Yum! Brands reaps benefits of an expanded digital footprint as profit surges 74% in 2021 

USA — American fast-food corporation Yum! Brands that operates brands such as KFC, Pizza Hut, and Taco Bell is reaping the benefits of aggressively expanding the digital side of its business during the Covid-19 period. 

The Louisville-based company achieved a net income of US$1.58 billion in 2021, which was up 74% from US$904 million in the previous fiscal year.  

Total revenues for the company also increased 16% to US$6.58 billion from US$5.65 billion. Same-store sales growth was 10%. 

Yum! Brand’s digital side of the business delivered a 25% increase in sales in 2021 when compared to 2020, suggesting a more permanent shift to digital channels.  

The focus on digital had been going on for a while but picked up pace in 2020 when the pandemic almost put to a standstill the dine-in side of the restaurant business.  

Digital footprint nearly doubles

David W. Gibbs, chief executive officer at Yum! Brands revealed that the company has nearly doubled its digital business when compared to 2019. 

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Yum! in 2021 agreed to acquire Dragontail Technologies, a food preparation optimization company that automates kitchen flow, driver dispatch and custom order tracking.  

The Dragontail platform now is in 2,800 stores in 21 markets across KFC and Pizza Hut. 

Yum! also recently acquired two startups. Tictuc, Tel Aviv, Israel, enables consumers to order food from messaging and social media apps.  

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Kvantum, Plano, Texas, leverages artificial intelligence to generate marketing performance insights and consumer analytics. 

Online sales uplifts sales amid covid 

A greater focus on digitalization helped Yum!  navigate the emergence of omicron, said Hannah Cleland, consumer analyst at GlobalData.  

Consumers continued to order takeaways more frequently in the second half of 2021, showing they have adopted that practice as part of regular routines, she said. 

Same-store sales increased at all three main brands at Yum! At Pizza Hut, they were up 7% in the fiscal year and 3% in the fourth quarter. Same-store sales at Taco Bell increased 11% in the fiscal year and 8% in the fourth quarter. 

“We also saw digital sales at KFC US grow approximately 70% year-over-year, fueled by our delivery service channel and e-commerce platform that launched nationwide in early 2021,” said Christopher Lee Turner, chief financial officer for Yum!  

“We continue to invest in technology platforms focused on delivering a frictionless experience for our guests, including the launch of Quick Pick-Up at KFC US in the fourth quarter that allows guests to bypass the drive-thru and grab their digital orders from cubbies inside the restaurant.” 

In the fourth quarter, Yum! Brands’ net income of US$330 million compared with US$332 million in the same time of the previous year. Total revenues grew 8% to US$1.89 billion from $1.74 billion. 

Yum! Opened a restaurant every 2 hours in 2021 

Even as Yum! Brands expands its digital presence, brick and mortar store still continue to be an important part of the business. 

CEO David Gibbs told investors during the 2021 fourth-quarter earnings call that the company broke a fast-food industry record in 2021 by opening 4,180 new restaurants.   

That averages out to about one new restaurant every two hours for the entire year, according to Gibbs. 

The fast-paced openings show that customers aren’t likely to give up fast food habits any time soon as executives continue to greenlight new locations. 

Confidence in fast food extends beyond Yum’s holdings with Starbucks adding nearly 1200 new stores in 2021 and plans to add another 2,000 in 2022.  

McDonald’s opened 650 new locations in 2021, with 1800 slated openings for 2022, including some in the US for the first time in years.  

Chipotle just increased its estimate for how many stores it could possibly run in North America from 6,000 to 7,000, an increase of over 16%. 

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