YUM! Brands (YUM) Stock Forecast & Price Target

Yum Brands is projected to achieve a systemwide sales figure exceeding $65 billion in 2024, positioning it as the second-largest restaurant company globally, with 98% of its operations franchised, driving significant revenue through franchise royalties and marketing contributions. The company has demonstrated resilience in its key brands, with Taco Bell expected to maintain same-store sales growth of 5% in Q4, and KFC improving to +2% due to robust performance in the U.S. and China, reflecting effective brand strategies and market responsiveness. Looking ahead, the firm aims to normalize net restaurant growth to 5% by 2026, indicating a positive long-term growth trajectory amidst industry challenges.

Yum Brands faces significant challenges that contribute to a negative outlook for its stock, particularly with Taco Bell experiencing a reduction in margins due to ongoing beef inflation and increased competition in the quick service restaurant (QSR) market, leading to diminished pricing power. Additionally, there are concerning signs for Pizza Hut in the U.S., including declining unit development and execution challenges exacerbated by recent leadership changes, which may further hinder financial performance. The company’s reliance on franchise royalties and marketing contributions, coupled with upcoming tough comparisons in same-store sales driven by previous successful promotions and external food safety issues at competitors, adds to the uncertainty surrounding Yum's growth trajectory.