Why KFC and Taco Bell’s same-store sales grew, but not Pizza Hut

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KFC, Pizza Hut, and Taco Bell segments

In the last part of this series, we learned about the performance for Yum! Brands’ (YUM) divisions in China and India. The same-store sales performance for the other divisions includes:

  • Pizza Hut’s division was -1% for 3Q14
  • KFC’s division had 3% same-store sales growth—this was flat compared to the same quarter last year
  • Taco Bell’s same-store sales also grew by 3%—compared to 2% in 3Q13

Please click here to read more about the recent change in Yum! Brands’ reporting structure.

YUM Other Same-Store Sales Growth 2014-10-15

Pizza Hut sales had a disappointing quarter. It faced competition from other well-known brands—like Domino’s Pizza (DPZ), Papa John’s (PZZA), and local pizza restaurants. For example, Domino’s Pizza reported a same-store sales growth of 7.7% for domestic stores and 7.1% for international stores. Although Yum! Brands undertook initiatives to attract more customers in the U.S., they don’t seem to be working for pizza lovers.

The KFC division had 3% growth—2% in the U.S.—in the same-store sales. It had strong growth. The growth mainly came from emerging markets—Russia, Thailand, and Africa. The growth also came from developed markets—the United Kingdom, Australia, and continental Europe.

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For KFC and Pizza Hut, unit growth in emerging markets appears to be management’s focus. This doesn’t include China and India. Management wants to appeal to the Millennials in the U.S. McDonald’s (MCD) and other restaurants in the Consumer Discretionary Select Sector SPDR (XLY) are also focusing on the Millennials.

Taco Bell’s growth strategy in the U.S. appears to be from different order times—breakfast and late night. It’s growth strategy also includes unit growth. We’ll discuss management’s initiatives later in this series. In the next part of the series, we’ll look at unit growth.

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