Yum! Brands Reports Third-Quarter Results

Rhea-AI Summary

Yum! Brands (NYSE: YUM) reported Q3 2024 results with worldwide system sales growing 1% and unit growth of 5%. Taco Bell U.S. achieved 4% same-store sales growth, while KFC International expanded units by 9%. Third-quarter GAAP EPS was $1.35, while EPS excluding Special Items was $1.37. Digital sales exceeded $8 billion, representing over 50% of total sales. The company opened 1,029 gross new units across its brands, with KFC Division opening 685 restaurants across 65 countries. However, same-store sales declined 4% at KFC and Pizza Hut, while Taco Bell maintained positive growth.

Positive

• Worldwide unit growth of 5% with 1,029 new restaurants
• Digital sales exceeded $8 billion, representing over 50% of total sales
• Taco Bell U.S. same-store sales grew 4%
• KFC International unit growth of 9%
• Core operating profit grew 3%

Negative

• KFC Division same-store sales declined 4%
• Pizza Hut Division same-store sales declined 4%
• EPS excluding Special Items decreased 5% to $1.37
• Pizza Hut operating profit declined 6%
• Habit Burger & Grill system sales declined 1% with same-store sales declining 5%

Insights

Financial Analyst

Yum! Brands delivered mixed Q3 results with some concerning trends. System-wide sales grew only 1%, significantly below inflation rates, while same-store sales declined 2%. The bright spots were Taco Bell's 4% same-store sales growth and KFC's strong international unit expansion at 9%.

The company's EPS of $1.37 (excluding special items) declined 5% year-over-year, impacted by higher taxes and lower investment income. Digital sales exceeded $8 billion with over 50% mix, showing strong digital transformation progress. However, geopolitical tensions and weak consumer sentiment are creating headwinds, particularly visible in KFC and Pizza Hut's negative same-store sales.

Market Research Analyst

The divergence between unit growth and same-store sales performance reveals shifting consumer behaviors. While total restaurant count grew 5%, the decline in same-store sales suggests market saturation in mature markets and changing consumer preferences. KFC's contrasting performance - strong unit growth but 4% same-store sales decline - indicates expansion success in emerging markets while facing challenges in established ones.

Taco Bell remains the portfolio's strongest performer, consistently outperforming QSR competitors. The digital sales milestone demonstrates successful technological integration but also highlights the importance of maintaining operational efficiency across multiple ordering channels.

Taco Bell U.S. Same-Store Sales Growth +4%; KFC International Unit Growth +9%

Digital Sales Mix Exceeding 50%

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Yum! Brands, Inc. (NYSE: YUM) today reported results for the third quarter ended September 30, 2024. Worldwide system sales, excluding foreign currency translation, grew 1% reflecting 5% unit growth. Third-quarter GAAP operating profit grew 1% and third-quarter core operating profit grew 3%. Third-quarter GAAP EPS was $1.35 and third-quarter EPS excluding Special Items was $1.37. Third-quarter EPS excluding Special Items reflects a $0.14 negative impact from a higher current year tax rate and lower investment income year-over-year.

DAVID GIBBS COMMENTS

David Gibbs, CEO, said “I'm incredibly proud of how our teams have navigated such a complex consumer environment to deliver 3% Core Operating Profit growth this quarter. The strengths of our twin growth engines were evident: Taco Bell U.S. significantly outperformed QSR competition with 4% same-store sales growth, and KFC International grew units an impressive 9% year-over-year. KFC International's unit openings spanned 64 countries this quarter, and year-to-date gross openings are up nearly 150 units year-over-year. While sales have been impacted by pressures relating to geopolitical conflicts and challenged consumer sentiment, our iconic brands which are led by our world-class talent and enabled by Yum!'s unmatched scale and cutting-edge, proprietary tech, are positioned for unstoppable growth.”

