On Wednesday, Yum Brands exceeded expectations for quarterly comparable sales and earnings as strong demand for less expensive meals and promotional deals at its KFC restaurants offset weak customer visitation at its Taco Bell and Pizza Hut locations. KFC’s quarterly comparable sales increased by 13% and exceeded expectations for an 8.29% growth as lower-income customers …
On Wednesday, Yum Brands exceeded expectations for quarterly comparable sales and earnings as strong demand for less expensive meals and promotional deals at its KFC restaurants offset weak customer visitation at its Taco Bell and Pizza Hut locations. KFC’s quarterly comparable sales increased by 13% and exceeded expectations for an 8.29% growth as lower-income customers who were struggling with high food prices were drawn in by promotions like the 2-for-$5 fried chicken wrap and new products like chicken nuggets.
According to CEO David Gibbs on a conference call to discuss the results, KFC experienced the greatest growth in the United States among its lower-income customers. Newer, younger customers also found the menu to be enticing. Also, during the quarter, the chain of fried chicken eateries established 600 additional locations in 60 different nations. According to Brian Yarbrough, an analyst at Edward Jones, “Chicken has been pretty popular lately…as consumers are consuming chicken over beef, and (KFC has) really gone after that market.” In a period when beef costs have remained stubbornly high, American restaurant giants like McDonald’s (NYSE: MCD) and Chipotle (NYSE: CMG) have indicated that more diners are preferring chicken. Revenue at Yum Brands increased by 3% to $1.69 billion, but it fell short of projections of $1.75 billion mostly because Taco Bell and Pizza Hut sales were lower than anticipated. Diners have gradually started to switch from more expensive fast-casual restaurants to the chains, while existing customers have also increased their frequency of purchases, according to CFO Chris Turner. Yum Brands’ value offerings have also attracted customers from higher income levels, he added.
Yum Brands exceeded projections by earning $1.41 per share after items, beating the $1.24 average. The corporation is gaining from the cooling of commodity prices that had spiked as a result of COVID-19-related interruptions and were made worse by the Russia-Ukraine crisis. Refinitiv IBES data showed that overall same-store sales increased 9%, above experts’ predictions of a 7.01% growth. Early trading saw a little increase in the price of the company’s shares.
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