Restaurant operator Yum Brands on Thursday reported better-than-expected quarterly earnings and same-store sales growth across its three brands.
The owner of the KFC, Taco Bell, and Pizza Hut fast-food chains said fourth-quarter net income rose to $436 million, or $1.26 per share, up from $303 million, or 83 cents per share, a year earlier. Excluding items, the company earned 96 cents per share, topping analysts’ average estimate of 80 cents.
Total revenue fell 16.4% to $1.58 billion, lower than the analysts’ estimate of $1.59 billion, but overall same-store sales rose 2% — just shy of Wall Street expectations of a 2.4% gain — amid a particularly strong performance from KFC.
“The fourth quarter was a solid ending to a year where Yum Brands met or exceeded each component of our full-year guidance,” CFO David Gibbs said in a news release. “Despite headwinds from refranchising dilution and lapping a 53rd week, we delivered full-year core operating profit growth of 7%.”
Yum said that by the end of 2017, it had become 97% franchised and expects to grow to 98% franchised by the end of this year.
“As Yum moves closer to a more asset-like business model, the level of stability of its revenues and earnings as compared to some other restaurant operators should increase while its overall capital requirements decline,” Moody’s restaurant analyst Bill Fahy said in a client note.
Among the individual brands, KFC same-store sales were up 3% in the fourth quarter, Taco Bell, which has a $1 value menu and had been Yum’s fastest-growing brand, reported a 2% gain, and Pizza Hut comparable sales increased 1%.
Yum also announced Thursday that it had acquired a a 3% stake in online food-ordering company GrubHub for $200 million to increase sales through pickup and deliveries at KFC and Taco Bell restaurants in the U.S.
“We are committed to making our iconic brands easier to access through online ordering for pickup and delivery, and aggressively pursuing delivery as a strategic global growth opportunity,” CEO Greg Creed said.