YUM! Brands (YUM) Stock Forecast & Price Target

Yum Brands exhibited a robust financial performance by generating over $65 billion in systemwide sales from more than 61,000 restaurants in 155 markets, positioning it as the world's second-largest restaurant company by dollar sales. The predominantly franchised business model, with 98% of its locations franchised, results in a recurring revenue stream from franchise royalties, constituting 66% of total revenue, which underpins its financial stability. Additionally, with a forecasted return to 5% net restaurant growth by 2027, driven by strong same-store sales, strategic partnerships, and a focus on Taco Bell’s performance, Yum Brands is well-positioned for sustained growth and profitability.

Yum Brands is facing a significant outlook challenge primarily due to expected core operating losses of -15% for Pizza Hut in the first quarter of 2026, attributed to lower franchise and company-operated margins impacted by increased marketing expenditures. Furthermore, the company anticipates modest net restaurant growth of below 5.0% in 2026, with ongoing unit development issues, particularly in KFC International, and difficult comparative performance for Taco Bell. The restaurant chain also operates in a competitive quick-service restaurant environment, where new entrants may suppress margins and erode pricing power, compounding the challenges facing its growth trajectory.