(7,804)
Net Income				374				374
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature						51		51
Comprehensive Income								426
Dividends declared				(198)				(198)
Repurchase of shares of Common Stock(1)	(1)	(4)		(105)				(109)
Employee share-based award exercises	—	(13)		—				(13)
Share-based compensation events		17						17
Balance at June 30, 2025	278	$	—	$	(7,361)	$	(319)	$	(7,680)

Balance at December 31, 2024	279	$	—	$	(7,256)	$	(392)	$	(7,648)
Net Income				628				628
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature						76		76
Pension and post-retirement benefit plans						2		2
Derivative instruments (net of tax impact of $2 million)						(5)		(5)
Comprehensive Income								701
Dividends declared				(397)				(397)
Repurchase of shares of Common Stock(1)	(2)	(4)		(334)				(338)
Employee share-based award exercises	1	(39)		(3)				(42)
Share-based compensation events		43						43
Balance at June 30, 2025	278	$	—	$	(7,361)	$	(319)	$	(7,680)

(1)Includes excise tax on share repurchases

See accompanying Notes to Condensed Consolidated Financial Statements.

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 64,000 restaurants in 157 countries and territories. As of June 30, 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 June 30, 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 was 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. In June 2026, we entered into two definitive agreements to sell the Pizza Hut brand thereby completing this review (see Note 3 for discussion regarding the agreements).

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 June 30, 2026. These reclassifications had no effect on previously reported Net Income.

Note 2 - Restaurant Acquisitions

During 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 was based on management's analysis, which may have included analysis performed by third party valuation specialists, as of the respective acquisition dates.

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 and years to date ended June 30, 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 June 30, 2026, we finalized our preliminary estimate of the fair value of identifiable net assets acquired. The cumulative adjustments to the preliminary estimate of identifiable net assets acquired (as recorded in the December 31, 2025 quarter of acquisition) were not significant.

Note 3 - Pizza Hut Divestitures

On June 16, 2026, we entered into definitive agreements to sell Pizza Hut in two separate transactions. Pizza Hut excluding Mainland China (“Pizza Hut Ex-China”) will be acquired by LongRange Capital, a private equity firm, and Pizza Hut in Mainland China will be acquired by Yum China Holdings, Inc., which will remain YUM’s master franchisee for KFC and Taco Bell in Mainland China.

We anticipate both transactions will close in August 2026, subject to customary closing conditions, including receipt of required regulatory approvals. Across the two transactions, we expect to receive approximately $2.3 billion of net proceeds after taxes, closing adjustments and transaction-contingent fees. Additionally, YUM has the opportunity to receive an earn-out from LongRange Capital of $75 million by 2030. We will continue to provide Byte by Yum!, our proprietary technology platform, to Pizza Hut Ex-China subsequent to the sale. Additionally, following the closing of the transaction, we will provide certain enterprise technology and finance services to Pizza Hut Ex-China under a transition services agreement.

During the quarter ended June 30, 2026, we determined that certain assets and liabilities met the criteria for classification as held for sale as a result of the signing of the definitive agreements. The planned sale of Pizza Hut does not represent a strategic shift that will have a major effect on YUM’s operations and financial results and, therefore, has not been presented as a discontinued operation. We suspend certain depreciation and amortization on assets that are held for sale, the impact of which was not significant during the quarter ended June 30, 2026.

The detail of assets and liabilities related to Pizza Hut that were classified as assets and liabilities held for sale in the Condensed Consolidated Balance Sheets are presented below.


	6/30/2026
Assets held for sale
Cash and cash equivalents	$	25
Accounts and notes receivable, net	197
Prepaid expenses and other current assets	45
Property, plant and equipment, net	26
Goodwill	255
Intangible assets, net	77
Other assets	104
Total Assets held for sale	$	730

Liabilities held for sale
Accounts payable and other current liabilities	$	155
Other liabilities and deferred credits	107
Total Liabilities held for sale	$	262

Note 4 - Earnings Per Common Share (“EPS”)


	Quarter ended				Year to date
	2026		2025		2026		2025
Net Income	$	853	$	374	$	1,285	$	628

Weighted-average common shares outstanding (for basic calculation)	275		279		276		279
Effect of dilutive share-based employee compensation	2		2		2		2
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)	277		281		278		282

Basic EPS	$	3.10	$	1.34	$	4.65	$	2.25

Diluted EPS	$	3.08	$	1.33	$	4.62	$	2.23
Unexercised employee SARs, RSUs, PSUs and stock options (in millions) excluded from the diluted EPS computation(a)	1.2		1.5		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.

Note 5 - Shareholders' Deficit

Under the authority of our Board of Directors, we repurchased shares of our Common Stock during the years to date ended June 30, 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 Date	2026	2025	2026		2025		2026
May 2024	4,345	2,296	$	670	$	336	$	389
June 2026	—	—	—		—		4,000
Total	4,345	2,296	$	670	$	336	$	4,389

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 June 30, 2026 we have remaining capacity to repurchase up to $0.4 billion of Common Stock under the May 2024 authorization. In June 2026, our Board of Directors authorized share repurchases of up to $4 billion (excluding applicable transaction fees and excise taxes) of our outstanding Common Stock from the earlier of the exhaustion or expiration of the May 2024 authorization through June 30, 2028.

Changes in Accumulated other comprehensive loss (“AOCI”) are presented below.


	Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Investment Nature		Pension and Post-Retirement Benefits		Derivative Instruments		Total
Balance at March 31, 2026, net of tax	$	(166)	$	(132)	$	(14)	$	(312)

OCI, net of tax

Gains (losses) arising during the period classified into AOCI, net of tax	2		—		7		9

(Gains) losses reclassified from AOCI, net of tax	—		1		3		4
	2		1		10		13
Balance at June 30, 2026, net of tax	$	(163)	$	(131)	$	(4)	$	(298)

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	(2)		(1)		15		12

(Gains) losses reclassified from AOCI, net of tax	—		2		(1)		1
	(2)		1		14		13
Balance at June 30, 2026, net of tax	$	(163)	$	(131)	$	(4)	$	(298)

Note 6 - Other (Income) Expense


	Quarter ended				Year to date
	6/30/2026		6/30/2025		6/30/2026		6/30/2025
Foreign exchange net (gain) loss	$	4	$	(3)	$	4	$	(7)
Impairment and closure expense	8		1		9		1
Other(a)	(6)		(4)		(52)		(9)
Other (income) expense	$	6	$	(7)	$	(39)	$	(15)

(a) The year to date ended June 30, 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.

Note 7 - 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.


