Sales at Taco Bell contribute to fast food giant Yum Brands’ outperformance. On Wednesday, Yum Brands announced quarterly earnings and revenue that surpassed analysts’ estimates, thanks mainly to robust same-store sales growth at Taco Bell.
Demand in the United States was vital for the restaurant chain overall as well-off customers switched to fast food and low-income customers bought value meals. Despite this, KFC and Pizza Hut saw their earnings dragged down by sluggish sales in China after the Chinese government loosened its zero Covid policy and a wave of fresh outbreaks hit the country. Yum, and other restaurant chains, such as Starbucks, struggled to recover due to the upswing.
According to a poll of analysts conducted by Refinitiv, Yum’s results were as follows:
- Revenue: $1.31 billion, up from $1.26 billion
- Compared to the predicted $1.92 billion, sales of $2.02 billion were made.
Compared to the same period a year ago, Yum’s net income increased to $371 million, or $1.29 per share, from $330 million, or $1.11. After adjusting for the costs associated with the company’s decision to leave Russia and other factors, earnings per share came to $1.31.
Customers’ insatiable need for Taco Bell contributed to a 7% growth in net revenues, which brought the firm to $2.02 billion. Same-store sales surged around the world by 6%.
Same-store sales growth at Taco Bell, typically Yum’s strongest performer, hit 11% in the most recent quarter, surpassing StreetAccount projections of 6.7% growth. The chain was successful because it provided both high-priced and inexpensive options.
Yum CEO David Gibbs remarked in a conference call, “We’re connecting, and we’re winning because of value.”
According to Taco Bell’s executives, the chain sold 45 million Mexican Pizzas in 2022, which is noteworthy given that the product was only offered for four months of that year.
Although the Mexican-themed chain has been expanding internationally recently, most of its restaurants are still in the United States. According to Gibbs, Taco Bell’s worldwide footprint grew by more than a thousand stores in the last quarter alone. Twenty-four percent of the company’s overseas eateries have opened in the past two years.
KFC’s profits were below Wall Street’s forecasts because of its poor showing in China. Sales at the fried chicken chain increased by 5%, falling short of analysts’ projections of 5.4% growth. KFC’s same-store sales rose by 9% in 2018, excluding its largest market, China.
Weak sales in China exacerbated Pizza Hut’s poor performance in the fourth quarter. The pizza chain’s domestic same-store sales increased by 1%, while those in foreign markets decreased by the same amount. A 4% increase in same-store sales for Pizza Hut in the United States indicates that pizza lovers have overcome the pizza overload they had during the Covid lockdowns of 2017. Executing executives say advertising stressing new value offerings was a significant factor in luring back clients with decreased disposable incomes.
The latest addition to Yum’s family, The Habit Burger Grill, reported a 1% drop in sales at locations open for at least a year. System revenues, including new restaurants and those operational for at least a year, increased by 12% due to Yum’s aggressive growth strategy.