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YUMC, Yum China Holdings Inc.

Restaurants consumer brand

Yum China is the largest restaurant company in China in terms of 2025 system sales.

Our growing restaurant network consists of our flagship KFC and Pizza Hut brands, as well as emerging brands such as Lavazza, Huang Ji Huang, Little Sheep and Taco Bell.

We have the exclusive right to operate and sublicense the KFC, Pizza Hut and, subject to the agreed terms, Taco Bell brands in China, excluding Hong Kong, Macau and Taiwan.

Latest annual: FY2025 10-K

YUMC · Yum China Holdings Inc.

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$11.8B

+4.4% YoY · 7% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $12.1B 5-yr avg $10.7B

Gross margin 50%

Operating margin 11.1% 5-yr avg 10.4%

ROIC 19% 5-yr avg 15%

Owner-earnings margin 9% 5-yr avg 8%

Free cash flow margin 8% 5-yr avg 7%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What moves the needle: Operating margin has run about 10% through the cycle, a solid margin the cost base and competition set as much as the price does. The cash cycle has run negative through the cycle (a median of −10 days): the operation is paid before it pays, so working capital releases cash as the business grows rather than tying it up. Read this kind of business on same-store sales and unit economics. On its own account, the filing leans hardest on customer concentration, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has run in the teens (median 18%, above 15% in 7 of 10 years). Owner earnings agree: roughly 8% of revenue reaches owners as cash, consistently, and customers and suppliers fund the business through negative working capital. Returns like these are solid but short of clear franchise economics; whether they hold is what the 10-K settles, not the multiple.

