Yum Brands On Tuesday, better-than-expected profits were reported, 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 US has outpaced the (fast food) industry in same-store sales growth,” Yum CEO Chris Turner said in a statement.
Yum shares rose more than 1% in premarket trading.
Here’s what the company reported compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: $1.56 adjusted vs. $1.49 expected
- Income: $2.05 billion versus $2.05 billion expected
Yum reported third-quarter net income of $1.62 billion, or $5.92 per share, compared with $397 million, or $1.41 per share, a year earlier.
Excluding gains from the sale 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 the sale of Pizza Hut. It completed the sale of the pizza chain’s mainland China operations to Yum China on August 7 and sold the remainder of Pizza Hut to LongRange Capital on September 1. The company’s third quarter results include Pizza Hut through these dates.
Excluding Pizza Hut, Yum’s same-store sales were flat for the quarter as Taco Bell weighed on the company’s overall results. Taco Bell’s same-store sales declined 4% as customers temporarily halted visits due to the foodborne illness outbreak.
Yum executives previously said that the weekend of July 18 had the most severe impact on sales, but that sales trends have improved since then.
Outside of the United States, Taco Bell’s much smaller international business reported same-store sales growth of 5%.
KFC’s same-store sales rose 1%, helped by growth in system sales in China and Europe. The United States, now the chicken chain’s third-largest market, saw system sales decline 6% during the quarter.
Like Restaurant Brands International’s Popeyes, KFC has struggled in the United States amid a wave of new competitors and more budget-conscious consumers.
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