Yum! Brands Results Tastier Than Expected

Fast meals big Yum! Brands Inc. (YUM) on Thursday, Nov. 2, reported growing same-store gross sales in all three of its chains—KFC, Pizza Hut and Taco Bell.

Shares have been up almost 6% to $79.02 at 12:24 p.m., EDT, Thursday.

During the quarter ending Sept. 30, Yum reported earnings of 68 cents per share, forward of badysts’ anticipated 67 cents per share. Sales of $1.44 billion, down 5% yr over yr, additionally exceeded the consensus estimate of $1.39 billion.

Yum’s KFC idea had the strongest gross sales development throughout the quarter, with system gross sales of $6.three billion, up eight% yr over yr. Same-store gross sales grew four% throughout the interval, and U.S. gross sales rose 1%. KFC opened 291 new worldwide eating places in 51 nations, 249 of which have been in rising markets.

Taco Bell’s system gross sales development of 6%, to $2.four billion, with system-sales rising three% and U.S. gross sales up three%. Yum CEO Greg Creed touted Taco Bell’s $1 Potato-rito and $5 Double Chalupa Supreme, amongst different product launches, which he mentioned drive buyer loyalty. He recognized India, Brazil, China and Canada because the model’s key development markets. 

At Yum’s third section, Pizza Hut, which has been making an attempt to enhance its geographic combine and supply capabilities to compete with rival Domino’s Pizza Inc. (DPZ) , system gross sales of $2.97 billion have been up three%, and same-store gross sales rose 1%. U.S. gross sales have been flat.  

“The foundations are not always bady, but I think delivering hot, reliable pizza is important,” Creed mentioned. Its efforts embody a brand new supply pouch made with 3M Co. (MMM)  insulation expertise. Improved supply each will increase the dimensions of checks and will increase the number of events for pizza purchases that Pizza Hut can seize. 

Customer satisfaction is up 9% from the prior yr at Pizza Hut, Creed added. 

Another Pizza Hut competitor, Papa John’s International Inc. (PZZA) , blamed the NFL’s management amid the nationwide anthem kneeling controversy for falling pizza gross sales.

“The NFL has hurt us by not resolving the current debacle to the players’ and owners’ satisfaction,” CEO John Schnatter mentioned on a name Wednesday, Nov. 1, with badysts. “NFL leadership has hurt Papa John’s shareholders.”

COO Steve Ritchie added that the “unexpected decline in viewership of the NFL” and unfavourable buyer views of the corporate’s league sponsorship may also harm gross sales within the subsequent quarter.

There could also be some reality to Papa John’s claims, in accordance with Nomura badyst Mark Kalinowski.

“It indeed appears that National Football League strife may be weighing on same-store sales, with Papa John’s as the NFL’s Official Pizza Sponsor bearing some brunt of this issue,” he wrote. “Sponsorship of NFL = No Free Lunch.”

But that does not appear to be an issue at Pizza Hut.

“We also love live sport, whether it’s baseball, college football, NFL,” Creed mentioned. “We’re not seeing any impact from any of that on our business,” and the corporate will proceed to advertise all three of its manufacturers with sports-centered advertising and marketing. Pizza Hut is an official NCAA sponsor, CFO David Gibbs added.

Yum shares rose zero.9% to $75.00 in premarket buying and selling Thursday.

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