By Noah Rothstein
On July 29, Yum! Brands reported quarterly earnings and revenue that topped analyst predictions as sales at its three major brands, KFC, Pizza Hut, and Taco Bell, outperformed pre-pandemic levels, opening new restaurants at a record pace.
According to CNBC, shares of Yum! closed at $130.31, up 6.28%, after reaching a 52-week high of $130.49.
CEO David Gibbs said the company’s revenue grew 34% from last year to $1.6 billion and surpassed expected revenue of $1.48 billion. Yum’s same-store sales grew 4% on a two-year basis, despite 1% of its restaurants remaining closed due to the pandemic at the end of the quarter. Worldwide same-store sales increased by 23% in the quarter.
A net of 603 new locations opened during the quarter, and Yum! plans to pick up the pace of its expansion by reinstating long-term growth targets. The company plans to expand the number of restaurants it operates between 4% and 5% over the long term, up from its previous guidance of 4% growth.
Taco Bell U.S. launched a rewards program last year that has been instrumental to the growth of the brand’s digital sales.
Earlier this year, the company launched an app and website for KFC, replacing its third-party website, which has increased its digital sales.
“Our 2021 digital sales are on pace to soon surpass last year’s full-year digital sales amount,” Gibbs said.
KFC has seen increased demand for its new chicken sandwich amid the infamous chicken sandwich war, first introduced in February this year. In April, KFC stated it sold more than twice the volume of its new chicken sandwich contrasted with past versions.
KFC’s same-store sales grew 30% in the quarter, led by growth in the U.S. Same-store sales in the U.S. rose 19% on a two-year basis as pandemic restrictions eased and diners returned. KFC opened 428 net new locations in 62 countries during the second quarter.
Pizza Hut’s same-store sales grew 10% this quarter. Same-store sales rose 1% on a two-year basis, with delivery being the primary driver of growth.
Taco Bell’s same-store sales grew 21% in the quarter. On a two-year basis, its same-store sales rose 12%. According to Chief Financial Officer Chris Turner, Taco Bell has freshened its employee benefits by offering paid time off, free family meals, and increased employee development activities.
To offset higher commodity costs and wages, the company has increased its product pricing slightly.
“We are seeing inflationary pressures, primarily in the U.S.,” Gibbs said. “We have greater purchasing scale than most players in the industry … which leverages purchasing across the brand, gives our franchisees advantaged cost and negotiating capability from a sourcing standpoint.”