Yum Brands Q4 Earnings Surpass Expectations, Led by Strong Performance of Taco Bell

Yum Brands, the multinational fast-food giant, has reported its Q4 earnings for the year 2022, which have surpassed analysts’ expectations, largely driven by strong sales at Taco Bell. The company reported net income of $371 million, or $1.29 per share, up from $330 million, or $1.11 per share, in the same period last year. The company’s net sales rose 7% to $2.02 billion, while the global same-store sales increased 6%.

Taco Bell, which is one of the strongest performers in Yum's portfolio, reported 11% same-store sales growth, beating StreetAccount estimates of 6.7%. This strong performance was due in part to the popularity of the Mexican Pizza, which sold 45 million units during the quarter, despite being only available for four months of the year. The Mexican-inspired chain’s CEO, David Gibbs, announced that the international footprint of Taco Bell had surpassed 1,000 locations during the quarter, with 40% of those restaurants built in the last two years.

However, the results were not all positive for Yum, as the weak performance in China once again weighed on the results of KFC and Pizza Hut. KFC's same-store sales growth was 5%, missing expectations of 5.4%. Excluding China, its largest market, KFC’s same-store sales increased 9%. Weak sales in China also impacted Pizza Hut's fourth-quarter performance, with the pizza chain’s global same-store sales ticking up only 1%. Despite this, Pizza Hut's U.S. same-store sales rose 4%, due to advertising that highlighted new value offerings, attracting lower-income customers back to the chain.

Yum's latest addition, The Habit Burger Grill, saw a 1% decline in same-store sales, but its system sales rose 12% thanks to the company's rapid expansion of the chain.

It is clear that the ongoing pandemic has had a significant impact on the restaurant industry, and Yum is no exception. The Chinese government's recent relaxation of its zero Covid policy has resulted in a wave of new outbreaks, which has impacted Yum and other restaurant companies like Starbucks. However, despite these challenges, Yum has demonstrated its resilience, with its results demonstrating the continued strength of its brands, particularly Taco Bell.

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