Financial gains from shedding Pizza Hut helped the fast-food parent company exceed quarterly forecasts despite operational setbacks at its core Mexican chain. Total net income surged, yet customer avoidance stemming from the lettuce contamination stalled overall comparable-store momentum. Leadership emphasized that diner traffic has stabilized and returned to industry-leading growth rates heading into the fourth quarter. Meanwhile, KFC offered mixed results, with European and Chinese gains offset by a six percent domestic sales contraction.
Key points
Total net income reached $1.62 billion primarily due to gains from completing the Pizza H…: Total net income reached $1.62 billion primarily due to gains from completing the Pizza Hut divestiture.
Management indicated that Taco Bell's domestic same-store sales recovered to outpace the…: Management indicated that Taco Bell's domestic same-store sales recovered to outpace the quick-service restaurant industry by late September.
International expansion provided support with Taco Bell's global unit rising 5% and KFC a…: International expansion provided support with Taco Bell's global unit rising 5% and KFC adding 1% globally.
Sources checked by our analysis pipeline: 1
Yum Brands on Tuesday reported earnings that beat expectations, but a cyclospora outbreak linked to iceberg lettuce at Taco Bell weighed on the company's same-store sales growth.
However, Yum said Taco Bell, which the company considers a "growth engine" for its business, has since rebounded.
"Since the end of September, Taco Bell U.S. has been outpacing the [quick-service restaurant] industry on same-store sales growth," Yum CEO Chris Turner said in a statement.
Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: $1.56 adjusted vs. $1.49 expected
- Revenue: $2.05 billion vs. $2.05 billion expected
Yum reported fiscal third-quarter net income of $1.62 billion, or $5.92 per share, up from $397 million, or $1.41 per share, a year earlier.
Excluding gains from its divestiture of Pizza Hut and other items, the restaurant company earned $1.56 per share.
Net sales rose 4% to $2.05 billion.
During the quarter, Yum completed its divestiture of Pizza Hut. It closed the sale of the pizza chain's business in mainland China…
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