Yum! Brands, owner of KFC, Pizza Hut, Taco Bell and the Habit Burger Grill brands, reported its earnings for the second quarter (Q2), which ended June 30. Worldwide system sales grew 13%, excluding foreign currency translation, the company announced Aug. 2.
"Our broad-based momentum continued in the second quarter with system sales growth of 13% owing to 9% same-store sales growth and 6% unit growth," Yum! Brands CEO David Gibbs said in the press release. "KFC, our largest division, led the quarter with an astounding 19% system sales growth."
Taco Bell and Pizza Hut each reported a 7% increase, lower than the company's expectations, according to the release. Highlights from the Q2 report include the addition of 1,025 gross new units; a record $7 billion in digital sales, with digital mix exceeding 45%; core operating profit increase of 12% and a 4% increase in GAAP operating profit; and that foreign currency translation "unfavorably impacted" divisional operating profit by $17 million, the release reports.
Yum! Brands officially ceased its corporate presence in Russia in April, when it sold its KFC business there to Smart Service Ltd., and so completed its exit from that market. The transaction negatively impacted Yum! and KFC Division system sales growth by 1 and 2 percentage points, respectively, for the year to June 30, the release reports.
In comparison to Wall Street projections based on a survey of analysts by Refinitiv, Yum!’s report recorded earnings per share of $1.41 adjusted vs. $1.24 expected, and a revenue count of $1.69 billion vs. $1.75 billion expected. The restaurant brand reported a net income of $418 million, or $1.46 per share, reflecting a $224 million, or 77 cents per share increase. During early trading, the shares of the company rose by more than 1%, according to the release.
KFC’s same-store sales 13% growth is driven by the restaurant brand’s growing popularity in China, according to the release. Pizza Hut reported same-store sales growth of 4%, falling under StreetAccount’s projections of 6.3%. The pizza chain’s national same-store sales increased by 1%. “Some of Pizza Hut’s growth comes from more solo diners, who are choosing menu items like its Melts,” the report states.
Taco Bell’s same-store sales also increased by 4%. The food chain established more than 1,000 new locations during the quarter, the release reports.
Gibbs said in the release that he remains confident Yum! Brands is well-positioned "to thrive in any consumer spending environment given the broad consumer appeal of our iconic brands, including our craveable products, compelling value and easy experiences.
"With our strong year-to-date results and continued momentum, we expect to deliver full year 2023 results well above our long-term growth algorithm for system sales and core operating profit growth,” Gibbs said in the release.