NYSE: YUMC

As of December 31, 2025, we owned and operated approximately 83% of our restaurants. Franchisees contribute to our revenue through the payment of a combination of upfront franchise fees and on-going royalties based on a percentage of sales, and payments for other transactions with us, such as purchases of food and paper products, advertising services, delivery services and other services.

Restaurant Concepts

KFC

KFC is the leading and the largest quick-service restaurant (“QSR”) brand in China in terms of 2025 system sales. Founded in Corbin, Kentucky by Colonel Harland D. Sanders in 1939, KFC opened its first restaurant in Beijing, China in 1987. As of December 31, 2025, there were 12,997 KFC restaurants in over 2,500 cities across China. In addition to Original Recipe® chicken, whole chicken and other chicken products, KFC in China has an extensive menu featuring beef burgers, pork, seafood, rice dishes, congees, fresh vegetables, desserts, coffee, tea and many other products. KFC also seeks to increase revenue from different channels, including dine-in, delivery and takeaway.

Pizza Hut

Pizza Hut is the leading and the largest casual dining restaurant (“CDR”) brand in China in terms of 2025 system sales and number of restaurants as of December 31, 2025, offering multiple dayparts, including breakfast, lunch, afternoon tea and dinner. Since opening its first China restaurant unit in Beijing in 1990, Pizza Hut has grown rapidly and, as of year-end 2025, there were 4,168 Pizza Hut restaurants in over 1,000 cities across China. Pizza Hut has an extensive menu offering a broad variety of pizzas, pasta, steaks, rice dishes, burgers and other entrees, appetizers, beverages and desserts. Pizza Hut also aims to further drive growth from different channels and occasions, including dine-in, delivery and takeaway. Pizza Hut also offers packaged foods to capture at-home consumption demand.

Other Concepts

In addition to KFC and Pizza Hut, our restaurant brand portfolio also includes Lavazza, Huang Ji Huang, Little Sheep and Taco Bell.

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2025 Form 10-K

Lavazza. In April 2020, we partnered with Luigi Lavazza S.p.A. (“Lavazza Group”), the world-renowned family-owned Italian coffee company, and established a joint venture (“Lavazza joint venture”), to explore and develop the Lavazza coffee concept in China. Lavazza joint venture operates both the coffee shop business and the retail business. Lavazza coffee shops offer an authentic Italian coffee experience. As of December 31, 2025, there were 146 Lavazza coffee shops in mainland China and Hong Kong. The retail business involves selling retail coffee products beyond Lavazza coffee shops.

Huang Ji Huang. In April 2020, we completed the acquisition of a controlling interest in Huang Ji Huang. Founded in 2004, Huang Ji Huang had 627 units in China and internationally as of December 31, 2025. Huang Ji Huang primarily operates a franchise model and is an industry-leading simmer pot brand.

Little Sheep. Little Sheep, with its roots in Inner Mongolia, China, specializes in “Hot Pot” cooking, which is very popular in China, particularly during the winter months. Little Sheep had 135 units in both China and international markets as of December 31, 2025. Little Sheep primarily operates a franchise model.

Taco Bell. Taco Bell is the world’s leading western QSR brand specializing in Mexican-style food, including tacos, burritos, quesadillas, salads, nachos and similar items. We opened our first Taco Bell restaurant in Shanghai, China, in December 2016. As of December 31, 2025, there were 28 Taco Bell units in China. The Company and Yum! Brands Inc. (“YUM”) are currently in the process of renegotiating the terms with respect to the development of the Taco Bell brand in China. For more information, refer to “—Intellectual Property.”

Our Strategies

Since 2021, we have been implementing our “RGM” strategy, which stands for “Resilience, Growth and Moat.” At our Investor Day held in November 2025, we outlined our RGM 3.0 strategy, which focuses on all three aspects – resilience, growth and moat – powered by two complementary forces, innovation and operational efficiency. Going forward, we intend to continue to maintain our dual focus on system sales and same-store sales growth, and capture new opportunities through front-end segmentation and back-end consolidation. Through an equity and franchise hybrid model, we have been accelerating our store network expansion with the aim of reaching our next milestone of 20,000 stores in 2026 and targeting over 30,000 stores by 2030. In the meantime, we will continue to invest in digitalization and supply chain, our key growth enablers.

Continue to strategically expand our restaurant network

We are confident in the long-term market opportunities in China and aim to maintain our industry-leading position in the QSR and CDR markets in China with our core brands while continuing to nurture our emerging brands.

Further expand geographical coverage. Restaurant chains have a low penetration rate in China, especially in lower-tier cities. Given the rapidly expanding middle class and dining out population as a result of continued economic growth and urbanization, we believe there are significant opportunities to expand within China, and we intend to focus our efforts on increasing our geographic footprint in both existing and new cities. In 2025, we entered into around 270 new cities. By 2030, we aim to nearly double our presence and increase penetration from 2,500 to 4,500 cities. We are tracking over 2,000 cities that do not have a KFC, and 1,500 cities that have KFC but do not yet have a Pizza Hut restaurant. For additional information on the risks associated with this growth strategy, see the section entitled “