Yum Brands beats quarterly results estimates on KFC boost

Yum Brands (YUM.N) topped market estimates for quarterly results last week, as cheaper meals and promotional offers at its KFC restaurants boosted demand and overshadowed lackluster traffic at Taco Bell and Pizza Hut.

The company has attracted more lower-income consumers who have been most hit by inflation through aggressive promotions and value meal deals, while an array of new menu item launches across its brands have also helped boost traffic.

Louisville, Kentucky-based Yum Brands is also benefiting from cooling costs of key commodities such as chicken, cheese and pork that had peaked amid COVID-19-related disruptions and the Russia-Ukraine crisis.

Quarterly comparable sales at KFC rose 13 per cent, handily beating estimates of 8.29 per cent, and logging the best same-store sales growth in at least seven quarters. New launches such as chicken nuggets, and cheaper meal options like the $5 Mac & Cheese Bowls and the 2-for-$5 fried chicken wrap offers helped KFC sales.

Meanwhile, Taco Bell’s second-quarter same store sales grew 4 per cent, slightly below expectations of a 4.18 per cent rise, as traffic at the chain tempered in comparison to strong demand last year driven by the launch of the Mexican Pizza.

Same-store sales at Yum Brands rose 9 per cent in the quarter ended June 30, compared with analysts’ estimates of a 7.01 per cent increase, according to Refinitiv IBES data.

Excluding items, Yum Brands earned $1.41 per share, above estimates of $1.24 per share.

Operating margin at KFC rose to 47.7 per cent in the quarter from 43.2 per cent a year earlier, while at Taco Bell, it improved slightly to 36.8 per cent.