	6/30/2026		12/31/2025
Accounts and notes receivable, gross	$	667	$	901
Allowance for doubtful accounts	(45)		(60)
Accounts and notes receivable, net	$	623	$	841

Prepaid Expenses and Other Current Assets


	6/30/2026		12/31/2025
Income tax receivable	$	111	$	114
Restricted cash	187		192
Prepaid expenses	127		119
Other current assets	72		64
Prepaid expenses and other current assets	$	498	$	489

Property, Plant and Equipment, net


	6/30/2026		12/31/2025
Property, plant and equipment, gross	$	3,109	$	3,091
Accumulated depreciation and amortization	(1,495)		(1,485)
Property, plant and equipment, net	$	1,614	$	1,605


Other Assets	6/30/2026		12/31/2025
Operating lease right-of-use assets(a)	$	1,177	$	1,213
Franchise incentives	172		209
Other	281		286
Other assets	$	1,629	$	1,708

(a) Non-current operating lease liabilities of $1,139 million and $1,174 million as of June 30, 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


	6/30/2026		12/31/2025
Cash and cash equivalents as presented in Condensed Consolidated Balance Sheets	$	674	$	709
Restricted cash included in Prepaid expenses and other current assets(a)	187		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	$	884	$	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.

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

Note 8 - Income Taxes


	Quarter ended						Year to date
	2026			2025			2026			2025
Income tax (benefit) provision	$	(320)		$	125		$	(236)		$	301
Effective tax rate	(60.1)		%	25.1		%	(22.5)		%	32.4		%

Our second quarter and year to date 2026 effective tax rate was impacted by:

•A net deferred tax benefit of $359 million recorded in the quarter ended June 30, 2026, reflecting the recognition of certain tax basis in entities that are expected to be sold with the Pizza Hut business. Such recognition was triggered upon entering into definitive agreements during the quarter ended June 30, 2026 to sell Pizza Hut. The Pizza Hut sales are expected to close at significant book gains in the quarter ended September 30, 2026 resulting in the utilization of these deferred tax benefits.

•Tax benefits of $91 million and $113 million in the quarter and year to date ended June 30, 2026, respectively, associated with the continued internal reorganization to consolidate the 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. The tax benefits were the result of establishing deferred tax assets associated with a step-up in amortizable tax basis in intellectual property rights that were transferred to international subsidiaries as well as releasing valuation allowances against tax attributes which will be utilized to partially offset the taxable gains recognized in such transfers.

•Favorable impacts from newly effective provisions of the One Big Beautiful Bill Act.

Our second quarter and year to date 2025 effective tax rate was impacted by $10 million and $102 million of tax expense, respectively, related to a reserve associated with a Mexican subsidiary's ability to utilize certain losses to offset recapture gains.

Note 9 - 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 6/30/2026
		KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Total
U.S.
Company sales		$	28	$	393	$	13	$	135	$	569
Franchise revenues		43		245		58		2		348
Property revenues		3		8		1		1		13
Franchise contributions for advertising and other services		11		180		64		1		256

China
Franchise revenues		73		—		18		—		92

Other
Company sales		247		3		18		—		268
Franchise revenues		346		18		66		—		429
Property revenues		12		—		—		—		13
Franchise contributions for advertising and other services		160		5		16		—		181
		$	924	$	853	$	254	$	139	$	2,169


	Quarter ended 6/30/2025
	KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Total
U.S.
Company sales	$	24	$	285	$	7	$	130	$	446
Franchise revenues	43		225		63		2		332
Property revenues	3		8		1		1		13
Franchise contributions for advertising and other services	11		173		67		1		252

China
Franchise revenues	65		—		17		—		82

Other
Company sales	222		2		—		—		224
Franchise revenues	315		15		67		—		397
Property revenues	11		—		—		—		11
Franchise contributions for advertising and other services	156		3		17		—		177
	$	849	$	711	$	239	$	134	$	1,933


	Year to date 6/30/2026
		KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Total
U.S.
Company sales		$	53	$	762	$	26	$	260	$	1,101
Franchise revenues		85		472		114		4		675
Property revenues		6		16		2		2		25
Franchise contributions for advertising and other services		22		351		129		2		505

China
Franchise revenues		150		—		38		—		188

Other
Company sales		477		7		37		—		521
Franchise revenues		673		34		131		—		838
Property revenues		24		—		1		—		25
Franchise contributions for advertising and other services		312		9		30		—		351
		$	1,802	$	1,650	$	507	$	269	$	4,228


	Year to date 6/30/2025
		KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Total
U.S.
Company sales		$	47	$	546	$	10	$	255	$	858
Franchise revenues		85		436		126		4		650
Property revenues		6		17		2		2		27
Franchise contributions for advertising and other services		20		330		136		1		488

China
Franchise revenues		134		—		34		—		168

Other
Company sales		415		4		—		—		419
Franchise revenues		598		29		128		—		755
Property revenues		21		—		1		—		22
Franchise contributions for advertising and other services		296		6		33		—		335
		$	1,622	$	1,368	$	470	$	262	$	3,721	(a)

(a) Does not include a charge of $1 million to Unallocated Franchise revenues during the year to date ended June 30, 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	(43)
Increase for upfront fees associated with contracts that became effective during the period, net of amounts recognized as revenue during the period	30
Deferred franchise fees related to Pizza Hut reclassified to Liabilities held for sale (see Note 3)	(61)
Other(a)	(1)
Balance at June 30, 2026	$	367

(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	$	62
1 - 2 years	55
2 - 3 years	49
3 - 4 years	43
4 - 5 years	37
Thereafter	121
Total	$	367

Note 10 - 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 6/30/2026
	KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Total
Company Sales	$	275	$	396	$	31	$	135	$	837
Franchise and property revenues	477		271		143		3		895
Franchise contributions for advertising and other services	172		185		80		1		438
	924		853		254		139		2,169

Less:
Company restaurant expenses	242		294		30		121		687
General and administrative expenses	88		53		56		12		210
Franchise and property expenses	18		9		13		1		41
Franchise advertising and other services expense	169		187		87		1		444
Other (income) expense	(2)		(1)		(3)		6		—
Division Operating Profit (Loss)	$	410	$	311	$	70	$	(4)	$	787

Unallocated amounts:(a)
Corporate and unallocated G&A expenses(b)									$	(114)
Unallocated Company restaurant expenses(c)									(13)
Unallocated Refranchising gain (loss)									1
Unallocated Other income (expense)									(6)
Consolidated Operating Profit									655
Investment income (expense), net									6
Other pension income (expense)									—
Interest expense, net									(128)
Income before income taxes									$	533

Other Segment Disclosures


	KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Corporate and Unallocated		Total
Depreciation and Amortization(e)	$	13	$	29	$	5	$	7	$	6	$	60
Capital Spending	25		39		2		20		13		100


	Quarter ended 6/30/2025
	KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Total
Company Sales	$	245	$	287	$	7	$	130	$	669
Franchise and property revenues	437		248		147		3		835
Franchise contributions for advertising and other services	167		176		85		1		428
	849		711		239		134		1,933

Less:
Company restaurant expenses	216		217		7		116		557
General and administrative expenses	89		49		54		13		205
Franchise and property expenses	20		7		10		1		39
Franchise advertising and other services expense	162		176		90		1		428
Other (income) expense	—		—		(3)		—		(3)
Division Operating Profit (Loss)	$	363	$	262	$	80	$	3	$	707

Unallocated amounts:(a)
Corporate and unallocated G&A expenses(b)									$	(97)
Unallocated Company restaurant expenses(c)									(4)

