Yum Brands beats forecasts, Taco Bell sales fall 4% — CNBC

Yum Brands reported that Taco Bell’s same-store sales in the United States declined by 4% in the third fiscal quarter. Restaurant traffic was affected by a foodborne illness outbreak linked to iceberg lettuce served at the chain’s restaurants, CNBC reports.

Financial results

Yum Brands’ adjusted earnings were $1.56 per share, compared with analysts’ expectation of $1.49. Revenue rose 4% to $2.05 billion, in line with forecasts. The company’s net income reached $1.62 billion, or $5.92 per share, versus $397 million, or $1.41 per share, a year earlier.

Excluding gains from the sale of Pizza Hut and other items, adjusted earnings were $1.56 per share. After excluding Pizza Hut, Yum Brands’ overall same-store sales were unchanged during the quarter.

Impact on Taco Bell

According to the company, the biggest impact on Taco Bell sales occurred during the weekend of July 18. Customers temporarily visited restaurants less often due to the foodborne illness outbreak, but sales trends later improved.

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Yum Brands CEO Chris Turner said that since late September, Taco Bell in the United States has outpaced the quick-service restaurant sector in same-store sales growth. Taco Bell’s international business, which is smaller than its U.S. operation, increased such sales by 5%.

Sale of Pizza Hut

In the third quarter, Yum Brands completed the sale of Pizza Hut. On August 7, the company closed the sale of the chain’s business in mainland China to Yum China, and on September 1, it sold the remaining Pizza Hut business to LongRange Capital. Yum Brands’ quarterly results include Pizza Hut’s performance up to those dates.

KFC’s same-store sales increased by 1%, driven by China and Europe. At the same time, in the United States, the chain’s third-largest market, KFC system sales declined by 6%.