Key Highlights
- First quarter results showed EPS of $1.50 compared to analyst projections of $1.38, while revenue reached $2.06 billion against expectations of $2.04 billion
- Taco Bell delivered 8% same-store sales growth, surpassing Wall Street’s 5.6% projection
- Worldwide same-store sales increased 3%, exceeding analyst projections of approximately 2.5%
- KFC achieved 2% same-store sales growth globally, marginally trailing estimates; domestic system sales declined 2%
- Pizza Hut’s domestic same-store sales decreased 4%, while worldwide performance exceeded the anticipated 0.7% decline
The fast-food conglomerate delivered results that exceeded analyst projections for the opening quarter of the year. Yum! Brands announced adjusted earnings per share of $1.50, surpassing the consensus forecast of $1.38, while total revenue of $2.06 billion came in above the anticipated $2.04 billion.
Profitability reached $432 million, translating to $1.55 per share, representing a significant increase from the prior year’s $253 million, or 90 cents per share. Total sales advanced 15%, propelled by increased revenue from company-operated locations following the acquisition of over 100 Taco Bell restaurants throughout the Southeast region during the previous year.
Shares climbed approximately 2.5% following the announcement.
Taco Bell emerged as the portfolio’s strongest performer. Same-store sales at the Mexican-inspired chain expanded 8% during the period, significantly outpacing StreetAccount’s estimate of 5.6%. CEO Chris Turner described the results as “outstanding” and “meaningfully ahead of the QSR industry.”
The company’s digital channels delivered impressive results. Digital sales across all systems approached $11 billion, with the digital sales proportion reaching an all-time high of 63%.
Management announced plans to broaden the deployment of AI-powered A/B testing technology in Taco Bell drive-through lanes following a productive first-quarter pilot program. This technology enables the chain to modify layouts, visual elements, and customer messaging to optimize effectiveness.
KFC Faces Domestic Headwinds
The fried chicken chain recorded 2% worldwide same-store sales growth, falling short of the 2.5% forecast. Domestically, KFC’s system sales contracted 2% during the quarter. The company has discontinued separate reporting of U.S. same-store sales for KFC, indicating the segment’s diminished scale relative to the overall operation.
The domestic market now ranks as KFC’s third-largest by system sales, trailing China and Europe. Turner emphasized the U.S. operation remains “strategically important,” while acknowledging improvement opportunities ahead. KFC is emphasizing value propositions and product innovation, incorporating insights from its Saucy concept, which specializes in chicken tenders.
Pizza Hut’s Path Forward Remains Unclear
The pizza chain delivered varied results across markets. Worldwide same-store sales remained unchanged, outperforming the anticipated 0.7% decrease, while domestic same-store sales contracted 4%. International markets posted 2% same-store sales growth.
Pizza Hut has consistently underperformed compared to other brands in the portfolio. Management announced in November it would evaluate strategic alternatives for the pizza division. Recent media reports identified Apollo Global Management and Sycamore Partners as prospective acquirers.
Management declined to offer a formal update regarding the strategic review process during Wednesday’s announcement, though the earnings materials notably featured a separate presentation of system sales, unit totals, and core operating profit figures that excluded Pizza Hut—suggesting preparation for presenting the business without this brand.
The company opened 1,030 gross new locations during the quarter, maintaining unit expansion at 5%. Core operating profit increased 6%.
Looking ahead, management is pursuing targets of 5% unit growth, 7% system sales growth excluding currency fluctuations, and core operating profit growth of at least 8% on average.
