Yum China Holdings, Inc. (YUMC) saw its stock surge in pre-market trading on November 4, 2024, after reporting impressive third-quarter results and announcing plans to increase capital returns to shareholders.

The fast-food restaurant operator reported revenue of $3.07 billion for the quarter, up 5.4% year-over-year and beating analysts' consensus estimate of $3.05 billion. This robust revenue growth was driven by strong sales across both the KFC and Pizza Hut brands, with KFC's system sales increasing 6% and Pizza Hut's system sales rising 2%.

Furthermore, Yum China's adjusted earnings per share (EPS) of $0.77 surpassed the consensus estimate of $0.68, representing a 13.24% beat. The company's strong earnings performance was fueled by higher revenue and improved operational efficiency, with core operating profit growing 18% year-over-year.

Another key highlight was the company's continued momentum in the delivery segment, with delivery sales growing 18% year-over-year, marking the tenth consecutive year of double-digit growth. Additionally, Yum China's same-store sales reached 97% of the prior year's level, improving from 96% in the second quarter, indicating a gradual recovery in consumer demand and traffic.

To support future growth, Yum China opened 438 net new stores in the third quarter, with 145 of these stores opened by franchisees. The company plans to accelerate franchise development to unlock additional growth opportunities, aiming for a franchise mix of 40-50% for KFC and 20-30% for Pizza Hut in the coming years.