Unallocated Refranchising gain (loss)									11
Unallocated Other income (expense)									4
Consolidated Operating Profit									622
Investment income (expense), net									—
Other pension income (expense)									1
Interest expense, net									(123)
Income before income taxes									$	499

Other Segment Disclosures


	KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Corporate and Unallocated		Total
Depreciation and Amortization(e)	$	11	$	16	$	4	$	6	$	6	$	44
Capital Spending	19		18		10		12		12		71


	Year to Date 6/30/2026
	KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Total
Company Sales	$	530	$	768	$	63	$	260	$	1,622
Franchise and property revenues	938		522		285		6		1,751
Franchise contributions for advertising and other services	334		360		159		2		856
	1,802		1,650		507		269		4,228

Less:
Company restaurant expenses	471		578		62		242		1,353
General and administrative expenses	174		106		116		25		421
Franchise and property expenses	37		15		31		2		85
Franchise advertising and other services expense	329		361		171		2		863
Other (income) expense	(2)		—		(6)		8		—
Division Operating Profit (Loss)	$	793	$	591	$	135	$	(11)	$	1,507

Unallocated amounts:(a)
Corporate and unallocated G&A expenses(b)									$	(225)
Unallocated Company restaurant expenses(c)									(25)


Unallocated Refranchising gain (loss)									2
Unallocated Other income (expense)(d)									39
Consolidated Operating Profit									1,299
Investment income (expense), net									6
Other pension income (expense)									—
Interest expense, net									(257)
Income before income taxes									$	1,049


Other Segment Disclosures
	KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Corporate and Unallocated		Total
Depreciation and Amortization(e)	$	26	$	57	$	11	$	14	$	12	$	119
Capital Spending	50		61		4		35		25		175


	Year to Date 6/30/2025
	KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Total
Company Sales	$	461	$	550	$	10	$	255	$	1,277
Franchise and property revenues	844		482		290		5		1,621
Franchise contributions for advertising and other services	316		336		169		1		823
	1,622		1,368		470		262		3,721

Less:
Company restaurant expenses	411		421		11		230		1,074
General and administrative expenses	169		98		109		26		401
Franchise and property expenses	36		13		21		2		73
Franchise advertising and other services expense	311		333		179		1		824
Other (income) expense	—		—		(5)		—		(4)
Division Operating Profit (Loss)	$	694	$	502	$	155	$	2	$	1,353

Unallocated amounts:(a)
Corporate and unallocated G&A expenses(b)									$	(202)
Unallocated Company restaurant expenses(c)									(7)
Unallocated Franchise and property revenues									(1)
Unallocated Refranchising gain (loss)									16
Unallocated Other income (expense)									10
Consolidated Operating Profit									1,170
Investment income (expense), net									1
Other pension income (expense)									1
Interest expense, net									(243)
Income before income taxes									$	929


Other Segment Disclosures
	KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Corporate and Unallocated		Total
Depreciation and Amortization(e)	$	22	$	32	$	9	$	13	$	14	$	89
Capital Spending	37		49		15		18		23		142

Revenues by Country(f)


	Quarter ended				Year to date
	2026		2025		2026		2025
United States	$	1,186	$	1,043	$	2,306	$	2,023
United Kingdom	269		232		523		438
Other	714		658		1,399		1,259
	$	2,169	$	1,933	$	4,228	$	3,720

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

(b)Corporate and unallocated G&A expenses include charges of $44 million and $81 million in the quarter and year to date ended June 30, 2026, respectively, related to our Pizza Hut strategic options review. Corporate and unallocated G&A expenses include charges of $14 million and $32 million in the quarter and year to date ended June 30, 2025, respectively, related to our resource optimization program and charges of $10 million during the quarter ended June 30, 2025 and $1 million and $17 million for the years to date ended June 30, 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 year to date ended June 30, 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 11 - 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				Year to date
	2026		2025		2026		2025
Service cost	$	1	$	1	$	2	$	2
Interest cost	11		11		21		22
Expected return on plan assets	(12)		(14)		(24)		(27)
Amortization of net (gain) / loss	—		1		1		1
Amortization of prior service costs	—		1		—		1
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.

Note 12 - Short-term Borrowings and Long-term Debt


Short-term Borrowings	6/30/2026		12/31/2025
Current maturities of long-term debt	$	2,823	$	39
Other	—		2
	2,823		41
Less current portion of debt issuance costs and discounts	(10)		(3)
Short-term borrowings	$	2,813	$	38

Long-term Debt
Securitization Notes	$	4,306	$	4,306
Subsidiary Senior Unsecured Notes	750		750
Revolving Facility	675		300
Term Loan A Facility	488		494
Term Loan B Facility	1,421		1,429
YUM Senior Unsecured Notes	4,550		4,550
Finance lease obligations	146		148
	$	12,336	$	11,976
Less long-term portion of debt issuance costs and discounts	(52)		(66)
Less current maturities of long-term debt	(2,823)		(39)
Long-term debt	$	9,462	$	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 June 30, 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 June 30, 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 years to date ended June 30, 2026 and 2025, was $267 million and $256 million, respectively.

Note 13 - 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 June 30, 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 June 30, 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 or year to date ended June 30, 2026.

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								Year to date
	Gains/(Losses) Recognized in OCI				(Gains)/Losses Reclassified from AOCI into Net Income				Gains/(Losses) Recognized in OCI				(Gains)/Losses Reclassified from AOCI into Net Income
	2026		2025		2026		2025		2026		2025		2026		2025

Interest rate swaps	$	10	$	5	$	(1)	$	(3)	$	20	$	6	$	(3)	$	(8)

Income tax benefit/(expense)	(3)		(1)		—		1		(5)		(1)		1		2

As of June 30, 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 $9 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 June 30, 2026 and December 31, 2025, was not significant.

See Note 14 for the fair value of our derivative assets and liabilities.

Note 14 - Fair Value Disclosures

As of June 30, 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:


	6/30/2026				12/31/2025
	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)

Securitization Notes(a)	$	4,306	$	4,157	$	4,306	$	4,160
Subsidiary Senior Unsecured Notes(b)	750		751		750		753
Term Loan A Facility(b)	488		486		494		492
Term Loan B Facility(b)	1,421		1,430		1,429		1,440
YUM Senior Unsecured Notes(b)	4,550		4,494		4,550		4,581

(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 Company has interest rate swaps which are required to be measured at fair value on a recurring basis (see Note 13 for discussion regarding derivative instruments). The following table presents the fair values for those interest rate swaps measured at fair value on a recurring basis and the level within the fair value hierarchy in which the measurements fall.


			Fair Value
	Condensed Consolidated Balance Sheet	Level	6/30/2026		12/31/2025
Assets
Interest Rate Swaps	Prepaid expenses and other current assets	2	$	9	$	1
Interest Rate Swaps	Other assets	2	7		—
Liabilities
Interest Rate Swaps	Other liabilities and deferred credits	2	—		(3)

The fair value of the Company's interest rate swaps was determined based on the present value of expected future cash flows considering the risks involved, including nonperformance risk, and using discount rates appropriate for the duration based on observable inputs.

