Yum China nears acquisition of Pizza Hut brand in mainland China after 36 years as licensee

The group said it plans to use offshore bridge loans to finance the transaction.

Yum China is set to take full ownership of the Pizza Hut brand in mainland China, ending a 36-year run as a licensee, in a move the company expects will lift margins and hand it greater control over one of its two flagship chains.

The acquisition, announced alongside the company's second quarter results, is expected to close in August 2026, with Yum China planning to secure an approximately $1.2b equivalent offshore bridge loan to finance the transaction.

The news follows Yum! Brands' announcement in June that it would sell the Pizza Hut brand in mainland China to Yum China, whilst the rest of the global Pizza Hut business would be acquired by private equity firm LongRange Capital.

Yum China said the savings in licence fees would support margin expansion, with Pizza Hut's restaurant margin potentially approaching that of KFC.

It added that brand ownership would give it greater strategic flexibility to innovate across menu, store formats and business models, and to open more stores that meet its payback requirements of two to three years.

"We are about to reach a major breakthrough by becoming the owner of the Pizza Hut brand in mainland China, after operating the brand in the market for 36 years," said Joey Wat, chief executive of Yum China. "Over the longer term, brand ownership will give us greater strategic flexibility to capture new opportunities and innovate more nimbly across our menu, store formats, new business models and operations."

The announcement came as Yum China reported a 13% year-on-year rise in total revenues to $3.1b for the second quarter ended 30 June 2026, or a 6% increase excluding foreign currency translation. Operating profit grew 14% to a second-quarter record of $348m, whilst diluted earnings per share rose 21% to $0.70.

Total system sales grew 6% year on year excluding foreign currency effects, with same-store sales up 1%. Same-store transactions grew 5%, marking the 14th consecutive quarter of transaction growth. Operating margin expanded 20 basis points to 11.1%, the ninth consecutive quarter of margin expansion.

The company opened 560 net new stores during the quarter, a second-quarter record and 67% higher than the same period last year, with 41% opened by franchisees. Total store count reached 19,297 as of 30 June 2026.

Delivery sales grew 26% year on year and contributed around 54% of total company sales, up from 45% a year earlier. Restaurant margin was flat at 16.1%, which the company attributed to higher rider costs from the increased delivery mix, offset by streamlined operations.

Wat said KFC delivered strong results with 7% system sales growth and restaurant margin expansion, whilst Pizza Hut's same-store sales returned to positive growth with net new openings nearly doubling from a year earlier. She pointed to the rollout of KCOFFEE cafe, KPRO and car-side pickup services across more KFC locations, alongside Pizza Hut's new Burger Bar format, as helping the company broaden into new occasions and customer segments.