Yum China Holdings, Inc. (YUMC) shares jumped Wednesday after the restaurant operator posted quarterly results that showed delivery isn't just growing—it's completely reshaping the business. And management celebrated by showering shareholders with a hefty dividend boost.

The company, which operates KFC and Pizza Hut across China, reported fourth-quarter adjusted earnings of 40 cents per share, comfortably ahead of the 36-cent analyst consensus. Revenue came in at $2.82 billion, up 9% year over year and beating the $2.72 billion Street estimate.

Delivery Takes Over

Here's the standout number: delivery sales surged 34% year over year and now account for roughly 53% of total company sales, compared to just 42% a year ago. That's a massive shift in how customers are interacting with these brands, and it's clearly working.

Total system sales grew 7% year over year, while same-store sales climbed 3%—marking the third consecutive quarter of growth. Same-store transactions were up 4%, indicating customers aren't just ordering more often, they're actually coming back.

The company added 587 net new stores during the quarter, with franchisees opening 36% of them. That franchise mix is part of the broader strategy to accelerate growth without overextending capital.

"KFC has unlocked new consumption occasions through its KCOFFEE cafe and KPRO side-by-side modules. Pizza Hut has enhanced its value-for-money proposition and developed the WOW model to expand into previously untapped locations, especially in lower-tier cities," said Joey Wat, CEO of Yum China.

Brand Performance

Breaking it down by brand: KFC's quarterly system sales grew 8%, with same-store sales up 3%. Pizza Hut saw system sales rise 6% year over year and same-store sales increase 1%.

Margins are improving too. Core operating profit jumped 23% year over year, with margin hitting 6.6%, up 80 basis points. Restaurant margin expanded to 13.0%, up 70 basis points, driven mainly by better food and paper costs along with lower occupancy and other operating expenses.

The company closed the quarter with $506 million in cash and equivalents.

Dividend Boost and Capital Returns

Now for the shareholder-friendly part: Yum China declared a 21% dividend increase, raising the payout to 29 cents per share, payable March 25.

The company is on track to return $1.5 billion each year from 2024 through 2026, which represents roughly 8% of its market cap as of early February 2026. Starting in 2027, management plans to return approximately 100% of annual free cash flow after subsidiary dividend payments to non-controlling interests.

That's expected to translate into average annual returns of approximately $900 million to over $1 billion in 2027 and 2028, climbing above $1 billion in 2028.

Expansion Ahead

Looking forward, the company expects to surpass 20,000 total stores in 2026 by adding more than 1,900 net new units, with 40%-50% of net new KFC and Pizza Hut stores franchised. Capital expenditures are projected at $600 million to $700 million, with $1.5 billion earmarked for capital returns to shareholders.

Wat said the company is targeting more than 30,000 stores by 2030 through an equity-and-franchise hybrid model, expanding its addressable market via front-end segmentation and back-end consolidation. Management plans to continue executing its RGM 3.0 strategy, balancing innovation with operational efficiency.

Price Action: Yum China shares climbed 4.45% to $53.00 during premarket trading Wednesday, approaching the 52-week high of $53.99.