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Taco Bell and KFC are rapidly expanding delivery

Both chains have the service in 30% of their U.S. systems through parent company Yum Brands’ Grubhub partnership.
Photograph courtesy of Taco Bell

Seven months after inking an innovative delivery partnership with Grubhub, Yum Brands concepts Taco Bell and KFC are quickly adding the service to their U.S. restaurants.

Louisville, Ky.-based Yum said on Wednesday that both chains have delivery in 30% of their domestic restaurants and are quickly adding new restaurants.

“We’re in the very early stages,” Yum CFO David Gibbs said on the company’s third quarter earnings call Wednesday morning. He said that check growth and incrementality from adding the service at the chains’ restaurants is “encouraging.”

Yum in February announced that it is investing $200 million into Grubhub to expand the service at the two brands. Artie Starrs, president of Pizza Hut U.S., took a seat on Grubhub’s board of directors as part of the partnership.

The deal was a clear sign of Yum’s confidence in the future of delivery and its potential for KFC and Taco Bell.

At the company’s Pizza Hut brand, for instance, the company said on Wednesday that delivery and takeout orders are outpacing dine-in orders by 10 percentage points globally. Pizza Hut’s global same-store sales fell 1%.

At Taco Bell, delivery is in more than 2,100 locations in the U.S. and “adding stores at a rapid rate.” The company has fully integrated Grubhub into its point-of-sale system. “Franchisees are all-in on delivery as a major brand initiative,” Gibbs said.

The Mexican QSR chain’s same-store sales rose 5% in the third quarter, Yum Brands said Wednesday. Yum CFO Greg Creed highlighted the chain’s marketing, including the return of Nacho Fries that were included on more than a quarter of all customer orders during a promotion in the third quarter, which ended Sept. 30.

Taco Bell, which now operates nearly 7,000 mostly U.S. units, recently opened its 30th urban concept and believes that it can continue to open numerous such walk-up units, with Gibbs calling it a “near greenfield market for us.”

Yum Brands stock rose nearly 5% on Wednesday. The company’s stock is near its all-time high of more than $92 per share.

At KFC, meanwhile, delivery is in 30% of the system. Gibbs said that the brand is seeing “above-average customer ratings” and that it expects the service to be integrated into that brand’s POS system.

For KFC, delivery is a key element in the brand’s continued comeback efforts. The chain’s same-store sales rose 1% in the U.S. in the third quarter and 3% internationally. Creed highlighted the chain’s “bold marketing,” including the use of Jason Alexander as the new Colonel Sanders to promote $20 Fill Ups.

Company executives also said that KFC’s comeback is moving closer to a key milestone: unit-count growth.

The quick-service chicken chain has been shrinking in its home market, where it now represents just 18% of the brand’s total system sales, a distant second to leading market China (27%).

But the company said it hopes to become a “positive net new unit grower” soon. “We could get there as soon as next year,” Gibbs said. “We’re excited about new unit growth. And franchisees love it. It’s a way for them to grow their business.”

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