Shares of Yum China Holdings, Inc. (NYSE: YUMC) surged 6.21% in Wednesday's trading session following the release of its first-quarter earnings report and ambitious growth plans. The company, which operates popular fast-food chains such as KFC and Pizza Hut in China, demonstrated resilience and growth potential in a competitive market.

Yum China reported Q1 adjusted earnings of $0.77 per diluted share, up from $0.71 in the same period last year, showing a solid year-over-year improvement. While this figure slightly missed the FactSet analyst consensus of $0.79, investors appeared to focus on the company's revenue growth and expansion strategy. The fast-food giant's revenue for the quarter ended March 31 increased to $2.98 billion from $2.96 billion a year earlier, albeit falling short of the $3.09 billion anticipated by analysts.

What seems to have truly excited investors is Yum China's aggressive expansion plans. The company opened 247 net new stores in Q1 alone, with about 25% of these being franchised locations. Looking ahead, Yum China aims to open between 1,600 and 1,800 net new stores in fiscal 2025, signaling confidence in the Chinese consumer market. Furthermore, the company expects franchises to increase to 40% to 50% of net new stores for KFC and 20% to 30% for Pizza Hut over the next few years, potentially improving capital efficiency and accelerating growth.

The market's enthusiastic response to Yum China's results and outlook suggests that investors are betting on the company's ability to capitalize on China's vast consumer market and its strategic shift towards a more franchise-heavy model. As the largest restaurant operator in China, Yum China's performance is often seen as a bellwether for consumer spending and economic health in the world's second-largest economy.