YUM! Brands (YUM) Stock Forecast & Price Target

Yum Brands generated over $65 billion in systemwide sales from more than 61,000 restaurants across 155 markets, solidifying its position as the world's second-largest restaurant firm by dollar sales with a franchise-heavy business model that accounts for 98% of its portfolio, primarily driven by recurring franchise royalties. The company's management anticipates a return to 5% net restaurant growth by 2026, bolstered by improved same-store sales for KFC and strategic partnerships in key international markets such as Brazil, Japan, and Korea, which are expected to foster accelerated development. Additionally, the potential sale of Pizza Hut is projected to enhance Yum's growth profile and reinforce its focus on Taco Bell, leading to a favorable outlook for core EBIT growth above current guidance.

Yum Brands reported over $65 billion in systemwide sales as of 2024, with a significant portion of its revenue derived from franchise royalties and marketing contributions. However, the company faces considerable headwinds, including sluggish unit growth in key segments like Pizza Hut and KFC, potential margin pressures from increased competition in the quick service restaurant (QSR) sector, and challenges related to Taco Bell's performance under difficult market conditions. These factors raise concerns about the sustainability of Yum Brands' growth trajectory and its ability to maintain robust profit margins amidst a shifting industry landscape.