Report Shows KFC, Taco Bell Profitable, but Pizza Hut Lagging

MANCHESTER, CT — Yum! Brands Second-quarter earnings report shows KFC and Taco Bell serving up profits while Pizza Hut is short on toppings.

Net income for 2Q in 2018 was $321 million, up 55 percent from the $206 million declared for the previous quarter. System-wide sales grew 4 percent compared to the same period in 2017, according to the report.

The results equated to earnings of 82 cents per share, excluding special items, and that's about 10 percent more than analyst expectations surveyed by Thomson Reuters of 74 cents.

Core operating profits were down 6 percent from the same period in 2017, according to the report.

KFC accounted for 54 percent of Yum! Brands revenue in the quarter with same store sales growth of 2 percent versus the same period in 2017. That matched most analysts’ predictions.

Taco Bell was responsible for 21 percent of the parent company's sales, but it brought in 36 percent of total operating profits for the group. Taco Bell's same store sales growth rose by 2 percent in Q2 compared to the same period in 2017.

Pizza Hut had what data analytics company GlobalData desribed as "static system-wide sales growth despite the opening of 27 locations in Q2." Pizza Hut accounted for 24 percent of system-wide sales but only 19 percent of operating profits. This resulted in negative same store sales growth, compared to the same period in 2017.

Said James Quinlan, food service analyst at GlobalData, "Marketing at KFC continues to attract younger consumers, a demographic that had drifted away from the brand to competitors and Taco Bell’s product mix continues to appeal to consumers hungry for Mexican food. This has resulted in both of these brands performing roughly in line with the wider quick service restaurant channel. However, Pizza Hut continues to underperform dragging down overall growth for Yum! Brands in Q2."

Photo Credit: Tim Jensen

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