Yum Brands Q1 profits more than triple buoyed by elevated appetite for fast foods

US – Yum Brands, the owner of KFC, Taco Bell, and Pizza Hut, has had its profits more than triple in Q1 as business improved following easing of Covid-19 restrictions.

The company’s profits during the quarter jumped to US$326 million up from US$83 million recorded in 2020. The profits were also higher than the US$262 million earned in the same three months in 2019.

Sales at stores open at least a year, a key gauge of a restaurant operator’s health, climbed 9% with KFC’s same-store sales increasing 14% in the U.S., while Pizza Hut’s grew 16%.

The company also beat estimations to record a US$1.49 billion revenue, an 18% jump from the same period last year.

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KFC’s trend in revenue growth has been replicated in other leading U.S. fast food restaurants such as McDonalds, Taco Bell, and Chipotle as consumers stick with the mobile ordering habits they picked up during the pandemic.

Just like Yum Brands, leading fast food chain McDonald’s Corp also reported double digit growth in sales, reporting a 13.6% jump in comparable sales for the quarter.

The shift to mobile ordering is a big blow to sit-down restaurants in the united states which have been struggling to attract sales during the pandemic.

For the 12 months ending in March, fast-food chains dominated the restaurant market – taking in 70.2% of dollars spent eating out and 82.9% of all restaurant traffic, according to data from The NPD Group.

Drive-thrus, new crispy chicken sandwiches and “family meal” deals helped draw customers that other restaurants lost.

With this shift, American fast food restaurants are reported to have gained 7.1% of market share by dollars that full-service restaurants shed during the period under review resulting in the segment recording sales of nearly US$281.6 billion.

Fast food “is going to be the bright spot in the restaurant space for a long time to come,” NPD analyst David Portalatin said, noting that fast food was gaining market share even before the pandemic.

To align with the changing business landscape, restaurant chain Bloomin’ Brands Inc quickly onboarded onto e-commerce at the start of the pandemic and recently reported that it  grew its digital ordering 147% over last year.

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But many independent restaurants could not ramp up digital operations as quickly. The National Restaurant Association estimates that 110,000 restaurants closed permanently in 2020.

This gap will be certainly be filled by the fast-food restaurants which are themselves keen on expanding their market share.

“With 90%-plus of our business being through the drive-thru, if we can sustain that and return our dining rooms and takeaway to the levels that they were pre-pandemic, we’ve set ourselves up for a very good run here,” said Joe Erlinger, head of McDonald’s U.S. operations

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