Financing

Taco Bell and KFC International fuel Yum Brands

Same-store sales at Taco Bell rose 8% in the third quarter while sister chain KFC continued to aggressively open new units around the globe.
Taco Bell
Taco Bell's same-store sales helped drive Yum Brands performance last quarter. | Photo courtesy of Taco Bell.

Yum Brands’ two most profitable divisions continued to fuel the chain last quarter.

Taco Bell U.S. generated 8% same-store sales growth in the third quarter, Yum said on Wednesday, as the return of a value-oriented $5 Box and a digital focus drove consumer interest in the period. The sales results included transaction growth, Yum executives said.

Taco Bell’s transactions grew regardless of income levels, executives said. David Gibbs, Yum’s CEO, told investors on Wednesday that its transactions grew 2% to 3% consistently across all income levels. He suggested the company might be getting the benefit of “some trade down” into QSR. “We’re demonstrating that we can thrive in any environment,” Gibbs said.

“The business is sort of on a roll,” he added.

Sister company KFC, meanwhile, continued to thrive internationally, opening 664 gross new units in the period. KFC worldwide now has 29,051 restaurants worldwide, more than all but three other restaurant companies.

The development was led by China, KFC’s largest market, as well as India and Turkey. The brand has added “more units than any other retail brand in the world” since 2021, Gibbs said. Combined, KFC International and Taco Bell represent more than 80% of Yum’s operating profit.

Global system sales at Yum grew 10% in the quarter. Earnings per share increased 27% in the quarter to $1.46. Excluding special items, EPS grew 32% to $1.44.

Same-store sales at KFC in the U.S. were flat, as were same-store sales at the company’s Pizza Hut division domestically. At Habit Burger, same-store sales declined 5%.

Digital sales drove much of the company’s business in the third quarter, increasing more than 20% in the quarter and generating $7 billion in system sales globally. “We like everything about those digital sales dollars as we continue to grow the business,” CFO Chris Turner told investors.

The company has further plans to develop that digital business in the coming year. Executives said that Taco Bell plans to upgrade its loyalty program next year. KFC plans to bring its KFC Rewards program to the U.S. later this year. “Loyalty across all our brands is a key focus area for us,” Turner said.

Taco Bell is also planning a new “Cantina Menu” in the U.S. next year that could focus more on chicken. Gibbs described it as “a different version of our chicken.”

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