Yum Brands Inc has beaten market expectations for second-quarter results as new menu items and steady online demand boosted sales at KFC and Pizza Hut in the United States.
Shares of the Taco Bell parent rose approximately 4%, hitting a record high, as comparable sales at its KFC division increased 30% in the second quarter, above estimates, helped by the easing of pandemic-induced restrictions in the United States.
Rewards Programmes, New Menu Items And Digital Sales
Major US fast-food restaurants, including Yum's chains, McDonald's and Starbucks, have been investing in their rewards programmes and launching new dishes to keep customers coming back even as full-service rivals reopen.
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Yum has launched a new chicken sandwich, Detroit-style pizza and menu items made using Beyond Meat's plant-based protein, while also acquiring technology firms, including Tictuk Tech, to improve its digital business.
In the second quarter ended June 30, digital sales rose 35% to over $5 billion, with Yum Brands CEO David Gibbs telling analysts that all of Yum's chains "are very rapidly becoming digital brands".
"Digital is one of those things that has no downside...The average check is higher. There's labour savings from processing orders on digital," Gibbs added on the earnings call.
Same-Store Sales, Overall Net Income, Earning Per Share And Comparable Sales
Same-store sales at KFC and Pizza Hut were also above pre-pandemic levels in the United States, cushioning the blow from declines in their international segments due to renewed coronavirus curbs in certain countries.
Overall net income rose 90% from a year earlier to $391 million. Excluding items, Yum earned $1.16 per share, surpassing estimates of 96 cents.
Comparable sales rose 23%, beating estimates of a 20.5% increase, according to IBES data from Refinitiv.
New Restaurant Openings
Yum also said that it opened a record 603 net new restaurants across its brands, including in China and India, raising its long-term store growth forecast to between 4% and 5% from 4%.