Operations

Digital drives big sales growth for Yum Brands

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April 28, 2021

Worldwide sales grew 11% and same-store sales spiked 9% for Yum Brands Inc.'s first quarter ended March 31.

The main driver, according to an earnings announcement, was digital capabilities and the fact more consumers are heading out to eat as COVID-19 pandemic concerns are ebbing.

Yum! Brands operates the brands KFC, Pizza Hut, Taco Bell, The Habit Burger Grill, and WingStreet worldwide, except in China, where the brands are operated by a separate company, Yum China.

Kentucky Fried Chicken and Taco Bell enjoyed a 11% worldwide sales spike while Pizza Hut had a 7% sales growth.

The earnings results saw company shares rise less than 1% in premarket trading after the earnings call early this morning, according to a CNBC report.

The company saw record digital sales of over $5 billion, according to the earnings announcement and unit growth of 1%. According to the announcement EPS was $1.07 and first-quarter EPS, excluding special items, was also $1.07, an increase of 67% over the prior year quarter. The company saw a 1% unit growth year-over-year and net new unit growth of 435 during the quarter.

"First-quarter results reflect encouraging momentum across our business, including solid 2-year same-store sales growth and a meaningful uplift in unit development, underpinned by the focus and collaboration of our franchise partners and restaurant teams around the world," said CEO David Gibbs in the announcement . "During the quarter we took important steps to further boost our digital and marketing capabilities through the acquisitions of two technology-focused companies that will enhance our ability to grow our sales overnight and our brands over time. Our foundation is strong and our path forward is clear. While uncertainties remain due to the ongoing impact of COVID-19 in many geographies, with our iconic brands, world-class talent and a healthy franchise system we are poised to enter a post-COVID world with a long runway of growth ahead of us."

Earnings highlights included:

KFC

Operating margin increased 8.4 percentage points driven by same-store sales growth, lower bad debt expense, and unit growth.
KFC Division opened 409 restaurants in 50 countries.
KFC International's same-store sales declined 2% on a 2-year basis, which includes the impact of about 2% of stores being temporarily closed as of the end of the first-quarter 2021.
KFC U.S., same-store sales grew 11% on a two-year basis, which includes the impact of less than 1% of stores temporarily closed as of the end of the first-quarter 2021.

Pizza Hut Division

Opened 172 restaurants in 33 countries.
Operating margin increased 8 percentage points driven by same-store sales growth, lower bad debt expense, and lower general and administrative expenses, partially offset by the impact of prior year permanent unit closures.
Pizza Hut U.S. off-premise channel generated 23% same-store sales growth.
Pizza Hut Division's same-store sales declined 1% on a 2-year basis, which includes the impact of about 3% of stores being temporarily closed as of the end of the first-quarter 2021.
For Pizza Hut International, same-store sales declined 7% on a 2-year basis, which includes the impact of about 3% of stores being temporarily closed as of the end of the first-quarter 2021.
Pizza Hut U.S. same-store sales grew 8% on a two-year basis, which includes the impact of about 3% of stores being temporarily closed as of the end of the first-quarter 2021.

Taco Bell Division

Opened 73 restaurants in nine countries.
Operating margin increased 4.7 percentage points due to same-store sales growth and lower general and administrative expenses.
Same-store sales grew 10% on a two-year basis, which includes the impact of less than 1% of stores being temporarily closed as of the end of the first-quarter 2021.

Habit Burger Grill Division

Opened six restaurants in the U.S and Cambodia.
Same-store sales grew 13%.
For the division, same-store sales grew 3% on a two-year basis, which includes the impact of about 2% stores that were temporarily closed as of the end of the first-quarter 2021.