Yum Brands starts opening units again

The owner of KFC, Taco Bell, Pizza Hut and Habit accelerated development in the third quarter and said it has a shot at breaking an industry record for new openings this year.
KFC Taco Bell Pizza Hut sales
Photograph: Shutterstock

Yum Brands' roster of fast-food concepts opened more locations around the globe in the third quarter as international sales picked up and their U.S. sales remained strong.

The Louisville, Ky.-based owner of KFC, Taco Bell, Pizza Hut and Habit Burger said on Thursday that it opened 760 net new locations in the quarter ended Sept. 30, or about 4%. The brands now operate a combined 52,000 global restaurants.

Company executives said Thursday that they opened one new restaurant every hour somewhere around the world. So far this year, the company has added 1,800 locations. “We probably have a shot at setting a record for the restaurant industry all-time for the number of units open in one year,” CEO David Gibbs said.

Same-store sales for the system rose 5%. In the U.S., the brands slowed somewhat from their second-quarter pace but remained well above 2019 levels.

KFC, which has performed strongly since the outset of the pandemic as consumers bought more buckets of chicken, saw same-store sales rise 13% on a two-year basis in the quarter. That’s down somewhat from the 19% growth in the second period when the chain introduced its chicken sandwich.

Globally, KFC opened now operates 26,222 restaurants worldwide.

Pizza Hut, meanwhile, now operates 18,007 locations after its unit development shifted directions in the quarter. It has been closing restaurants in the U.S., however, though same-store sales at the chain rose 8% on a two-year basis, a slight slowdown from the second quarter.

Taco Bell, meanwhile, said its same-store sales rose 5% in the third quarter and 8% on a two-year basis. That was slower than the 12% two-year sales in the second quarter.

Analysts asked executives Thursday about Taco Bell’s two-year slowdown, in particular. Its two-year sales were behind the overall industry average and came as the chain relaunched breakfast.

Gibbs, however, said the company’s system sales are up 15% on a two-year basis, though he noted that the brand skews toward individual meals that have been less popular among consumers since the start of the pandemic.

“It does have its own unique challenges since it skews a little bit more toward individual meals versus family occasions,” he said. “But Taco Bell’s performance was strong.”

The chain’s smaller Habit Burger’s same-store sales rose 11%, and 7% on a two-year basis, as the brand opened eight new locations.

Total revenues at Yum Brands rose 11% in the quarter to $1.6 billion. Net income rose 87% to $528 million, or $1.75 per share.

As for unit development, about half of the company’s new unit development came in China, but executives noted the 379 new locations outside that country equaled the total number of net new units Yum reported in the third quarter of 2019.

UPDATE: This story has been updated to add more information.

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