KFC and Taco Bell Keep Yum! Brands Humming Along | Summary and Q&A

TL;DR

Yum! Brands exceeded expectations in Q3, with KFC and Taco Bell driving profits while Pizza Hut lags behind.

Key Insights

• ❓ KFC and Taco Bell were the top performers for Yum! Brands in Q3, contributing significantly to operating profit.
• 🪡 Pizza Hut needs improvement and has an opportunity to capitalize on the struggles of competitors like Papa John's.
• 😋 Yum! Brands' investment in Grubhub aims to boost sales for KFC and Taco Bell through expanded delivery options.
• 😋 Yum! Brands plans to focus on franchising and shareholder returns in the coming years.
• 🖤 Promotional strategies have played a crucial role in the success of Taco Bell, while Shake Shack lacks this approach.
• 😋 Shake Shack's weak Q3 results highlight the importance of promotional strategies in the fast-food industry.
• ✋ The high valuation of Shake Shack raises questions about the company's sustainability and profitability.

Transcript

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Questions & Answers

Q: How did KFC and Taco Bell perform in Q3 for Yum! Brands?

KFC and Taco Bell were the main drivers of profits for Yum! Brands in Q3, with both experiencing growth in sales and operating profit. Taco Bell accounted for 30% of total operating profit, while KFC contributed substantially with same-store sales growth of 3%.

Q: Why is Pizza Hut lagging behind its sister brands?

Pizza Hut has been facing challenges and has not been able to take advantage of Papa John's recent troubles. The quality of their pizza needs improvement, but it is expected that their NFL sponsorship may help boost sales in the future.

Q: How has Yum! Brands worked on boosting sales for KFC and Taco Bell?

Yum! Brands invested $200 million in Grubhub's stock, aiming to increase sales for KFC and Taco Bell. This partnership allows for a focus on delivery and expanding their reach.

Q: What is Yum! Brands' strategy for the future?

Yum! Brands plans to continue its trend of becoming predominantly franchised, with a goal of 98% franchised operations. They also aim to give back $6.5-7 billion to shareholders through 2019 via repurchases and dividends.

Summary & Key Takeaways

• Yum! Brands reported higher than expected profits and revenue in Q3, with KFC and Taco Bell leading the way while Pizza Hut struggled.

• Yum! Brands made an investment in Grubhub earlier this year, aiming to boost sales for KFC and Taco Bell.

• Pizza Hut has room for improvement, especially given Papa John's recent struggles, but its NFL sponsorship may help turn things around.