Note 15 - 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 $2.3 billion accruing through June 30, 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 June 30, 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 $300 million. The present value of these potential payments discounted at our pre-tax cost of debt at June 30, 2026, was approximately $250 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 June 30, 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.

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.

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 64,000 restaurants in 157 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 64,000 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

•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.

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.

Certain General and administrative expenses allocations between KFC Division and Corporate and Unallocated for the prior periods have been restated to be comparable with the allocations for the quarter and year to date ended June 30, 2026.

Results of Operations

Summary

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

Quarterly Financial Highlights:

% Change

System Sales, ex FX

Same-Store Sales

Units

GAAP Operating Profit

Core Operating Profit

KFC Division

+13

Taco Bell Division

+19

Pizza Hut Division

(2)

(1)

(12)

(14)

Worldwide

Year to date Financial Highlights:

% Change

System Sales, ex FX

Same-Store Sales

Units

GAAP Operating Profit

Core Operating Profit

KFC Division

+14

Taco Bell Division

+10

+18

Pizza Hut Division

(1)

(13)

(15)

Worldwide

+11

Additionally:

•Foreign currency translation favorably impacted Divisional Operating Profit by $16 million and $41 million for the quarter and year to date ended June 30, 2026, respectively.

•Gross unit openings for the quarter were 1,053 units resulting in 481 net new units.

◦Gross unit openings for the year to date were 2,083 units resulting in 881 net new units.


	Second Quarter			Year to date
	2026	2025	% Change	2026	2025	% Change
GAAP EPS	$3.08	$1.33	+131	$4.62	$2.23	+107
Less Special Items EPS	$1.46	$(0.11)	NM	$1.50	$(0.51)	NM
EPS Excluding Special Items	$1.62	$1.44	+12	$3.12	$2.74	+14

Worldwide

GAAP Results


	Quarter ended								Year to date
	2026			2025			% B/(W)		2026			2025			% B/(W)
Company sales	$	837		$	669		25		$	1,622		$	1,277		27
Franchise and property revenues	895			835			7		1,751			1,620			8
Franchise contributions for advertising and other services	438			428			2		856			823			4
Total revenues	2,169			1,933			12		4,228			3,720			14

Company restaurant expenses	700			560			(25)		1,378			1,081			(27)
G&A expenses	324			302			(7)		646			604			(7)
Franchise and property expenses	41			39			(6)		85			73			(16)
Franchise advertising and other services expense	444			428			(4)		863			824			(5)
Refranchising (gain) loss	(1)			(11)			(88)		(2)			(16)			(85)
Other (income) expense	6			(7)			NM		(39)			(15)			NM
Total costs and expenses, net	1,514			1,311			(16)		2,930			2,550			(15)
Operating Profit	655			622			5		1,299			1,170			11

Investment (income) expense, net	(6)			—			NM		(6)			(1)			NM
Other pension (income) expense	—			(1)			(93)		—			(1)			(74)
Interest expense, net	128			123			(4)		257			243			(6)
Income before income taxes	533			499			7		1,049			929			13
Income tax (benefit) provision	(320)			125			356		(236)			301			178
Net Income	$	853		$	374		128		$	1,285		$	628		105

Diluted EPS(a)	$	3.08		$	1.33		131		$	4.62		$	2.23		107
Effective tax rate	(60.1)		%	25.1		%	85.1	ppts.	(22.5)		%	32.4		%	55.0	ppts.

(a)See Note 4 for the number of shares used in this calculation.

Performance Metrics


Unit Count	6/30/2026	6/30/2025	% Increase (Decrease)
Franchise	62,536	59,907	4
Company-owned	1,630	1,365	19
Total	64,166	61,272	5


	Quarter ended		Year to date
	2026	2025	2026	2025
Same-store Sales Growth %	3	2	3	2
System Sales Growth %, reported	8	5	9	4
System Sales Growth %, excluding FX	5	4	6	4

Our system sales breakdown by Company and franchise sales was as follows:


	Quarter ended				Year to date
	2026		2025		2026		2025

Consolidated
Company sales(a)	$	837	$	669	$	1,622	$	1,277
Franchise sales	16,691		15,608		32,910		30,504
System sales	17,529		16,277		34,531		31,781
Negative (Positive) Foreign Currency Impact(b)	(375)		N/A		(960)		N/A
System sales, excluding FX	$	17,154	$	16,277	$	33,571	$	31,781

KFC Division
Company sales(a)	$	275	$	245	$	530	$	461
Franchise sales	9,291		8,476		18,364		16,600
System sales	9,566		8,721		18,894		17,061
Negative (Positive) Foreign Currency Impact(b)	(313)		N/A		(788)		N/A
System sales, excluding FX	$	9,254	$	8,721	$	18,106	$	17,061

Taco Bell Division
Company sales(a)	$	396	$	287	$	768	$	550
Franchise sales	4,281		3,988		8,303		7,705
System sales	4,677		4,275		9,071		8,255
Negative (Positive) Foreign Currency Impact(b)	(5)		N/A		(21)		N/A
System sales, excluding FX	$	4,672	$	4,275	$	9,050	$	8,255

Pizza Hut Division
Company sales(a)	$	31	$	7	$	63	$	10
Franchise sales	3,077		3,109		6,160		6,134
System sales	3,108		3,116		6,223		6,144
Negative (Positive) Foreign Currency Impact(b)	(57)		N/A		(151)		N/A
System sales, excluding FX	$	3,052	$	3,116	$	6,072	$	6,144

Habit Burger & Grill Division
Company sales(a)	$	135	$	130	$	260	$	255
Franchise sales	42		36		83		66
System sales	177		166		343		321
Negative (Positive) Foreign Currency Impact(b)	—		N/A		—		N/A
System sales, excluding FX	$	177	$	166	$	343	$	321

(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				Year to date
	2026		2025		2026		2025
Core Operating Profit Growth %	5		2		6		5
Diluted EPS Growth %, excluding Special Items	12		7		14		10
Effective Tax Rate excluding Special Items	22.3	%	23.2	%	20.3	%	21.6	%





Company restaurant profit	$	137		$	109		$	244		$	196
Company restaurant margin %	16.3		%	16.3		%	15.0		%	15.3		%


Reconciliation of GAAP Operating Profit to Core Operating Profit	Quarter ended				Year to date
	2026		2025		2026		2025
Consolidated
GAAP Operating Profit	$	655	$	622	$	1,299	$	1,170
Detail of Special Items:
Charges associated with Pizza Hut Strategic Options Review(a)	44		—		81		—
Charges associated with Brand HQ Consolidation(b)	—		10		1		17
Charges associated with Resource Optimization	—		14		—		32
Income from Litigation Settlement(c)	—		—		(44)		—
German acquisition and Turkey termination-related costs(d)	—		5		—		7
Special Items Expense - Operating Profit	44		28		38		55
Positive Foreign Currency Impact on Division Operating Profit	(16)		N/A		(41)		N/A
Core Operating Profit	$	683	$	650	$	1,296	$	1,225

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	44		28		82		56
Increase in Other (income) expense	—		—		(44)		(2)
Special Items Expense - Operating Profit	$	44	$	28	$	38	$	55