Every line is arithmetic on the company's filings, shown in full in the sections below.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
											Income statement
$7.1B	$7.8B	$8.4B	$8.8B	$8.3B	$9.9B	$9.6B	$11.0B	$11.3B	$11.8B	$12.1B	RevenueRevenue
21%	25%	—	—	—	—	—	—	—	—	50%	Gross marginGross mgn
6%	6%	5%	6%	6%	6%	6%	6%	5%	5%	5%	SG&A / revenueSG&A/rev
0%	0%	0%	0%	0%	0%	0%	0%	0%	0%	0%	R&D / revenueR&D/rev
$634M	$778M	$941M	$901M	$961M	$1.4B	$629M	$1.1B	$1.2B	$1.3B	$1.3B	Operating incomeOp. inc.
9.0%	10.0%	11.2%	10.3%	11.6%	14.1%	6.6%	10.1%	10.3%	10.9%	11.1%	Operating marginOp. mgn
$498M	$398M	$708M	$713M	$784M	$990M	$442M	$827M	$911M	$929M	$946M	Net incomeNet inc.
24%	49%	23%	27%	27%	27%	32%	28%	28%	28%	28%	Effective tax rateTax rate
											Cash flow & returns
$866M	$884M	$1.3B	$1.2B	$1.1B	$1.1B	$1.4B	$1.5B	$1.4B	$1.5B	$1.6B	Operating cash flowOp. cash
$402M	$409M	$445M	$428M	$450M	$516M	$602M	$453M	$476M	$448M	$456M	DepreciationDeprec.
($50M)	$51M	$156M	$18M	($156M)	($416M)	$327M	$129M	($9M)	$47M	$119M	Working capital & otherWC & other
$436M	$415M	$470M	$435M	$419M	$689M	$679M	$710M	$705M	$626M	$633M	CapexCapex
6.2%	5.3%	5.6%	5.0%	5.1%	7.0%	7.1%	6.5%	6.2%	5.3%	5.2%	Capex / revenueCapex/rev
$430M	$469M	$863M	$750M	$695M	$615M	$734M	$1.0B	$943M	$1.0B	$1.1B	Owner earningsOwner earn.
6.1%	6.0%	10.3%	8.5%	8.4%	6.2%	7.7%	9.3%	8.3%	8.6%	9.2%	Owner earnings marginOE mgn
$430M	$469M	$863M	$750M	$695M	$442M	$734M	$763M	$714M	$840M	$931M	Free cash flowFCF
6.1%	6.0%	10.3%	8.5%	8.4%	4.5%	7.7%	7.0%	6.3%	7.1%	7.7%	Free cash flow marginFCF mgn
—	$25M	$91M	—	$288M	$115M	$23M	—	—	—	$23M	AcquisitionsAcquis.
—	$38M	$161M	$181M	$95M	$203M	$202M	$216M	$248M	$353M	$365M	Dividends paidDiv. paid
—	$128M	$307M	$265M	$8M	$75M	$466M	$613M	$1.2B	$1.1B	—	BuybacksBuybacks
32%	23%	45%	33%	14%	17%	8%	15%	17%	19%	19%	ROICROIC
21%	14%	25%	23%	13%	14%	7%	13%	16%	17%	17%	Return on equityROE
—	13%	19%	17%	11%	11%	4%	10%	12%	11%	11%	Retained to equityRetained/eq
											Balance sheet
$964M	$1.3B	$1.4B	$1.7B	$4.3B	$4.0B	$3.2B	$2.6B	$1.8B	$1.4B	$1.4B	Cash & investmentsCash+inv
$74M	$79M	$80M	$88M	$99M	$67M	$64M	$68M	$79M	$95M	$103M	ReceivablesReceiv.
$268M	$297M	$307M	$380M	$398M	$432M	$417M	$424M	$405M	$438M	$414M	InventoryInvent.
$480M	$420M	$619M	$623M	$708M	$830M	$727M	$786M	$801M	$793M	$822M	Accounts payablePayables
($138M)	($44M)	($232M)	($155M)	($211M)	($331M)	($246M)	($294M)	($317M)	($260M)	($305M)	Operating working capitalOper. WC
$1.4B	$1.8B	$2.0B	$2.3B	$4.9B	$4.7B	$3.9B	$3.4B	$2.7B	$2.4B	$2.3B	Current assetsCur. assets
$1.0B	$1.0B	$1.3B	$1.7B	$2.1B	$2.4B	$2.2B	$2.4B	$2.3B	$2.2B	$2.3B	Current liabilitiesCur. liab.
1.4×	1.8×	1.6×	1.3×	2.4×	2.0×	1.8×	1.4×	1.2×	1.0×	1.0×	Current ratioCurr. ratio
$79M	$108M	$266M	$254M	$832M	$2.1B	$2.0B	$1.9B	$1.9B	$2.0B	$2.0B	GoodwillGoodwill
$3.7B	$4.3B	$4.6B	$7.0B	$10.9B	$13.2B	$11.8B	$12.0B	$11.1B	$10.8B	$10.8B	Total assetsAssets
($964M)	($1.3B)	($1.4B)	($1.7B)	($4.3B)	($4.0B)	($3.2B)	($2.6B)	($1.8B)	($1.4B)	($1.4B)	Net debt / (cash)Net debt
$2.4B	$2.8B	$2.9B	$3.1B	$6.2B	$7.1B	$6.5B	$6.4B	$5.7B	$5.4B	$5.4B	Shareholders’ equityEquity
0.2%	0.3%	0.3%	0.3%	0.4%	0.4%	0.4%	0.6%	0.4%	0.4%	0.4%	Stock comp / revenueSBC/rev
											Per share
369M	398M	395M	388M	402M	434M	425M	420M	390M	371M	354M	Shares out (diluted)Shares
$19.17	$19.52	$21.30	$22.62	$20.55	$22.70	$22.52	$26.14	$28.98	$31.80	$34.14	Revenue / shareRev/sh
$1.35	$1.00	$1.79	$1.84	$1.95	$2.28	$1.04	$1.97	$2.34	$2.50	$2.67	EPS (diluted)EPS
$1.17	$1.18	$2.18	$1.93	$1.73	$1.42	$1.73	$2.43	$2.42	$2.74	$3.13	Owner earnings / shareOE/sh
$1.17	$1.18	$2.18	$1.93	$1.73	$1.02	$1.73	$1.82	$1.83	$2.26	$2.63	Free cash flow / shareFCF/sh
—	$0.10	$0.41	$0.47	$0.24	$0.47	$0.48	$0.51	$0.64	$0.95	$1.03	Dividends / shareDiv/sh
$1.18	$1.04	$1.19	$1.12	$1.04	$1.59	$1.60	$1.69	$1.81	$1.69	$1.79	Cap. spending / shareCapex/sh
$6.44	$6.95	$7.27	$7.93	$15.44	$16.26	$15.25	$15.25	$14.69	$14.50	$15.35	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+5.8%/yr	+9.1%/yr
Owner earnings / share	+10.0%/yr	+9.7%/yr
EPS	+7.1%/yr	+5.1%/yr
Dividends / share	+33.3%/yr (8-yr)	+32.1%/yr
Capital spending / share	+4.0%/yr	+10.1%/yr
Book value / share	+9.4%/yr	−1.2%/yr

The year, in the company's words

the filing →

Verbatim from the 10-K's management discussion. Each sentence is shown only because its subject, direction, and stated figures check out against the filed numbers on this page. The words are the company's; the arithmetic is the record's.

