Yum Brands Inc posted a smaller-than-expected drop in comparable sales and beat profit estimates on Thursday, helped by strong online sales at its Taco Bell chain as COVID-19 pandemic fears kept customers at home.
Fast-food restaurants, including rivals McDonald's Corp and Chipotle Mexican Grill, have benefited from earlier digital investments, especially when dining rooms were closed at the height of the health crisis.
“For the second consecutive quarter, digital sales increased by more than $1 billion over the prior year and set a single quarter record of $4 billion,” Chief Executive Officer David Gibbs said.
Net income rose about 11% to $283 million in the third quarter, as Yum recorded $8 million of pre-tax income due to the change in fair value of its investment in food delivery firm Grubhub Inc.
Yum said it sold its Grubhub stake for $206 million in the reported quarter, more than two years after the company made a $200 million investment to improve its delivery services.
Grubhub is expected to be bought by European online food-ordering company Just Eat Takeaway.com NV for $6.9 billion in the first half of 2021, pending approval from its shareholders and regulators.
Comparable sales fell 2% for the KFC owner in the quarter ended Sept. 30, but beat the average analyst estimate of a 3.74% slide, according to IBES data from Refinitiv.
Taco Bell posted comparable sales growth of 3%, well above the estimate of a 1.75% rise.
At Pizza Hut, Yum’s pizza chain that has long been grappling with stiff competition from Domino’s Pizza and others, comparable sales were down 3% and slipped 4% at KFC.
Excluding one-time items, the company earned $1.01 per share, compared with the estimate of 80 cents.
Total revenue rose about 8% to $1.45 billion.
Reporting by Nivedita Balu in Bengaluru; Editing by Shinjini Ganguli, Bernard Orr