KFC Division
GAAP Operating Profit	$	410	$	363	$	793	$	694
Negative (Positive) Foreign Currency Impact	(14)		N/A		(37)		N/A
Core Operating Profit	$	395	$	363	$	756	$	694

Taco Bell Division
GAAP Operating Profit	$	311	$	262	$	591	$	502
Negative (Positive) Foreign Currency Impact	—		N/A		(1)		N/A
Core Operating Profit	$	310	$	262	$	590	$	502

Pizza Hut Division
GAAP Operating Profit	$	70	$	80	$	135	$	155
Negative (Positive) Foreign Currency Impact	(2)		N/A		(4)		N/A
Core Operating Profit	$	69	$	80	$	131	$	155

Habit Burger & Grill Division
GAAP Operating Profit (Loss)	$	(4)	$	3	$	(11)	$	2
Negative (Positive) Foreign Currency Impact	—		N/A		—		N/A
Core Operating Profit (Loss)	$	(4)	$	3	$	(11)	$	2

Reconciliation of GAAP Net Income to Net Income excluding Special Items
GAAP Net Income	$	853	$	374	$	1,285	$	628
Special Items Expense - Operating Profit	44		28		38		55
Special Items Tax (Benefit) Expense(e)	(449)		3		(456)		88
Net Income excluding Special Items	$	449	$	405	$	867	$	771



	Quarter ended						Year to date
	2026			2025			2026			2025
Reconciliation of Diluted EPS to Diluted EPS excluding Special Items
Diluted EPS	$	3.08		$	1.33		$	4.62		$	2.23
Less Special Items Diluted EPS	1.46			(0.11)			1.50			(0.51)
Diluted EPS excluding Special Items	$	1.62		$	1.44		$	3.12		$	2.74

Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items
GAAP Effective Tax Rate	(60.1)		%	25.1		%	(22.5)		%	32.4		%
Impact on Tax Rate as a result of Special Items	(82.4)		%	1.9		%	(42.8)		%	10.8		%
Effective Tax Rate excluding Special Items	22.3		%	23.2		%	20.3		%	21.6		%

(a) In 2025, we began a review of strategic options for the Pizza Hut brand. During the quarter and year to date ended June 30, 2026, we recorded charges of $44 million and $81 million, respectively, 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 $10 million during the quarter ended June 30, 2025, and approximately $1 million and $17 million for the years to date ended June 30, 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)On January 8, 2025, we terminated our franchise agreements with franchisee IS Gida A.S. (IS Gida), the owner and operator of KFC and Pizza Hut restaurants in Turkey and a subsidiary of IS Holding A.S. (IS Holding), after failure by IS Gida to meet our standards. As a result, 283 KFC restaurants and 254 Pizza Hut restaurants in Turkey were closed during the first quarter of 2025. We also re-acquired the master franchise rights in Germany for KFC and Pizza Hut from the owner of IS Holding in December 2024. We recorded charges of $5 million and $7 million during the quarter and year to date ended June 30, 2025, respectively, to Corporate and unallocated General and administrative expenses consisting primarily of severance costs associated with re-acquiring the master franchise rights in Germany. Consistent with prior charges related to the matter, these charges have been reflected as Special Items.

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


	Quarter ended				Year to date
	6/30/2026		6/30/2025		6/30/2026		6/30/2025
Tax (Benefit) on Special Items Expense - Operating Profit	$	(11)	$	(7)	$	(9)	$	(14)
Tax (Benefit) - Income tax impacts from planned sale of Pizza Hut	(359)		—		(359)		—
Tax (Benefit) - Intra-entity transfers and valuations of intellectual property	(79)		—		(101)		—
Tax Expense - Other Income tax impacts recorded as Special	—		—		13		—
Tax Expense - Foreign tax reserve	—		10		—		102
Special Items Tax (Benefit) Expense	$	(449)	$	3	$	(456)	$	88

Tax (Benefit) on Special Items 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) - Income tax impacts from the planned sale of Pizza Hut in the quarter and year to date ended June 30, 2026, reflects a $359 million net deferred tax benefit recorded upon the recognition of certain tax basis in entities expected to be sold. Such recognition was triggered upon entering into definitive agreements during the quarter ended June 30, 2026 to sell Pizza Hut. The Pizza Hut sales are expected to close at significant book gains in the quarter ended September 30, 2026 resulting in the utilization of these deferred tax benefits.

Tax (Benefit) - Intra-entity transfers and valuations of intellectual property in the quarter and year to date ended June 30, 2026, reflects tax benefits of $91 million and $113 million, respectively, 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 businesses. 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.

Additionally, Tax (Benefit) - Intra-entity transfers and valuations of intellectual property in the quarter and year to date ended June 30, 2026, includes $12 million of tax expense representing an adjustment to the valuation allowance on tax credits previously granted by local Swiss tax authorities in connection with transferred IP rights in Switzerland. Previously recorded impacts associated with this IP transfer were recorded as Special Items.

Tax Expense - Other Income tax impacts recorded as Special in the year to date ended June 30, 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.

Tax Expense - Foreign tax reserve in the quarter and year to date ended June 30, 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 6/30/2026
	KFC Division			Taco Bell Division			Pizza Hut Division			Habit Burger & Grill Division			Corporate and Unallocated		Consolidated
GAAP Operating Profit (Loss)	$	410		$	311		$	70		$	(4)		$	(132)	$	655
Less:
Franchise and property revenues	477			271			143			3			—		895
Franchise contributions for advertising and other services	172			185			80			1			—		438
Add:
General and administrative expenses	88			53			56			12			114		324
Franchise and property expenses	18			9			13			1			—		41
Franchise advertising and other services expense	169			187			87			1			—		444
Refranchising (gain) loss	—			—			—			—			(1)		(1)
Other (income) expense	(2)			(1)			(3)			6			6		6
Company restaurant profit (loss)	$	33		$	103		$	1		$	13		$	(13)	$	137
Company sales	$	275		$	396		$	31		$	135		$	—	$	837
Company restaurant margin %	12.0		%	25.9		%	2.2		%	9.8		%	N/A		16.3		%


	Quarter ended 6/30/2025
	KFC Division			Taco Bell Division			Pizza Hut Division			Habit Burger & Grill Division			Corporate and Unallocated		Consolidated
GAAP Operating Profit (Loss)	$	363		$	262		$	80		$	3		$	(85)	$	622
Less:
Franchise and property revenues	437			248			147			3			—		835
Franchise contributions for advertising and other services	167			176			85			1			—		428
Add:
General and administrative expenses	89			49			54			13			97		302
Franchise and property expenses	20			7			10			1			—		39
Franchise advertising and other services expense	162			176			90			1			—		428
Refranchising (gain) loss	—			—			—			—			(11)		(11)
Other (income) expense	—			—			(3)			—			(4)		(7)
Company restaurant profit (loss)	$	30		$	70		$	—		$	14		$	(4)	$	109
Company sales	$	245		$	287		$	7		$	130		$	—	$	669
Company restaurant margin %	12.1		%	24.3		%	(6.6)		%	10.7		%	N/A		16.3		%