Revenue+4.4%
“In 2025, the Company’s total revenues increased 4%, including or excluding the impact of F/X, mainly attributable to 3% of net new unit contribution and 1% same-store sales growth.”
✓ figure matches the filed record
Operating income+11.0%
“Operating profit increased 11%, including or excluding the impact of F/X, primarily driven by the increase in Total revenues, favorable commodity prices and efficiency improvement from streamlined operations, partially offset by increased delivery cost associated with higher delivery sales mix in the current year and value-for-money offerings.”
✓ figure matches the filed record

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

371Mpeak FY2021

ROIC

19%low FY2022

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$1.0Bowner earningsvs.$929Mnet incomelow FY2016

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetained

Each year's operating cash, by what management did with it: the mix, and how it drifts.

FY2016FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business earned $1.0B of owner earnings, the operating cash left after the $448M it takes just to hold its position. It put $178M more into growth; free cash flow, after that spending, was $840M.

Reported net income$929M

Owner earnings$1.0B · 9% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$929M	$911M	$827M	$442M	$990M
Depreciation & amortizationnon-cash charge added back	+$448M	+$476M	+$453M	+$602M	+$516M
Stock-based compensationreal costnon-cash, but a real cost	+$42M	+$41M	+$64M	+$42M	+$41M
Working capital & othertiming of cash in and out, other non-cash items	+$47M	−$9M	+$129M	+$327M	−$416M
Cash from operations	$1.5B	$1.4B	$1.5B	$1.4B	$1.1B
Maintenance capital expenditurethe spending needed just to hold position and volume	−$448M	−$476M	−$453M	−$679M	−$516M
Owner earnings	$1.0B	$943M	$1.0B	$734M	$615M
Growth capital expenditurediscretionary; spent to get bigger, not to stand still	−$178M	−$229M	−$257M	—	−$173M
Free cash flow	$840M	$714M	$763M	$734M	$442M
Owner-earnings marginowner earnings ÷ revenue	9%	8%	9%	8%	6%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the maintenance capital it must spend to hold its position (here about $448M, roughly its depreciation, the rate its assets wear out). The other $178M of its capital spending is growth it chose, not upkeep it owed; charged only with the maintenance it must do, the business earns well more than the year's free cash flow shows. The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $42M), owner earnings is nearer $976M.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? —

No meaningful interest burden

Little or no interest expense reported

What this means
Little or no interest expense reported, the business isn't leaning on lenders to operate.
How heavy is the debt, net of cash? +$1.4B

Net cash, debt-free

Cash $506M + ST investments $878M − debt $0

What this means
Cash and short-term investments exceed every dollar of debt by $1.4B, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? -19d

Negative, funded by others

DSO 3 + DIO 27 − DPO 50 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money.

Is it a good business?

Return on invested capital —

Not enough data

Industry peers: median 26%

What this means
The filing data didn't include the inputs for this check.
Owner-earnings margin 8%

Solid through the cycle

10-yr median margin, range 6%–10%; latest $1.0B = operating cash $1.5B − maintenance capex $448M

Industry peers: median 9%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 9% of revenue this year, a 8% median across 10 years. It chose to put $178M more into growth, so free cash flow this year was $840M — the gap is investment, not weakness. Treating stock comp as the real expense it is (less $42M of SBC) leaves $976M.
Are earnings backed by cash? 1.58×

Cash-backed

Cash from ops $1.5B ÷ net income $929M

In the filing’s words The filing leans on adjusted, non-GAAP earnings, but the GAAP profit is itself cash-backed — the adjustments are not papering over a cash shortfall here.

