Yum Manufacturers (YUM) This fall 2022 outcomes

A pedestrian walks past the Taco Bell American fast food restaurant chain in Spain.

Xavi Lopez | Light Rocket | Getty Images

Yum Marks on Wednesday reported quarterly earnings and sales that beat analysts’ expectations, driven by strong same-store sales growth at Taco Bell.

Overall, the restaurant giant saw strong US demand for its groceries, but weak sales in China again weighed on the results of KFC and Pizza Hut. After the Chinese government eased its zero-Covid policy, a wave of new outbreaks has hit the country, hurting the recovery of Yum and other restaurant businesses Starbucks.

Here’s what Yum reported versus Wall Street expectations, based on a poll of analysts by Refinitiv:

  • Earnings per share: Adjusted $1.31 vs. $1.26 expected
  • Revenue: $2.02 billion versus $1.92 billion expected

Yum reported net income of $371 million, or $1.29 per share, for the fourth quarter, up from $330 million, or $1.11 per share, a year ago.

Excluding costs related to the decision to leave Russia and other factors, the company earned $1.31 per share.

net sales rose 7% to $2.02 billion. The company’s global same-store sales rose 6% in the quarter, driven by patrons’ strong appetites for Taco Bell.

Taco Bell, which is typically the strongest performer in Yum’s portfolio, reported 11% same-store sales growth, beating StreetAccount’s estimate of 6.7%. Executives said Taco Bell sold 45 million Mexican pizzas in 2023, a number that’s even more impressive because it was only available four months of the year.

Most of the Mexican-inspired chain’s locations are in the US, though it’s expanded internationally in recent years. Yum CEO David Gibbs said Taco Bell’s international footprint exceeded 1,000 locations during the quarter. The company has built 40% of its international restaurants in the last two years.

KFC underperformed Wall Street expectations as weak performance in China weighed on results. The fried chicken chain reported same-store sales growth of 5%, just below estimates of 5.4%. Excluding China, its largest market, KFC’s same-store sales were up 9%.

Weak sales in China also impacted Pizza Hut’s fourth-quarter performance. The pizza chain’s global same-store sales rose 1%, but international same-store sales fell 1%. US same-store sales of Pizza Hut rose 4%, a sign that consumers have recovered from last year’s pizza fatigue after over-ordering pie during the Covid lockdowns. Executives recognized advertising that highlighted new value-added offerings and helped attract lower-income customers back to the pizza chain.

Habit Burger Grill, Yum’s latest addition, said sales at locations open for at least a year fell 1% in the quarter. However, system sales, which track transactions at all of the chain’s restaurants and not just locations that have been open for 12 months, rose 12% thanks to Yum’s rapid expansion of the chain.

The company’s shares fell less than 1% in premarket trading.

Read Yum Brands full earnings report here.

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