(Reuters) – Yum Brands surpassed Wall Street estimates for fourth-quarter comparable sales on Thursday, as value offerings from Taco Bell attracted budget-conscious U.S. consumers to the popular Tex-Mex chain.
Its shares rose about 3% in premarket trading.
Fast-food chains from McDonald’s to Burger King are leaning on their value meals to revive demand, after high prices of essentials and steep borrowing costs forced customers to dine out less.
Taco Bell’s Luxe Carvings Box value meal, starting at $5, was a big hit and helped drive up same-store sales at U.S. outlets by 5% in the quarter.
Yum has also invested in growing international stores for its KFC chain, where worldwide same-store sales grew 1% despite some impact through 2024 from boycotts related to the Middle East conflict.
The company’s core operating profit, more than 80% of which comes from Taco Bell U.S. and KFC international, jumped 8% in 2024, excluding the impact of an extra week in the year. Yum expects the metric to grow at least 8% this year, in line with its long-term target.
Its worldwide same-store sales rose 1% in the quarter ended Dec. 31, compared with analysts’ estimates for a 0.42% rise, according to data compiled by LSEG.
As digital orders ramp up, now accounting for more than half of Yum’s sales, the company is also investing in back-end technology such as its artificial intelligence-backed “Byte by Yum” software to help reduce wait times at restaurants, improve delivery times, and manage pricing and promotions on its app.
On an adjusted basis, profit for the quarter was $1.61 per share, beating estimates by a cent.
Same store sales at its Pizza Hut division fell 1% in the fourth quarter, a sequential improvement from a 4% drop in the third quarter.
(Reporting by Juveria Tabassum and Neil J Kanatt in Bengaluru; Editing by Devika Syamnath)
