Yum! Brands gain from new restaurant development and digital sales.
In the most recent quarter, KFC saw double-digit growth in sales thanks to a number of factors, including a robust rebound in China and the introduction of chicken nuggets in the US. According to David W. Gibbs, CEO of parent company Yum! Brands, Inc., Taco Bell’s global Taco Tuesday marketing campaign featuring professional basketball player LeBron James “created massive brand buzz.”Over the course of the three months, 1,025 new eateries were added, which helped the business as well.
We achieved 9% same-store sales growth and 6% unit growth for the second quarter, with KFC leading the way with an impressive 19% system sales growth. This was made possible by our industry-leading development momentum, unique marketing campaigns, and pertinent new product layers, like the introduction of original recipe hand-breaded chicken nuggets in the US, Mr. Gibbs stated on an August 2 earnings call.
The second quarter ending June 30th saw an 86% increase in net income from $224 million, or 78¢ per share, to $418 million, or $1.49 per share on the common stock. Net income, excluding special items, increased 31% to $403 million from $307 million.From $1.64 billion to $1.69 billion, total revenues increased.
“We continue to unlock incremental sales through higher spend and frequency as well as incremental profitability for our system thanks to our unique digital capabilities, which enable easier experiences and greater access to our iconic brands,” Mr. Gibbs stated. “With that in mind, I’m happy to announce that we had another quarter of double-digit growth, with $7 billion in digital sales—more than 45% of our total system sales worldwide.”
Operating profit for the KFC segment rose by 11% to $326 million from $293 million in the previous year. System sales increased from $7.3 billion to $8.3 billion, a 14% increase. The quarter over year saw a 13% increase in same-store sales.
According to Mr. Gibbs, “same-store sales growth of 13% and unit growth of 7% drove second-quarter system-sales growth of 19% (in constant currency).” “Our same-store sales growth was driven by a robust recovery in our China market and widespread transaction growth.” Nonetheless, KFC Global same-store sales growth increased by an astounding 10% throughout the quarter, even outside of China. In terms of dollars, KFC is our largest digital company worldwide. It has seen consistent increase in digital sales and mix year over year.
Operating profit for the Taco Bell business was $228 million, 6% more than $215 million the previous year. From $3.5 billion to $3.8 billion, system sales increased by 7%. System sales at Taco Bell in the US increased by 6%, while system sales abroad, excluding foreign exchange, increased by 18%. US Taco Bell same-store sales increased by 4%.
“With kiosks now installed in 100% of Taco Bell stores, digital sales in the US increased by nearly 35% year over year,” Mr. Gibbs stated. Taco Bell International’s system sales increased by 18% as a result of the momentum in development. With a consistent look and feel around the globe, Taco Bell’s worldwide Taco Tuesday campaign, which debuted in June and runs through the third quarter, capitalizes on the company’s cultural leadership in the US to increase customer awareness and brand equity.
Operating profit for the Pizza Hut business decreased by 2% to $91 million from $93 million. From $3 million to $3.2 million, system sales increased by 5%. Due to a 1% increase in same-store sales, Pizza Hut US saw a 2% increase in system sales.
According to Mr. Gibbs, “Pizza Hut International increased system sales 11%, led by 6% same-store sales growth and 5% unit growth.” Due in large part to the Melts platform’s incremental transaction growth—which in the US has shown to be a self-sustaining layer at an alluring entry price point—the individual occasion continued to be a growth driver. Melts has expanded to 35 markets since its late-year US launch. This represents more than half of our global store base, a considerable increase from the 11 markets it was present in during the first quarter.System sales for the Habit Burger Grill business increased by 9% while same-store sales growth was flat.
“By elevating their craveable offerings, the Habit team highlights its craft brand positioning and stays true to its culinary forward limited-time menu strategy,” Mr. Gibbs stated. With kiosks now installed in more than 60% of stores, we’re continuing to increase the number of access points for our patrons. Excellent profit flow-through and 10% larger checks on average for kiosk sales compared to front counter sales provide additional evidence of the benefits of switching to digital sales.Over 56,000 restaurants are either franchised or operated by Yum! Brands and its subsidiaries across more than 155 countries and territories.
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We have added 10,000 new gross units to the Yum! system in only the last 2.5 years, Mr. Gibbs stated. “That means that in the last 2.5 years, nearly 20% of our stores have been built.”
With $718 million in net income thus far this year, or $2.55 per share, it is 15% more than the comparable period’s $623 million, or $2.16 per share. Over the first half of the year, total revenues increased by 5% to $3.3 billion from $3.2 billion.
Christopher L. Turner, chief financial officer, stated, “Given our strong first-half results and continuing momentum into the second half of the year, I’m happy to report that we expect on a full-year basis to over deliver on all components of our long-term growth algorithm.” “We anticipate low double digit growth in core operating profit for the entire year 2023, exceeding our long-term guidance of at least.