	Year to date 6/30/2026
	KFC Division			Taco Bell Division			Pizza Hut Division			Habit Burger & Grill Division			Corporate and Unallocated		Consolidated
GAAP Operating Profit (Loss)	$	793		$	591		$	135		$	(11)		$	(209)	$	1,299
Less:
Franchise and property revenues	938			522			285			6			—		1,751
Franchise contributions for advertising and other services	334			360			159			2			—		856
Add:
General and administrative expenses	174			106			116			25			225		646
Franchise and property expenses	37			15			31			2			—		85
Franchise advertising and other services expense	329			361			171			2			—		863
Refranchising (gain) loss	—			—			—			—			(2)		(2)
Other (income) expense	(2)			—			(6)			8			(39)		(39)
Company restaurant profit (loss)	$	59		$	191		$	1		$	18		$	(25)	$	244
Company sales	$	530		$	768		$	63		$	260		$	—	$	1,622
Company restaurant margin %	11.2		%	24.8		%	2.0		%	6.9		%	N/A		15.0		%


	Year to date 6/30/2025
	KFC Division			Taco Bell Division			Pizza Hut Division			Habit Burger & Grill Division			Corporate and Unallocated		Consolidated
GAAP Operating Profit (Loss)	$	694		$	502		$	155		$	2		$	(183)	$	1,170
Less:
Franchise and property revenues	844			482			290			5			(1)		1,620
Franchise contributions for advertising and other services	316			336			169			1			—		823
Add:
General and administrative expenses	169			98			109			26			202		604
Franchise and property expenses	36			13			21			2			—		73
Franchise advertising and other services expense	311			333			179			1			—		824
Refranchising (gain) loss	—			—			—			—			(16)		(16)
Other (income) expense	—			—			(5)			—			(10)		(15)
Company restaurant profit (loss)	$	50		$	129		$	(1)		$	25		$	(7)	$	196
Company sales	$	461		$	550		$	10		$	255		$	—	$	1,277
Company restaurant margin %	10.8		%	23.4		%	(6.4)		%	9.6		%	N/A		15.3		%

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.

Public Health Issue

On July 17, 2026, after communication with state and federal health officials, Taco Bell U.S. announced that it had preemptively and voluntarily removed certain lettuce provided by its vendor, Taylor Farms, which Taylor Farms subsequently recalled. We removed the lettuce from our nationwide supply chain quickly and transparently, and before the recall, because the safety and well-being of our consumers is always our top priority.

Taco Bell U.S. saw a meaningful near-term impact on sales as a result of the issue. Sales are improving from their low-point and we believe that they will continue to improve through the quarter ended September 30, 2026, due to the underlying strength of the brand and recovery plan being implemented by the Taco Bell team. While it is difficult to forecast with certainty the impacts of this issue, we believe Taco Bell Company restaurant margin percentage in the U.S. will range between 19% to 21% in the quarter ended September 30, 2026.

Pizza Hut Strategic Options Review

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.

On June 16, 2026, we entered into definitive agreements to sell Pizza Hut in two separate transactions completing our strategic options review. Pizza Hut excluding Mainland China (“Pizza Hut Ex-China”) will be acquired by LongRange Capital, a private equity firm, and Pizza Hut in Mainland China will be acquired by Yum China Holdings, Inc., which will remain YUM’s master franchisee for KFC and Taco Bell in Mainland China.

We anticipate both transactions will close in August 2026, subject to customary closing conditions, including receipt of required regulatory approvals. Across the two transactions, we expect to receive approximately $2.3 billion of net proceeds after taxes, closing adjustments and transaction-contingent fees. Additionally, YUM has the opportunity to receive an earn-out from LongRange Capital of $75 million by 2030. We will continue to provide Byte by Yum!, our proprietary technology, to Pizza Hut Ex-China subsequent to the sale. Additionally, following the closing of the transaction, we will provide certain enterprise technology and finance services to Pizza Hut Ex-China under a transition services agreement.

We incurred certain other costs during the quarter and year to date ended June 30, 2026 associated with this strategic review (see Detail of Special Items section of this MD&A) and we expect to incur further expenses of approximately $40 million during the remainder of 2026.

KFC Division

The KFC Division has 34,747 units, 90% of which are located outside the U.S. Additionally, 99% of the KFC Division units were operated by franchisees as of June 30, 2026.


	Quarter ended										Year to date
							% B/(W)										% B/(W)
	2026			2025			Reported		Ex FX		2026			2025			Reported		Ex FX
System Sales	$	9,566		$	8,721		10		6		$	18,894		$	17,061		11		6
Same-Store Sales Growth (Decline) %	2			2			N/A		N/A		2			2			N/A		N/A

Company sales	$	275		$	245		12		8		$	530		$	461		15		9
Franchise and property revenues	477			437			9		6		938			844			11		7
Franchise contributions for advertising and other services	172			167			3		(1)		334			316			6		—
Total revenues	$	924		$	849		9		5		$	1,802		$	1,622		11		6

Company restaurant profit	$	33		$	30		11		5		$	59		$	50		19		10
Company restaurant margin %	12.0		%	12.1		%	(0.1)	ppts.	(0.3)	ppts.	11.2		%	10.8		%	0.4	ppts.	0.2	ppts.

G&A expenses	$	88		$	89		1		3		$	174		$	169		(3)		—
Franchise and property expenses	18			20			12		14		37			36			(1)		2
Franchise advertising and other services expense	169			162			(4)		—		329			311			(6)		—
Operating Profit	$	410		$	363		13		9		$	793		$	694		14		9


			% Increase (Decrease)
Unit Count	6/30/2026	6/30/2025
Franchise	34,227	31,887	7
Company-owned	520	482	8
Total	34,747	32,369	7

Company sales and Company restaurant margin %

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

The year to date 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 decrease in Company restaurant margin percentage was driven by lower margins associated with new builds inside the U.S., partially offset by Company same-store sales growth.

The year to date increase in Company restaurant margin percentage was driven by Company same-store sales growth, partially offset by higher restaurant operating costs and lower margins associated with new builds inside the U.S.

Franchise and property revenues

The quarterly and year to date increases in Franchise and property revenues, excluding the impacts of foreign currency translation, were driven by unit growth and franchise same-store sales growth of 2%.

G&A

The quarterly decrease in G&A, excluding the impacts of foreign currency translation, was driven by lower professional fees.

G&A, excluding the impacts of foreign currency translation, was flat year to date.

Operating Profit

The quarterly and year to date increases in Operating Profit, excluding the impacts of foreign currency translation, were driven by same-store sales growth and unit growth.

Taco Bell Division

The Taco Bell Division has 9,046 units, 86% of which are in the U.S. The Company owned 8% of the Taco Bell Division units in the U.S. as of June 30, 2026.