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 147%

Returned more than it generated

Dividends + buybacks $1.5B ÷ Owner Earnings $1.0B

What this means
The company returned more than it generated: against $1.0B of Owner Earnings, $1.5B (147%) went back to shareholders, $353M dividends, $1.1B buybacks — the excess came from the balance sheet or borrowing, not the year's operations. Net of $42M stock comp, the real buyback was about $1.1B. Sustained, that pattern draws down cash or adds debt; the net-debt line above shows where it stands.
Investing or harvesting? 1.40×

Expanding

Capex $626M ÷ depreciation $448M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 3 of 5 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $11.8B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Miss

Current ratio ≥ 2× · 1.05×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Earnings stability Pass

A profit every year (10-yr record) · no losses

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Near

Uninterrupted dividends · 9 of 10 yrs

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Pass

Earnings +33% over the record · +66%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $2.55/share (latest year $2.66), the averaged base the calculator's gate runs on, and book value is $15.41/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 10 of 10

What this means
Never lost money over the record, the earnings stability Graham insisted on.
Operating margin 10% → 10% (3-yr avg ends)

In the filing’s words The margin has held, but the filing names price competition — the pressure is present even where the margin has absorbed it so far.

What this means
Through the cycle the operating margin held roughly steady — about 10% early, 10% lately, median 10%.
Owner earnings growth +9%/yr

What this means
Owner earnings grew about 9% a year over the record.
Worst year 2022 · 6.6% op. margin

What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Share count +0.1%/yr

What this means
Roughly flat share count, little dilution, little buyback.
Dividend record rising

What this means
Paid and raised the dividend across the record, the continuity Graham prized.

Does AI threaten the moat?

Moderate contestability

AI is likely to reshape costs and some products here without clearly contesting or sparing the core moat; how the company itself frames it is the tell.

In its own filing Raised, but not as a competitor

The filing raises AI among its risks, but in other terms (security, regulation, energy or the like), not as a competitor to its product.

The question is whether a moat the record shows as durable outlasts a technology that lowers the cost of part of what the firm sells. The durability is read in the record above, the filing's own framing of AI beside it; the industry label decides nothing on its own.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$2.3B

Cash & short-term investments$1.4B
Receivables$103M
Inventory$414M
Other current assets$373M

Current liabilities$2.3B

Accounts payable$822M
Other current liabilities$1.5B

Current ratio1.01×all current assets ÷ what's due · Graham looked for 2×

Quick ratio0.83×stricter: inventory excluded

Cash ratio0.62×strictest: cash alone against what's due

Working capital$15Mthe cushion left after near-term bills

Revenue, latest quarter vs. a year ago+9.7%the freshest read on whether the business is still growing

Current ratio, recent quarters1.2× → 1.0×

Deeper floors

Tangible book value$3.3Bequity stripped of goodwill & intangibles

Net current asset value($2.4B)Graham's net-net: current assets less all liabilities

Debt incl. operating leases$2.2B$2.2B of it operating leases; with finance leases, “total fixed claims” below reaches $2.3B (annual-report basis)

Deferred revenue$261Mcustomer cash collected before delivery; operating float

From the company's latest filing.

Lease obligations

the lease note, SEC EDGAR →

Debt by another name. What the business owes on the property, aircraft, stores and equipment it rents rather than owns is a fixed claim due on a schedule; added back to the debt, it is the true leverage. That ladder, operating and finance leases together, and what it adds to the debt on the page above.

Operating leasesFinance leases

'26$524M

'27$452M

'28$388M

'29$318M

'30$261M

later$720M

Lease payments by year, scaled to the largest; “later” is everything beyond year five, shown apart. These are the contractual cash payments, before the interest the filing imputes back out to the balance-sheet liability.

Due in the next 12 months$524Ma fixed cash payment, owed whether or not the business has a good year

Total lease payments$2.7Bevery year plus the tail, undiscounted: the full cash the leases will take

On the balance sheet$2.3Bthe present value of those payments, the recognised lease liability

True leverage: debt plus leases

On-balance-sheet debt$0

Lease obligations (present value)$2.3B

Total fixed claims on the business$2.3B

Counting the leases the way Buffett does, the fixed claims on this business come to $2.3B, of which the leases are 100%, more than the debt itself. The lease wall above and the debt schedule together are the calendar of what must be paid, and when.

Lease ladder read from the ASC 842 tags in the company’s Dec 31, 2025 annual report and reconciled: the yearly buckets sum to the undiscounted total, which less the imputed interest equals the balance-sheet liability; a ladder that doesn’t tie out is withheld.