THIRD-QUARTER HIGHLIGHTS

• Worldwide system sales grew 1%, excluding foreign currency translation, with KFC at 1%, Taco Bell at 5%, and Pizza Hut (1)%.
• Unit count increased 5% including 1,029 gross new units in the quarter.
• Robust digital system sales exceeding $8 billion, with digital mix over 50%.
• GAAP operating profit grew 1% and core operating profit grew 3%.
• Foreign currency translation unfavorably impacted divisional operating profit by $3 million.

Reported Results	% Change
	System Sales Ex F/X	Same-Store Sales	Units	GAAP Operating Profit	Core Operating Profit1
KFC Division	+1	(4)	+7	(2)	(1)
Taco Bell Division	+5	+4	+2	+11	+11
Pizza Hut Division	(1)	(4)	+2	(6)	(5)
Worldwide	+1	(2)	+5	+1	+3

	Third-Quarter			Year-to-Date
	2024	2023	% Change	2024	2023	% Change
GAAP EPS	$1.35	$1.46	(8)	$3.73	$3.97	(6)
Less Special Items EPS1	$(0.02)	$0.02	NM	$(0.14)	$0.06	NM
EPS Excluding Special Items	$1.37	$1.44	(5)	$3.87	$3.91	(1)

1 See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Core Operating Profit and Special Items.

All comparisons are versus the same period a year ago.

System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further details.

Digital system sales includes all transactions at system restaurants where consumers utilize ordering interaction that is primarily facilitated by automated technology.

KFC DIVISION

	Third-Quarter				Year-to-Date
			%/ppts Change				%/ppts Change
	2024	2023	Reported	Ex F/X	2024	2023	Reported	Ex F/X
Restaurants	31,143	29,051	+7	N/A	31,143	29,051	+7	N/A
System Sales ($MM)	8,669	8,620	+1	+1	25,023	24,975	Even	+2
Same-Store Sales Growth (%)	(4)	+6	NM	NM	(3)	+9	NM	NM
Franchise and Property Revenues ($MM)	417	426	(2)	(2)	1,219	1,254	(3)	(1)
Operating Profit ($MM)	339	344	(2)	(1)	986	975	+1	+3
Operating Margin (%)	43.1	49.2	(6.1)	(5.9)	46.2	47.1	(0.9)	(0.4)

	Third-Quarter (% Change)		Year-to-Date (% Change)
	International	U.S.	International	U.S.
System Sales Growth Ex F/X	+2	(7)	+4	(7)
Same-Store Sales Growth	(3)	(5)	(3)	(6)

• KFC Division opened 685 gross new restaurants across 65 countries.
• Company-owned restaurant margins were 12.5%, including the newly acquired U.K. stores for the full quarter.
• Foreign currency translation unfavorably impacted operating profit by $1 million.

KFC Markets1	Percent of KFC System Sales2	System Sales Growth Ex F/X
		Third-Quarter (% Change)	Year-to-Date (% Change)
China	27%	+5	+6
United States	15%	(7)	(7)
Europe	11%	+6	+8
Asia	10%	(6)	(7)
Australia	7%	+2	+3
Latin America	7%	+8	+16
United Kingdom	6%	(6)	(3)
Middle East / Turkey / North Africa	6%	(10)	(9)
Africa	5%	+10	+10
Thailand	2%	+6	+7
Canada	2%	+3	+3
India	2%	+7	+9

1Refer to investors.yum.com/financial-information/financial-reports/ for a list of the countries within each of the markets.

2Reflects Full Year 2023.

TACO BELL DIVISION

	Third-Quarter				Year-to-Date
			%/ppts Change				%/ppts Change
	2024	2023	Reported	Ex F/X	2024	2023	Reported	Ex F/X
Restaurants	8,594	8,385	+2	N/A	8,594	8,385	+2	N/A
System Sales ($MM)	4,008	3,804	+5	+5	11,622	11,028	+5	+5
Same-Store Sales Growth (%)	+4	+8	NM	NM	+3	+7	NM	NM
Franchise and Property Revenues ($MM)	234	218	+7	+7	678	637	+6	+6
Operating Profit ($MM)	251	226	+11	+11	709	658	+8	+8
Operating Margin (%)	37.6	36.0	1.6	1.6	36.7	36.1	0.6	0.6

• Taco Bell Division opened 49 gross new restaurants across 15 countries.
• Taco Bell U.S. system sales grew 5% and Taco Bell International system sales excluding foreign currency translation, grew 6%.
• Taco Bell U.S. and Taco Bell International same-store sales grew 4% and 1%, respectively.
• Company-owned restaurant margins were 23.4%, down slightly year-over-year.

