Yum Brands income jumps 8.6% powered by more Taco Bell and KFC diners

USA – American fast food company Yum! Brands has posted strong quarterly performance with 8.6% rise in net income to US$454 million from $418 million in the comparable period last year.

The company results indicated that strong sales at KFC and Taco Bell offset continued weakness at Pizza Hut which is losing to competitors in its key market, the United States.

Taco Bell and KFC reported same-store sales increases but Pizza Hut had a 1% same-store sales decline in the three months ended September 30.

During the review period, the restaurant chain embarked on an intensive strategy with new menu items including US$1 nacho fries and pickle fried chicken in response to increased competition, and as a result Taco Bell and KFC saw more customers to its restaurants.

It also relaunched US$1 nacho fries as well as the US$1 Triple Melt Burrito at Taco Bell which contributed to 5% increase in same-store sales.

At KFC, same-store sales grew 3% attributed to better value offers and digital orders in Russia, Thailand, the Middle East and India.

Pizza Hut was slow during the period despite efforts done to revamp operations through promotional offerings in the United States where it is facing slowing demand.

It is facing stiff completion from Domino’s, meal-kit companies and grocery stores which through a strong delivery platform have attracted more customers to their side.

“First of all, Pizza Hut is a slow turnaround,” said Yum Brands CEO Greg Creed to CNBC.

“We [have] got to do a better job of communicating value … do I think we can do better with Pizza Hut in the U.S.? Yes, I do.”

“We’ve got a new agency, … the team is all over it, and I think you will see us going forward with what I’ll call sharper and more distinctive advertising and communication around this compelling value that we offer,” Creed said on an earnings conference call.

Higher sales were driven by strong performances in international markets and a delivery deal with Grubhub.

Revenue in the quarter fell 3% to US$1.39 billion, beating Wall Street estimates.

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