How the cash was used, 2016–2025

Over the record, the business generated $12.3B of operating cash; how management split it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.

Reinvested$5.6B · 45%
Dividends$1.7B · 14%
Buybacks$4.3B · 35%
Retained (debt / cash)$748M · 6%

Returned to owners$6.0B
79% of the owner earnings the business produced over the span, $1.7B as dividends and $4.3B as buybacks.
Average price paid for buybacks$43.30
Across the years where the filing reports a share count, 43M shares were bought for $1.9B, about $43.30 each. Year to year the price paid ranged from $34.11 (2018) to $57.69 (2021); its heaviest year, 2023, paid $49.44 ($613M).
Net change in share count−4.1%
The diluted count fell from 369M to 354M, so the buybacks outran the stock issued to staff.
Dividend record$0.95/sh
Paid in 9 of the years on record, the per-share dividend growing about 33% a year. It was cut at least once along the way.
Return on what it retained33%
Of the earnings it kept rather than paid out ($1.2B over the span), annual owner earnings (first three years vs last three) grew $406M, so each retained $1 added about 0.33 of yearly owner earnings. Buffett's test, run on owner earnings instead of market value.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2022	Ms. Wat	$15.9M	$18.2M	$734M
2022	Ms. Wat	$15.9M	$18.2M	$734M
2023	Ms. Wat	$20.3M	$9.0M	$1.0B
2023	Ms. Wat	$20.3M	$9.0M	$1.0B
2024	Ms. Wat	$14.2M	$17.0M	$943M
2024	Ms. Wat	$14.2M	$17.0M	$943M
2025	Ms. Wat	$19.6M	$18.8M	$1.0B
2025	Ms. Wat	$19.6M	$18.8M	$1.0B

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership<1%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
CEO pay ratio2,150:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
Stock-based compensation$42M
The slice of the business handed to employees in shares this year, 0% of revenue, equal to 3% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Yum China Holdings Inc. is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

1 of the 5 tests turned up something to look into; the other 4 came back clean.

Look hereAre "one-time" charges a yearly habit?10 of 10 years
Management took an impairment or write-down in 10 of the last 10 years, $548M in all. A charge taken almost every year is not one-time; it is the business — past deals coming due, and an admission the assets were worth less than what was paid. Munger's rule: when the "one-time" keeps happening, it is the business. Read it beside the goodwill the company still carries.

And these came back clean

Is it less profitable than it was?
Did the share count rise anyway?
Did reported profit become cash?
Did receivables and inventory outpace sales?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2025

read the 10-K →

Which reported numbers are a judgment call?
Management names Revenue recognition, Income taxes, Stock compensation as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Restaurants

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
ARMKAramark	$18.5B	11%	4.2%	7%	2%
DRIDarden Restaurants Inc.	$12.1B	59%	9.6%	27%	9%
CMGChipotle Mexican Grill Inc.	$11.9B	—	9.3%	36%	11%
YUMCYum China Holdings Inc.	$11.8B	51%	10.3%	18%	8%
QSRRestaurant Brands International Inc.	$9.4B	66%	31.0%	11%	21%
YUMYum! Brands Inc.	$8.2B	73%	32.2%	75%	20%
TXRHTexas Roadhouse	$5.9B	—	8.0%	26%	9%
EATBrinker Intl	$5.4B	74%	6.6%	24%	5%
Group median	—	62%	9.5%	25%	9%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Yum China Holdings Inc. has delivered.

Today’s price $

Through the cycle, Yum China Holdings Inc. earns about $988M on its 8.4% median owner-earnings margin. This year’s 8.6% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($988M) Net of stock comp (−$43M) Steady-state · maintenance capex ($1.1B)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25+10%/yr

Owner-earnings growth · ’16→’25+6%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $931M on 349M shares outstanding, per the 10-Q cover, as of 2026-05-04; net cash $1.4B. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. Capex ($633M) runs well above depreciation ($456M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $1.1B, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh YUMC against another business →

The owners of YUMC: the meeting and the votes →

Cite: Owner Scorecard, "Yum China Holdings Inc. (YUMC), the owner's record," https://ownerscorecard.com/c/YUMC, data as of 2026-07-09.

Manual order: ← YUM its page in the Manual Z →

Industry order: ← YUM the Restaurants chapter