Yum China Holdings (YUMC) delivered impressive third-quarter results, driving a surge in its stock price as the company continues to outperform amid challenging economic conditions. The fast-food operator reported a 5% year-over-year increase in revenue to a record $3.07 billion, surpassing analysts' expectations.

The strong performance was driven by robust sales growth, margin expansion, and continued expansion of its store network. Yum China's operating profit grew 15% to $371 million, while diluted earnings per share jumped 33% to $0.77, exceeding consensus estimates.

A key driver of Yum China's success was its strategic focus on broadening its addressable market and capturing new customer demand. The company opened 438 net new stores during the quarter, bringing its total store count to 15,861, comprising 11,283 KFC and 3,606 Pizza Hut locations. Notably, 145 of these new stores were opened by franchisees, aligning with Yum China's strategy to accelerate franchise development and unlock opportunities in strategic and remote locations.

Yum China's innovative business models, such as the side-by-side KCOFFEE Cafes and Pizza Hut WOW stores, played a significant role in driving growth. These concepts enabled the company to broaden its reach and tap into new customer segments, with KCOFFEE Cafes reaching 500 stores and Pizza Hut WOW reaching 150 stores during the quarter.

Furthermore, Yum China's emphasis on operational efficiency and innovation contributed to its strong performance. The company reinvested savings from improved operational efficiencies into food innovation and value-for-money offerings, attracting customers and driving traffic to its stores.