KFC, Taco Bell parent sees revenue rise 34 percent

The firm that owns KFC and Taco Bell posted better-than-expected gross sales within the second quarter because of stronger buyer demand and a report new retailer constructing spree.

Yum Brands constructed 603 web new shops in the course of the quarter, together with 522 KFC shops in 62 nations.

As a results of the robust quarter, the corporate raised its outlook for brand spanking new retailer progress from 4% to between 4% and 5% in 2021 and 2022. CEO David Gibbs mentioned the tempo of retailer openings mirrored the well being of the corporate’s manufacturers popping out of the pandemic.

“When our unit economics are good, it’s an attractive proposition for our franchisees to build,” Gibbs mentioned in a convention name with buyers Thursday. Worldwide, 98% of Yum’s eating places are owned by franchisees.

Revenue for the Louisville, Kentucky, firm rose 34% within the April-June interval to $1.6 billion. That was forward of Wall Street’s forecast of $1.48 billion, in line with analysts polled by FactSet.

Gibbs additionally famous a pointy enhance in digital gross sales, together with on-line orders for pickup and supply. Digital orders grew 35% year-over-year to $5 billion.

Digital orders save on labor prices and guarantee extra seamless service, Gibbs mentioned, and prospects ordering on-line additionally are likely to order extra.

Customers ordering from KFC in Hong Kong
CEO David Gibbs mentioned the tempo of retailer openings — 603 in the course of the quarter — mirrored the well being of the corporate’s manufacturers popping out of the pandemic.
SOPA Images/LightRocket through Getty Images

“Digital is one of those things that have no downside,” he mentioned.

To facilitate that progress, Yum agreed to accumulate Dragontail, an Australian tech firm, in May. Dragontail’s platform helps handle kitchen orders and dispatch supply drivers; the deal is predicted to shut by the top of the third quarter. Yum now gives supply from greater than 70% of its shops globally.

Yum’s scale — with greater than 50,000 eating places worldwide — helps blunt the influence of upper commodity costs, Gibbs mentioned. But he mentioned U.S. franchisees have made “moderate” value will increase to account for larger labor prices.

Restaurants have been struggling to hire enough workers because the pandemic eases and demand soars. On Wednesday, Yum rival McDonald’s mentioned it has raised pay for U.S. staff by 5% this 12 months.

A now hiring sign outside a Taco Bell restaurant
Restaurants have been struggling to rent sufficient staff because the pandemic eases and demand soars.
Getty Images

Same-store gross sales, or gross sales at areas open a minimum of a 12 months, jumped 23%, which was larger than Wall Street anticipated. Last 12 months, the corporate’s same-sales dropped 15% within the second quarter because the pandemic slowed buyer site visitors.

Same-store gross sales additionally rose in comparison with 2019 ranges. But on that foundation the numbers had been extra uneven, with stronger leads to the U.S. the place extra shops have absolutely reopened.

KFC U.S. same-store gross sales jumped 19% in comparison with 2019 ranges, for instance, however worldwide KFC same-store gross sales fell 1%. The firm mentioned 2% of its worldwide shops remained briefly closed as a consequence of virus restrictions on the finish of June.

A man wearikng a mask rides a bicycle past a Taco Bell
Yum Brands mentioned its eating places, which embody Taco Bell, noticed a 35 percent enhance in digital gross sales, together with on-line orders for pickup, in the course of the quarter.
Getty Images

Yum China Holdings, a separate firm that reported outcomes Wednesday, mentioned it needed to shut or prohibit service at 400 eating places in southern China in late May as a consequence of a coronavirus outbreak.

(*34*), Pizza Hut’s U.S. same-store gross sales rose 9% in comparison with 2019, whereas worldwide same-store gross sales had been down 6%.

Net earnings rose 89% to $391. Adjusted for one-time objects, the corporate earned $1.16 per share. That was additionally forward of analysts’ forecast of 96 cents.

Yum Brands shared rose 6% to $129.82 in afternoon buying and selling.

Yum’s outcomes got here the day after McDonald’s reported a big rebound within the second quarter. McDonald’s mentioned its international same-store gross sales jumped 40.5% within the April-June interval.

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