	Quarter ended										Year to date
							% B/(W)										% B/(W)
	2026			2025			Reported		Ex FX		2026			2025			Reported		Ex FX

System Sales	$	4,677		$	4,275		9		9		$	9,071		$	8,255		10		10
Same-Store Sales Growth %	7			4			N/A		N/A		8			6			N/A		N/A

Company sales	$	396		$	287		38		38		$	768		$	550		40		40
Franchise and property revenues	271			248			9		9		522			482			8		8
Franchise contributions for advertising and other services	185			176			5		5		360			336			7		7
Total revenues	$	853		$	711		20		20		$	1,650		$	1,368		21		21

Company restaurant profit	$	103		$	70		47		47		$	191		$	129		48		48
Company restaurant margin %	25.9		%	24.3		%	1.6	ppts.	1.6	ppts.	24.8		%	23.4		%	1.4	ppts.	1.4	ppts.

G&A expenses	$	53		$	49		(8)		(8)		$	106		$	98		(8)		(8)
Franchise and property expenses	9			7			(24)		(23)		15			13			(13)		(12)
Franchise advertising and other services expense	187			176			(7)		(7)		361			333			(8)		(8)
Operating Profit	$	311		$	262		19		19		$	591		$	502		18		18


			% Increase (Decrease)
Unit Count	6/30/2026	6/30/2025
Franchise	8,370	8,235	2
Company-owned	676	521	30
Total	9,046	8,756	3

Company sales and Company restaurant margin %

The quarterly and year to date increases in Company sales were driven by acquisitions of restaurants from franchisees and company same-store sales growth of 6%.

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

Franchise and property revenues

The quarterly and year to date increases in Franchise and property revenues were driven by franchise same-store sales growth of 7% and 8% for the quarter and year to date, respectively, and unit growth partially offset by the impact of our acquisition of restaurants from franchisees.

G&A

The quarterly and year to date increases in G&A were driven by higher headcounts including headcount associated with operating restaurants acquired from franchisees, higher digital and technology expenses, and higher legal and professional fees.

Operating Profit

The quarterly and year to date increases in Operating Profit were 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 19,985 units, 70% 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 June 30, 2026.


	Quarter ended										Year to date
							% B/(W)										% B/(W)
	2026			2025			Reported		Ex FX		2026			2025			Reported		Ex FX

System Sales	$	3,108		$	3,116		Even		(2)		$	6,223		$	6,144		1		(1)
Same-Store Sales Growth (Decline) %	(1)			(1)			N/A		N/A		(1)			(1)			N/A		N/A

Company sales	$	31		$	7		348		346		$	63		$	10		505		492
Franchise and property revenues	143			147			(3)		(4)		285			290			(2)		(3)
Franchise contributions for advertising and other services	80			85			(6)		(6)		159			169			(6)		(6)
Total revenues	$	254		$	239		6		6		$	507		$	470		8		7

Company restaurant profit (loss)	$	1		$	—		252		250		$	1		$	(1)		289		281
Company restaurant margin %	2.2		%	(6.6)		%	8.8	ppts.	8.8	ppts.	2.0		%	(6.4)		%	8.4	ppts.	8.4	ppts.

G&A expenses	$	56		$	54		(5)		(5)		$	116		$	109		(6)		(5)
Franchise and property expenses	13			10			(29)		(28)		31			21			(44)		(42)
Franchise advertising and other services expense	87			90			3		3		171			179			5		5
Operating Profit	$	70		$	80		(12)		(14)		$	135		$	155		(13)		(15)


			% Increase (Decrease)
Unit Count	6/30/2026	6/30/2025
Franchise	19,855	19,709	1
Company-owned	130	59	120
Total	19,985	19,768	1

Franchise and property revenues

The quarterly and year to date decreases in Franchise and property revenues, excluding the impact of foreign currency translation, were primarily driven by franchise same-store sales declines of 1% and the impact of our acquisition of restaurants from franchisees.

G&A

The quarterly and year to date increases in G&A, excluding the impact of foreign currency translation, were driven by the impact of G&A associated with operating restaurants acquired from franchisees and higher expense associated with annual

incentive compensation plans, partially offset by lower professional and legal expenses and lapping expenses associated with the bi-annual Global Franchise Convention held in the prior year.

Operating Profit

The quarterly and year to date decreases in Operating Profit, excluding the impact of foreign currency translation, were driven by higher advertising costs associated with the Pizza Hut U.S. Hut Forward program, the impact of operating restaurants acquired from franchisees and same-store sales declines.

Habit Burger & Grill Division

The Habit Burger & Grill Division has 388 units, all of which are in the U.S. The Company owned 78% of the Habit Burger & Grill Division units as of June 30, 2026.


	Quarter ended					Year to date
					% B/(W)						% B/(W)
	2026		2025		Reported		2026		2025		Reported
System Sales	$	177	$	166	7		$	343	$	321	7
Same-Store Sales Growth (Decline) %	3		(4)		N/A		4		(3)		N/A
Total revenues	$	139	$	134	4		$	269	$	262	3
Operating Profit (Loss)	$	(4)	$	3	NM		$	(11)	$	2	NM


Unit Count	6/30/2026	6/30/2025	% Increase (Decrease)
Franchise	84	76	11
Company-owned	304	303	—
Total	388	379	2

Corporate & Unallocated


	Quarter ended								Year to date
(Expense) / Income	2026			2025			% B/(W)		2026			2025			% B/(W)
Corporate and unallocated G&A	$	(114)		$	(97)		(18)		$	(225)		$	(202)		(11)
Unallocated Company restaurant expenses	(13)			(4)			(241)		(25)			(7)			(279)
Unallocated Franchise and property revenues	—			—			NM		—			(1)			NM
Unallocated Refranchising gain (loss)	1			11			(88)		2			16			(85)
Unallocated Other income (expense) (See Note 6)	(6)			4			NM		39			10			NM
Investment income (expense), net	6			—			NM		6			1			NM
Other pension income (expense)	—			1			(93)		—			1			(74)
Interest expense, net	(128)			(123)			(4)		(257)			(243)			(6)
Income tax benefit (provision) (See Note 8)	320			(125)			356		236			(301)			178
Effective tax rate (See Note 8)	(60.1)		%	25.1		%	85.1	ppts.	(22.5)		%	32.4		%	55.0	ppts.

Corporate and unallocated G&A

The quarterly and year to date increases in Corporate and Unallocated G&A expense were 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 and year to date increases were driven by the acquisition of restaurants from franchisees in 2025.

Interest expense, net

The quarterly and year to date increases in Interest expense, net were driven by higher outstanding borrowings.

Consolidated Cash Flows

Net cash provided by operating activities was $923 million in 2026 versus $850 million in 2025. The increase was primarily driven by an increase in Operating Profit, partially offset by higher incentive compensation payments and higher income tax payments.

Net cash used in investing activities was $169 million in 2026 versus $130 million in 2025. The change was primarily driven by lapping maturities of short-term investments in the prior year and higher current year capital spending, partially offset by lower current year spending on restaurant acquisitions.

Net cash used in financing activities was $757 million in 2026 versus $741 million in 2025. The change was primarily driven by higher current year share repurchases, partially offset by higher current year net borrowings.

Consolidated Financial Condition

Our Condensed Consolidated Balance Sheet was impacted by the held for sale classification of assets and liabilities associated with the Pizza Hut divestitures (See Note 3).

