Yum Brands on Thursday reported improved earnings for the fourth quarter ended Dec. 31, with an overall 1% drop in same-store sales across all brands as the company continues to improve during the COVID-19 pandemic. Only Taco Bell reported positive same-store sales of 1%, attributed to delivery growth, bringing back menu favorites and introducing new menu items like the grilled cheese burrito and nachos party pack.
“Taco Bell focused on building brand over time and sales overnight,” Yum Brands CEO David Gibbs said during Thursday’s earnings call. “We also improved ease by expanding to aggregate marketplaces.”
Yum Brands noted that their international markets have been lagging through the pandemic, while U.S.-focused Taco Bell has had the opportunity to gain ground. Meanwhile both Pizza Hut and KFC — with their strong focus in international markets, particularly in Asia — reported a 1% and 2% drop in same-store sales, respectively. KFC’s international sales growth was negative during the fourth quarter, while the U.S. division experienced 8% same-store sales. By the end of the fourth quarter, KFC had reached the 25,000-store milestone systemwide.
Pizza Hut similarly reported a 7% drop in same-store sales growth overseas and 8% same-store sales growth for U.S. stores. Pizza Hut’s performance was underscored by significant store closures throughout 2020 (1,063 net store closures by the end of the fiscal year).
“20% of Pizza Hut stores were in hands of poorly capitalized operators and now with Greg Flynn entering the system [buying NPC International’s Pizza Hut units] we know that will provide a boost to Pizza Hut,” Gibbs said. “There lots of reasons to be enthusiastic about their off-premise SKU.”
All three of Yum’s largest brands gained a boost from drive-thru sales, bolstered by improvements in both consumer and employee-side convenience technology. KFC experienced a 16-second improvement in average drive-thru times and Taco Bell experienced record-breaking drive-thru performance. The Habit Burger Grill, meanwhile, rolled out off-premise solutions like popup drive-thrus and curbside pickup (the latter of which accounted for 50% of digital sales).
Yum Brands also gave a preview of their performance in the first month of Q1 2021. The company said that all four brands saw same-store sales at U.S. stores up in “the mid-teens” in January, boosted by the COVID stimulus, although the impact of that boost will likely be temporary.
Yum Brands revenue increased 3% to $1.74 billion YoY. The company reported fourth quarter net income of $332 million, or $1.08 per share, down from $488 million, or $1.58 per share, the same quarter the year earlier.
The company added 183 net new units in 2020, with unit growth approximately flat for the quarter.
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