KFC owner Yum Brands Inc has recorded a smaller-than-expected drop in comparable sales and beaten profit estimates, helped by strong online sales at its Taco Bell chain.
Yum CEO David Gibbs said that online sales in the third quarter surged by over $1 billion to $4 billion from a year earlier, setting a new quarterly record.
"Drive-through demand skyrocketed this quarter as Taco Bell served over 30 million more cars," he said.
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Taco Bell, which trounced third-quarter comparable sales estimates, remains the crown jewel in Yum's portfolio, Cowen analyst Andrew Charles said in a note.
CEO Gibbs said that while the upward online sale trend continues in the current quarter, pandemic-related uncertainty persists. He said that there could be more challenges from fresh lockdowns.
Yum's net income rose by approximately 11% to $283 million, helped by $8 million in pre-tax income due to change in fair value of its investment in Grubhub Inc, which will be acquired by European online food-ordering company Just Eat Takeaway.com NV early next year, once approved by regulators.
Yum sold its stake in food delivery firm Grubhub for $206 million more than two years after making a $200 million investment to improve its delivery services.
Comparable sales fell 2% for the KFC owner in the quarter that ended on September 30, compared with the estimate of a 3.74% slide, according to IBES data from Refinitiv.
Earnings Per Share
Excluding items, Yum earned $1.01 per share, which was 21 cents more than expectations.