Yum Brands has reported better-than-expected third-quarter earnings, although a cyclospora outbreak linked to iceberg lettuce at Taco Bell hit same-store sales growth in the period.
The restaurant group said its Taco Bell business had since recovered, with US same-store sales rising by about 1% so far in the fourth quarter. In the four weeks to Friday, sales were up 3% compared with the same period last year.
Chief executive Chris Turner said Taco Bell US had been outperforming the wider quick-service restaurant industry since the end of September.
Yum reported adjusted earnings of $1.56 per share, ahead of the $1.49 expected by analysts. Revenue rose 4% to $2.05 billion, in line with expectations.
Net income reached $1.62 billion, or $5.92 per share, compared with $397 million, or $1.41 per share, a year earlier. The latest figure included gains from the divestiture of Pizza Hut and other items.
Excluding Pizza Hut, which Yum sold during the quarter, same-store sales were flat. Taco Bell’s same-store sales fell 4% as customers temporarily reduced visits following the outbreak.
Yum said the sharpest impact was seen over the weekend of July 18, but customer numbers have improved since then. Its most loyal customers returned more quickly, helped in part by weekly Tuesday offers for members of Taco Bell’s loyalty scheme.
Chief financial officer Ranjith Roy said visits from medium and light customers had recovered to about 95% of previous levels, while visits from heavy users had returned to normal.
Taco Bell has also used promotional partnerships to attract more occasional diners, including a collaboration with singer Olivia Rodrigo involving a pink-coloured Mountain Dew Baja Blast. Its international business, which is much smaller than its US operation, recorded same-store sales growth of 5%.
KFC sales fall in the US
KFC’s global same-store sales increased by 1%, supported by system sales growth in China and Europe. In the US, now the chain’s third-largest market, system sales fell 6% during the quarter.
The US business launched popcorn chicken during the period, with the product selling out at many restaurants. Yum said the limited-time offering was not enough to offset the strong performance of the Hot & Spicy Wings and Potato Wedges promotion a year earlier.
Mr Turner said KFC was aiming to become “the most modern chicken QSR”, with plans for high-profile promotions, a new brand identity and a broader menu featuring upgraded sauces and more drinks.
Yum completed the sale of Pizza Hut during the quarter, selling its mainland China business to Yum China on August 7 and the rest of the chain to LongRange Capital on September 1. Pizza Hut’s results were included up to the dates of those transactions.