PIZZA HUT DIVISION

	Third-Quarter				Year-to-Date
			%/ppts Change				%/ppts Change
	2024	2023	Reported	Ex F/X	2024	2023	Reported	Ex F/X
Restaurants	19,927	19,469	+2	N/A	19,927	19,469	+2	N/A
System Sales ($MM)	3,184	3,243	(2)	(1)	9,491	9,780	(3)	(2)
Same-Store Sales Growth (%)	(4)	+1	NM	NM	(5)	+4	NM	NM
Franchise and Property Revenues ($MM)	150	150	Even	+1	446	454	(2)	(1)
Operating Profit ($MM)	91	97	(6)	(5)	278	292	(5)	(3)
Operating Margin (%)	38.3	40.3	(2.0)	(1.6)	38.9	39.6	(0.7)	(0.3)

	Third-Quarter (% Change)		Year-to-Date (% Change)
	International	U.S.	International	U.S.
System Sales Growth Ex F/X	(3)	(1)	(2)	(2)
Same-Store Sales Growth	(6)	(1)	(6)	(3)

• Pizza Hut Division opened 292 gross new restaurants across 36 countries.
• Foreign currency translation unfavorably impacted operating profit by $2 million.

Pizza Hut Markets1	Percent of Pizza Hut System Sales2	System Sales Growth Ex F/X
		Third-Quarter (% Change)	Year-to-Date (% Change)
United States	41%	(1)	(2)
China	18%	(2)	+2
Asia	13%	(3)	(4)
Europe	12%	(7)	(6)
Latin America	6%	Even	+1
Middle East / Africa	5%	(4)	(6)
Canada	3%	+2	+4
India	2%	+3	+2

1Refer to investors.yum.com/financial-information/financial-reports/ for a list of the countries within each of the markets.

2Reflects Full Year 2023.

HABIT BURGER & GRILL DIVISION

• Habit Burger & Grill Division opened 3 gross new restaurants.
• Habit Burger & Grill Division system sales declined 1% with same-store sales declining 5%.

OTHER ITEMS

• See reconciliation of Non-GAAP Measurements to GAAP results within this release for further detail of Special Items by financial statement line item including the impact of Special Items on General and administrative expenses.
• Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the third-quarter Form 10-Q.

CONFERENCE CALL

Yum! Brands, Inc. will host a conference call to review the company's financial performance and strategies at 7:45 a.m. Eastern Time November 5, 2024. The number is 404/975-4839 for U.S. callers, 833/950-0062 for Canada callers, and +1/929-526-1599 for international callers, conference ID 611638.

The call will be available for playback beginning at 10:00 a.m. Eastern Time November 5, 2024 through November 12, 2024. To access the playback, dial 866/813-9403 in the U.S., 226/828-7578 in Canada, and +1/929-458-6194 internationally, conference ID 196705.

The webcast and the playback can be accessed by visiting Yum! Brands' website, investors.yum.com/events-and-presentations and selecting “Q3 2024 Yum! Brands, Inc. Earnings Call.”

ADDITIONAL INFORMATION ONLINE

Quarter-end dates for each division, restaurant count details, definitions of terms and Restricted Group financial information are available at investors.yum.com. Reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures are included in our Condensed Consolidated Summary of Results.

FORWARD-LOOKING STATEMENTS

This announcement may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as “expect,” “expectation,” “believe,” “anticipate,” “may,” “could,” “intend,” “belief,” “plan,” “estimate,” “target,” “predict,” “likely,” “seek,” “project,” “model,” “ongoing,” “will,” “should,” “forecast,” “outlook” or similar terminology. These statements are based on and reflect our current expectations, estimates, assumptions and/ or projections, our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections, including with respect to the future earnings and performance or capital structure of Yum! Brands, will prove to be correct or that any of our expectations, estimates or projections will be achieved.

Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: food safety and food- or beverage-borne illness concerns; adverse impacts of health epidemics, deterioration in public health conditions or the occurrence of other catastrophic or unforeseen events; the success and financial stability of our concepts’ franchisees, particularly in light of challenging macroeconomic conditions; the success of our development strategy; anticipated benefits from past or potential future acquisitions, investments, other strategic transactions or initiatives, or our portfolio business model; our significant exposure to the Chinese market; our global operations and related exposure to geopolitical instability, including the Middle East conflict as well as potential expansion of trade policies; foreign currency risks and foreign exchange controls; our ability to protect the integrity or availability of IT systems or the security of confidential information and other cybersecurity risks; compliance with data privacy and data protection legal requirements; our ability to successfully implement technology initiatives, including utilization of artificial intelligence; our increasing dependence on digital commerce platforms; the impact of social media; our ability to protect our trademarks or other intellectual property; shortages or interruptions in the availability and the delivery of food, equipment and other supplies; the loss of key personnel, labor shortages and increased labor costs, including as a result of state and local legislation related to wages and working conditions; changes in food prices and other operating costs; our corporate reputation, the value and perception of our brands and changes in consumer preferences and wellness trends; evolving expectations and requirements with respect to social and environmental sustainability matters; adverse effects of severe weather and climate change; pending or future litigation and legal claims or proceedings; changes in, or noncompliance with, legal requirements; tax matters, including changes in tax rates or laws, impositions of new taxes, tax implications of our restructurings, or disagreements with taxing authorities; changes in consumer discretionary spending and macroeconomic conditions, including inflationary pressures and elevated interest rates; competition within the retail food industry; risks relating to our level of indebtedness. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

The forward-looking statements included in this announcement are only made as of the date of this announcement and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions “Risk Factors” and “Forward-Looking Statements” in our most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q) for additional detail about factors that could affect our financial and other results.

Yum! Brands, Inc., based in Louisville, Kentucky, and its subsidiaries franchise or operate a system of over 60,000 restaurants in more than 155 countries and territories under the company’s concepts – KFC, Taco Bell, Pizza Hut and Habit Burger & Grill. The Company's KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style food, and pizza categories, respectively. Habit Burger & Grill is a fast casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. In 2024, Yum! was named to the Dow Jones Sustainability Index North America, and the company was recognized among TIME Magazine’s list of Best Companies for Future Leaders, Newsweek’s list of America’s Most Responsible Companies and USA Today’s America’s Climate Leaders. Yum! also received widespread recognition in 2023, including being listed on the Bloomberg Gender-Equality Index; and Forbes’ list of America’s Best Employers for Diversity. In addition, KFC, Taco Bell and Pizza Hut brands were ranked in the top five of Entrepreneur’s Top Global Franchises Ranking for 2023.

Category: Earnings

View source version on businesswire.com: https://www.businesswire.com/news/home/20241103953329/en/

Analysts are invited to contact:

Matt Morris, Head of Investor Relations at 888/298-6986



Members of the media are invited to contact:

Virginia Ferguson, Vice President, Public Relations, at 502/874-8200

Source: Yum! Brands, Inc.

FAQ

What was Yum! Brands (YUM) earnings per share in Q3 2024?

Yum! Brands reported Q3 2024 GAAP EPS of $1.35 and EPS excluding Special Items of $1.37.

How much did Taco Bell's same-store sales grow in Q3 2024?

Taco Bell U.S. same-store sales grew 4% in Q3 2024.

What was YUM's digital sales performance in Q3 2024?

Digital sales exceeded $8 billion, with digital mix representing over 50% of total sales.

How many new restaurants did Yum! Brands (YUM) open in Q3 2024?

Yum! Brands opened 1,029 gross new units across its brands in Q3 2024.