Yum Brands Inc. reported better-than-expected earnings before market open Wednesday.
The parent of Taco Bell, Pizza Hut and KFC fast-food restaurants had net income of $416 million, or $1.46 a share, up from $331 million, or $1.14 a share, in the year-earlier period. Adjusted per-share earnings came to $1.44, ahead of the $1.27 FactSet consensus. Yum Brands’
YUM,
revenue rose to $1.708 billion from $1.64 billion in the prior year’s quarter. Analysts surveyed by FactSet were looking for revenue of $1.772 billion.
Same-store sales growth was 6%, above the 4.6% FactSet consensus. The company also added 1,130 gross new units, an increase of 6% and a new third-quarter record.
Related: Inflation hasn’t taken a bite out of traffic to Yum Brands’ Pizza Hut and Taco Bell, research shows
Chief Executive David Gibbs said that the full-year 2023 results are expected to outperform all aspects of the company’s long-term growth algorithm. During a conference call to discuss the results, Gibbs was asked about pressure on consumer spending. The CEO noted that the third quarter was Yum Brands’ fifth consecutive quarter of double-digit systems-sales growth globally but acknowledged there are challenges “in every market.”
In the U.K., the CEO cited the impact of variable-rate mortgages on consumers, and he also pointed to student-loan repayments in the U.S. However, Gibbs said that the company and its franchisees are navigating consumer-spending pressures. The CEO said that Taco Bell’s U.S. stores in lower-income areas are performing well, for example, highlighting the impact of the Taco Bell $5 box. “We’re putting up strong results,” he added. “We’re demonstrating we can thrive in any environment.”
Speaking during the conference call, Yum Brands Chief Financial Officer Chris Turner said that the company’s automated inventory-management system is now in place at over 7,000 U.S. restaurants, including 2,700 KFC restaurants. The company is also testing a voice-enabled AI-powered drive-through platform at some restaurants in California, he added.
Related: McDonald’s set up well for 2024 as digital sales, restaurant growth, ramp up: Wells Fargo
Shares of Yum Brands fell 0.7% in premarket trading Wednesday. The stock is down 5.6% in 2023, compared with the S&P 500’s
SPX
gain of 9.2%.
