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Customers flocked to Taco Bell for Naked Chicken Chalupas

Brand’s same-store sales surge, largely on traffic

More customers went into Taco Bell early in 2017, and many of them were buying Naked Chicken Chalupas.

The Mexican quick-service chain’s same-store sales increased 8 percent in the first quarter ended March 31, with much of it coming on a 5-percent increase in transactions in the period.

“These are remarkable results,” Greg Creed, CEO of Taco Bell parent company Yum! Brands Inc., said on the company’s operating call on Wednesday.

Much of this traffic came in for the company’s Naked Chicken Chalupas — Chalupas, but with a shell made from fried chicken. 

Taco Bell said it sold 25 million of the Chalupas.

Suffice it to say, Taco Bell wants to do more of it. And indeed, the company recently announced plans for Naked Chicken Chips. “We plan for more naked products,” Creed said. “We’d be crazy not to.”

Executives on the call said the success at Taco Bell isn’t just from that product. “They had a great quarter,” Creed said. “It was strong across the board.”

He said the brand has been successful with both premium and low-priced products and has enjoyed “world class marketing.” “I do believe the team has turned this into a cult brand,” Creed said. That’s hard to do with a $10 billion brand, he noted.

Creed also said Taco Bell has a calendar of products “for the next couple of years” that should keep sales coming while also enabling the brand to react “flexibly” should anything unexpected happen.

Colonel-ization continues

Yum’s KFC brand also had growth in the U.S., which generated 2 percent same-store sales growth. That was KFC’s 11th straight quarter of growth, and Creed said the increase came entirely from transactions. 

“I like sales that come from transaction growth, rather than from pricing,” Creed said.

Creed said that the company’s Colonel campaign, which has used a series of actors and comedians to play the role of Colonel Sanders in its ads, has worked to generate more consistent sales. The current colonel is actor Rob Lowe.

But he also said the company’s improvement has come from more product availability and improving operations. 

KFC’s Georgia Gold product generated sales, and the company felt strong enough about its operations to bring its popular Zinger chicken sandwich to the U.S. — the Zinger is a popular product globally.

Executives have high hope for the sandwich, given the general popularity of chicken sandwiches and the product’s own popularity around the world.

“Great marketing and a clear message have helped make KFC distinctive and relevant,” Creed said. “Now franchisees are investing. We’ve added new sales layers, and demand from new franchisees has spiked.” 

Pizza Hut same-store sales fall 

The performance at KFC in the U.S., and Taco Bell, stand in stark contrast to the performance at Pizza Hut in the U.S., where same-store sales fell 7 percent in the quarter.

Yum announced plans to invest $130 million in Pizza Hut in the U.S. to help reinvigorate the brand.

Total revenues for Yum Brands fell 2 percent in the quarter, to $1.42 billion, from $1.44 billion. Net income in the period fell 23 percent to $280 million, from $364 million.

Yum’s stock rose nearly 3 percent in morning trading Wednesday.

Contact Jonathan Maze at [email protected]

Follow him on Twitter: @jonathanmaze

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