Yum Brands beats estimates as KFC, Pizza Hut sales soar

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Shares of the Taco Bell parent rose about 4%, hitting a record high, as comparable sales at its KFC division increased 30% in the second quarter, above estimates, helped by the easing of pandemic-induced restrictions in the United States.

Major U.S. fast-food restaurants, including Yum’s chains, McDonald’s (NYSE:MCD) and Starbucks (NASDAQ:SBUX), have been investing in their rewards program and launching new dishes to keep customers coming back even as full-service rivals reopen.

Yum has launched a new chicken sandwich, Detroit-style pizza and menu items made using Beyond Meat (NASDAQ:BYND)’s plant-based protein, while also acquiring technology firms, including Tictuk Tech, to improve its digital business.

In the second quarter ended June 30, digital sales rose 35% to over $5 billion, with Chief Executive Officer David Gibbs telling analysts all of Yum’s chains “are very rapidly becoming digital brands”.

“Digital is one of those things that has no downside … The average check is higher. There’s labor savings from processing orders on digital,” Gibbs added on the earnings call.

Same-store sales at KFC and Pizza Hut were also above pre-pandemic levels in the United States, cushioning the blow from declines in their international segments due to renewed coronavirus curbs in certain countries.

Overall net income rose 90% from a year earlier to $391 million. Excluding items, Yum earned $1.16 per share, surpassing estimates of 96 cents.

Comparable sales rose 23%, beating estimates of a 20.5% increase, according to IBES data from Refinitiv.

Yum also said it opened a record 603 net new restaurants across its brands, including in China and India, raising its long-term store growth forecast to between 4% and 5% from 4%.