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 $675 million outstanding as of June 30, 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 $674 million at June 30, 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.

Pizza Hut Divestitures

On June 16, 2026 we entered into definitive agreements to sell Pizza Hut in two separate transactions. We anticipate both transactions will close in August 2026, subject to customary closing conditions, including receipt of required regulatory approvals. Across the two transactions, we expect to receive approximately $2.3 billion of net proceeds after taxes, closing adjustments and transaction-contingent fees.

With the anticipated net proceeds from the Pizza Hut transactions, we expect to pay down the current drawings on the Revolving Facility and the majority of the remainder will be set aside for share repurchases with timing subject to market conditions. Accordingly, in June 2026, our Board of Directors authorized incremental share repurchases of up to $4 billion through June 30, 2028 (see Note 5).

Debt Obligations and Interest Payments

As of June 30, 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 June 30, 2026.


	2026		2027		2028		2029		2030		2031		2032		2037		2043		Total
Securitization Notes			$	884	$	595	$	590	$	1,000	$	737	$	500					$	4,306
Credit Agreement	$	14	34		1,424		438												1,909
Revolving Facility							675												675
Subsidiary Senior Unsecured Notes			750																750
YUM Senior Unsecured Notes									800		1,050		2,100		$	325	$	275	4,550
Total	$	14	$	1,668	$	2,019	$	1,702	$	1,800	$	1,787	$	2,600	$	325	$	275	$	12,190

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 outstanding as of June 30, 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 June 30, 2026 have been classified as Short-term borrowings in the Condensed Consolidated Balance Sheets as of June 30, 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 12 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 June 30, 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.

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 June 30, 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.

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 June 30, 2026, the related condensed consolidated statements of income, comprehensive income, and shareholders’ deficit for the three-month and six-month periods ended June 30, 2026 and June 30, 2025, the related condensed consolidated statements of cash flows for the six-month periods ended June 30, 2026 and June 30, 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

August 4, 2026

PART II – OTHER INFORMATION AND SIGNATURES

Item 1. Legal Proceedings

Information regarding legal proceedings is incorporated by reference from Note 15 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. Information about our most significant risk factors is disclosed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. At June 30, 2026, there have been no material changes to this information, except for the expanded discussion around the multistate outbreak of Cyclospora, included below.

Food safety and food- or beverage-borne illness concerns may have an adverse effect on our business and/or our growth prospects.

Food or beverage-borne illnesses (that can be caused by food-borne pathogens such as E. coli, Listeria, Salmonella, Cyclospora and Trichinosis) and food safety issues (such as food tampering and contamination including with respect to allergens or adulteration) have occurred and may occur within our system from time to time. For example, in July 2026, there was a multistate outbreak of Cyclospora and Taco Bell U.S. removed certain lettuce from its nationwide supply chain that was later recalled by its vendor. Any report linking our or our Concepts’ franchisees’ restaurants, our suppliers or distributors or otherwise involving the types of products used at our restaurants, or linking our competitors, suppliers, distributors or the retail food industry generally, to instances of food- or beverage-borne illness or food safety issues or substances having perceived health or environmental risks have resulted and could result in adverse publicity and otherwise adversely affect us and lead to consumer complaints, litigation and/or governmental investigations. There is also a risk that we or our Concepts’ franchisees’ restaurants, suppliers or distributors underreport food safety incidents or system failures, which could hinder response and tracking of such risks. Moreover, our Concepts’ restaurants' reliance on third-party food suppliers and distributors and increasing reliance on food delivery aggregators may increase the risk that food- or beverage-borne illness incidents and food safety issues could be caused by factors outside of our control. If a customer is believed to have become ill from food or beverage-borne illnesses or as a result of food safety issues, remediation efforts could include temporary closure of restaurants, which could disrupt our operations and adversely affect our reputation, business and/or our growth prospects. The occurrence of food-borne pathogens in restaurant products or food safety issues could also adversely affect the price and availability of affected ingredients, which could result in disruptions in our supply chain and/or lower margins for us and our Concepts’ franchisees. In addition, the health and environmental risks of certain ubiquitous substances (including per-and-polyfluoroalkyl substances (PFAS)) commonly found in packaging have been the subject of increased regulatory scrutiny and lawsuits against us and other restaurant companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information as of June 30, 2026, with respect to shares of Common Stock repurchased by the Company during the quarter then ended:


Fiscal Periods	Total number of shares purchased (thousands)	Average price paid per share	Total 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)
4/1/26-4/30/26	399	$159.23	399	$811

5/1/26-5/31/26	1,710	$153.32	1,710	$549

6/1/26-6/30/26	1,062	$149.93	1,062	$4,389
Total	3,171	$152.93	3,171

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. In June 2026, our Board of Directors authorized share repurchases of up to $4 billion (excluding applicable transaction fees and excise taxes) of our outstanding Common Stock from the earlier of the exhaustion or expiration of the May 2024 authorization through June 30, 2028. As of June 30, 2026, we have remaining capacity to repurchase up to $0.4 billion of Common Stock under the May 2024 authorization.

Item 5. Other Information

Securities Trading Plans

During the three months ended June 30, 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:

Name / Title

Type of Plan

Adoption / Termination Date

End Date

Aggregate Number of
Securities to be Sold

Plan Description

Tracy Skeans / Chief Operating Officer & Chief People & Culture Officer

Rule 10b5-1 trading plan

May 21, 2026 (1)

December 31, 2026

3,494 (2)

Sale of Shares of Common Stock

26,660 (3)

Exercise of Stock Appreciation Rights and Sales of Resulting Shares of Common Stock

(1)On May 21, 2026, Tracy Skeans, Chief Operating Officer and Chief People & Culture Officer, modified a trading arrangement she had previously adopted with respect to the sale of securities of the Company's common stock (a "Rule 10b5-1 Trading Plan"). Ms. Skeans' initial Rule 10b5-1 Trading Plan was adopted on February 7, 2026. The modification reduced the number of shares covered by 3,495 shares. The plan includes a minimum 90-day cooling off period from the date of modification.

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

(3)Represents the number of shares of common stock underlying the stock appreciation rights awards specified in the modified 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.

Item 6. Exhibits

(a)

Exhibit Index

Exhibit No.

Exhibit Description

2.1*

Equity Purchase Agreement, dated as of June 16, 2026, by and between Yum! Brands, Inc. and Toppings TopCo, LLC.

2.2*

Membership Interest Purchase Agreement, dated as of June 16, 2026, between Yum China Holdings, Inc. and Yum! Brands, Inc.

10.1†

Transition and Retirement Agreement, dated May 28, 2026, between the Company and Tracy Skeans, as attached herein

Letter from KPMG LLP regarding Unaudited Interim Financial Information (Acknowledgement of Independent Registered Public Accounting Firm).

31.1

C ertifica tion of the Chief Executive Off icer pursuant to Rule 13 a-14(a) of Secu riti es 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.INS

XBRL 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.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

†

Indicates a management contract or compensatory plan.

Schedules (or similar attachments) have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplemental copies of any of the omitted schedules (or similar attachments) upon request by the U.S. Securities and Exchange Commission.

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.