Yum Brands reported third-quarter results on Tuesday that surpassed Wall Street forecasts, though a foodborne illness outbreak linked to iceberg lettuce at Taco Bell created headwinds during the period. The parent company of Taco Bell and KFC posted net income of $1.62 billion, or $5.92 per share, compared with $397 million, or $1.41 per share, in the year-ago quarter. Excluding items related to its Pizza Hut divestiture, the company earned $1.56 per share. Net sales rose 4% to $2.05 billion.
Taco Bell, which Yum characterizes as a “growth engine” for its portfolio, experienced temporary disruption from the cyclospora outbreak. Same-store sales at the chain declined 4% during the quarter as consumers reduced visits following the food safety incident. The most significant sales impact occurred during the weekend of July 18. However, Yum executives noted that the brand has since recovered, with Chief Executive Officer Chris Turner stating in a statement that Taco Bell has been outpacing the quick-service restaurant industry on same-store sales growth since the end of September. In the fourth quarter to date, Taco Bell’s same-store sales are up approximately 1%, while same-store sales in the last four weeks ended Friday rose 3% compared with the year-ago period.
Yum attributed Taco Bell’s recovery to loyalty program initiatives and promotional collaborations. The chain introduced weekly Tuesday deals targeting loyalty program members and partnered with pop star Olivia Rodrigo on a limited-time pink-colored Mountain Dew Baja Blast. Taco Bell’s most loyal customers returned more quickly than casual diners. Traffic from medium and light customer segments has rebounded to approximately 95% of prior levels, while visits from heavy users have returned to normal. Internationally, Taco Bell’s same-store sales grew 5%.
KFC, another major Yum brand, posted same-store sales growth of 1% during the quarter. The chicken chain benefited from system sales increases in China and Europe, though its U.S. operations saw system sales shrink 6%. KFC introduced popcorn chicken, which sold out at numerous locations, though sales gains were insufficient to overcome the impact of a strong year-ago promotion featuring Hot & Spicy Wings and Potato Wedges. Yum said it plans to position KFC as “the most modern chicken QSR” through new promotions, brand identity updates, and an expanded menu featuring upgraded sauces and additional beverages.
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