Yum China Holdings, Inc. ( YUMC ) on Sunday outlined strategic plans to accelerate network expansion, boost sales growth, and improve profitability at its 2025 Investor Day.

Outlook

In 2025, the company expects an operating margin of 10.8%–10.9%, restaurant margins of 16.2%-16.3% and free cash flow per share of $2.2–$2.3.

From 2026–2028, the company targets a same-store sales index of 100–102 YoY, mid- to high-single-digit system sales CAGR, high-single-digit operating profit CAGR, and double-digit growth in EPS.

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By 2028, Yum China ( YUMC ) plans to exceed 25,000 stores, achieve at least 11.5% operating margin, and restaurant margins of at least 16.7%, with annual capital expenditure of $600–700 million.

The company will return $1.5 billion annually to shareholders from 2024 to 2026.

Beginning in 2027, the company aims to return roughly 100% of free cash flow, which will lead to average annual returns of $900 million–$1 billion in 2027–2028 and exceed $1 billion in 2028.

KFC Store Expansion

By 2028, KFC plans to grow its store count by one-third to over 17,000, achieve mid- to high-single-digit system sales CAGR from 2026–2028, and surpass 10 billion Chinese Yuan in operating profit.

For 2025, the company sees restaurant margins of around 17.3%.

Pizza Hut Accelerating Same-Store Transaction Growth

Pizza Hut has boosted its value proposition, delivering 17% same-store transaction growth for three quarters and six consecutive quarters of margin expansion.

With 1,000 cities covered, it plans to expand into 1,500+ untapped cities, add 600+ stores annually, and reach 6,000+ stores by 2028.

Pizza Hut aims to boost restaurant margin and double operating profit by 2029 versus 2024 via low-capex WOW models, menu innovations in pizzas, burgers, and one-person meals, and operational improvements.

For 2025, the company sees restaurant margins of around 12.7%.

Lavazza’s Menu & Shops Expansion

The brand’s Same-store sales rose double digits in the third quarter of 2025, with the Light Store Model showing strong margins.

Blending Italian heritage with local flavors, Lavazza is enhancing its menu, increasing roasting capacity, and broadening retail channels.

The brand targets 1,000 coffee shops and $60 million in retail sales by 2029.

AI Boost & Supply Chain Efficiency

Looking ahead, the company is entering the next era of agentic AI. Its pilot, Q-Smart, serves as an AI assistant for restaurant general managers, with more agentic AI applications in development.

Also, Yum China ( YUMC ) plans to build integrated supply chain parks with suppliers to boost synergies and operational efficiency. Prioritizing food safety, the company will invest in AI-powered solutions for monitoring, traceability, and risk prevention.

Management Commentary

Joey Wat, CEO of Yum China, said, ”RGM 3.0 focused on all three aspects – resilience, growth and moat – powered by two complementary forces, innovation and operational efficiency. On the front end, we are innovating new modules and offerings to cater to a wide range of customer segments and occasions. On the back end, we are consolidating our resources to unlock synergies in and across stores, regions and even brands.”

“As a result, despite our significant scale, store expansion is accelerating. It took us 33 years to reach our first 10,000 stores, and we now aim to double that in just six years by 2026 and exceed 30,000 stores within the following four years by 2030.”

Recent Earnings

This month, Yum China ( YUMC ) reported third-quarter adjusted earnings per share of 76 cents, beating the analyst consensus estimate of 74 cents, and sales of $3.206 billion surpassed the Street view of $3.186 billion.

Price Action: YUMC shares were trading higher by 0.84% to $46.56 premarket at last check Monday.

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