Taco Bell, KFC Power Yum Brands Quarterly Results

Yum Brands Inc (YUM.N) beat Wall Street estimates for third-quarter revenue and profit on Wednesday, as strong sales at KFC and Taco Bell more than made up for further weakness at Pizza Hut, sending its shares up more than 4 percent.

Competition between big U.S. fast-food chains has intensified as Yum, McDonald’s Corp (MCD.N) and Domino’s Pizza Inc (DPZ.N) try to lure cash-conscious customers with dollar menus, discounts and new breakfast items.

Taco Bell, Yum’s fastest-growing brand, launched $1 nacho fries and a $1 Triple Melt Burritos and nachos this year, driving same-restaurant sales up 5 percent in the third quarter. Analysts had expected a 3 percent rise.

Same-store sales at the KFC division also rose 3 percent, beating expectations of a 2.13 percent growth, boosted by strong performance in international markets including Russia, Thailand, the Middle East and India.

Pizza Hut, however, remained a dark spot for the company, with same-restaurant sales falling 1 percent, due to declines in the United States, where it faces intense competition.

The chain has been trying to turn itself around in the United States, ramping up promotional offerings such as the large two-topping pizza for $5.99.

Company executives called out Pizza Hut’s underperformance on a post-earnings call, with Chief Executive Officer Greg Creed saying the promotions were not distinctive enough to attract new customers.

Excluding one-time items, Yum earned $1.04 per share, beating analysts’ average expectation of 83 cents, according to Refinitiv estimates.

Yum’s net income rose 8.6 percent to $454 million in the three months ended Sept. 30.

Total revenue fell 3 percent to $1.39 billion, but also beat analysts’ average estimate.

The company’s shares rose 3.6 percent to $89.50 in premarket trading on Wednesday. The stock has gained nearly 6 percent this year.

Reuters

Reporting by Aishwarya Venugopal in Bengaluru; Editing by Arun Koyyur, Saumyadeb Chakrabarty and Sweta Singh