Taco Bell’s sales surged, thanks to the Mexican Pizza

The Mexican fast-food chain’s same-store sales rose 8% last quarter. But sister chains KFC and Pizza Hut did not fare nearly as well.
Taco Bell Mexican Pizza
Demand for the Mexican Pizza drove Taco Bell sales last quarter./Photo courtesy of Yum Brands.

Maybe Yum Brands should start serving Mexican Pizzas at KFC and Pizza Hut.

The Louisville, Ky.-based brand operator said on Wednesday that same-store sales at its Taco Bell brand surged 8% last quarter, which just so happened to be the same period that the fast-food chain brought Mexican Pizza back to its menu.

Neither KFC nor Pizza Hut were so lucky. KFC, which had been enjoying a two-year run of strong sales, reported a 7% decline in its U.S. market in the period. Same-store sales at Pizza Hut, struggling with the same driver shortage that has been plaguing rival Domino’s, reported a 4% same-store sales decline—as did the smaller Habit Burger.

“Taco Bell continues to fire on all cylinders,” Yum Brands CEO David Gibbs said on the company’s second-quarter earnings call on Wednesday.

The Mexican Pizza was pulled from Taco Bell’s menu in 2020 as part of a simplification effort. The move led to a more than year-long campaign from customers to convince the company to bring it back, something it did in May.

The company gave its loyalty members early access to the product. Sign-ups for Taco Bell’s loyalty program were 15 times normal during those two days, leaning to 10% overall growth in the company’s loyalty membership, Gibbs said.

Demand for Mexican Pizza was seven times previous levels and the company sold more than 20 million pizzas nationwide. “Some restaurants sold out within a week,” Gibbs said, saying that the product gave Taco Bell a “sustained positive halo.”

KFC, meanwhile, had seen its U.S. sales flourish during the pandemic as customers stayed home and ordered buckets of chicken. Last year, the chain introduced its new chicken sandwich, generating 11% same-store sales, and Gibbs suggested that stimulus payments to consumers last year also led to inflated sales.

Gibbs suggested that KFC struggled to match that performance this year. But he also said that same-store sales at the brand improved “sequentially” during the period.

Pizza Hut’s same-store sales decline, meanwhile, was due “in large part to continued operational challenges in the delivery business.”

The company has been working with third-party delivery companies to meet its capacity constraints, Gibbs said, noting that 55% of its U.S. locations are now using delivery as a service, up from 40% in the first part of the quarter. Gibbs also said that 70% of Pizza Hut’s U.S. locations are now on at least one aggregator marketplace, as the company turns to third-party delivery to help offset its sales declines.

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