Pizza Hut and Taco Bell
Yum! Brands (YUM) owns two other big brands—Pizza Hut and Taco Bell. Pizza Hut is a casual dining restaurant, competing with Domino’s Pizza (or DPZ), Olive Garden under Darden Restaurants (DRI), and Chili’s Bar & Grill under Brinker Intl. (EAT) in the U.S. market.
In the previous chart, same store sales for Taco Bell declined to 1% year-to-date (or YTD) in 2014 compared to 4% in YTD 2013. The Pizza Hut division declined to -2% YTD in 2014 compared to -1% YTD in 2013. Investors who would like to gain exposure to the restaurant industry can invest in exchange-traded funds (or ETFs) like the PowerShares Dynamic Leisure and Entertainment ETF (PEJ) and the PowerShares Dynamic Food and Beverage ETF (PBJ).
Yum! Brands’ pizza business system sales grew by 16% and same store sales were flat in the 2Q14. Yum! Brands opened 36 new units of Pizza Hut during the same period. The non-pizza items accounted for two third of its sales in this segment. Mainly, in Pizza Hut China, the Chinese food makes up over 40% of the menu. In terms of growth, pizza restaurants are spread across 305 cities with a guidance of 1,200 units by the end of 2014.
Profits for Taco Bell declined by 2% over 1Q14. Taco Bell launched the breakfast menu recently on March 27, 2014. Taco Bell can gain on the already tried and tested model to drive more sales. For the 2Q14, breakfast day-part sales were 7% of the revenue.
Along with the introduction of the breakfast menu, Yum! Brands also launched the Doritos Locos Tacos and Quesarito. However, these products have not performed so well, giving a same store sales growth of just 2% in the second quarter.