Yum! Brands’ Digital Sales Skyrocket $1B YOY

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Taco Bell, KFC, Pizza Hut and Habit Grill boost the bottom line with impressive digital sales & off-premise growth.

Yum! Brands’ Digital Sales Skyrocket $1B YOY

By Anna Wolfe, Senior Editor - Restaurants - 11/04/2020

For the second consecutive quarter, Yum! Brands' digital sales increased by more than $1 billion over the prior year and set a single quarter record of $4 billion.

Worldwide, about 98% of its stores across its four brands are open in a full or limited capacity.

“Despite the challenges related to COVID, we delivered core operating profit growth of 7%,” said David Gibbs, CEO, in a Q3 earnings call with analysts on Oct. 29. “This strength can be attributed to strong growth in our Taco Bell division and an improvement in franchisee health."

Yum! has four global brands. Across the board, off-premises and digital ordering has posted impressive results.

Expanding Delivery

Yum now has over 35,000 restaurants offering delivery around the world, representing an 11% increase year-over-year, in part driven by expanded aggregator partnerships.

Here are some of the Q3 highlights:

KFC U.S. drive-thru sales grew about 60% year-over-year, and 80% of its US locations now offer delivery.

KFC

Q3 system sales declined 1% as a 4% same-store sales decline was partially offset by 5% net new unit growth.

“The rapid recovery at KFC has largely been driven by off-premise capability, acceleration of digital and the reopening of temporarily closed stores,” explained Gibbs.

During Q3 markets with robust, off-premise, and/or digital capabilities excelled, including the U.S., the UK, Australia, Japan and Canada. “KFC U.S. had another fantastic quarter with 9% same-store sales growth owing to the continued strength of our group occasion business and digital,” said Gibbs. “Our KFC U.S. drive-thru sales grew about 60% year-over-year with our largest day part growth occurring at midday and continued strength during the dinner day part. We also hit a delivery milestone with about 80% of KFC’s in the U.S. now delivering many through multiple aggregator partners.”

 

COVID is highlighting how important the future of off-premise is and we intend to use this momentum to further advance the off-premise category and continue to decrease our dine-in asset footprint.
David Gibbs, CEO

Pizza Hut

The pizza brand reported a Q3 system sales decline of 4% with a 3% same-store sales decline and a 4% net new unit decline. “Global off-premise same-store sales grew mid-teens year-over-year, which is clearly encouraging. COVID is highlighting how important the future of off-premise is and we intend to use this momentum to further advance the off-premise category and continue to decrease our dine-in asset footprint,” said Gibbs.

With the surge in mobile ordering and preference for off-prem, other restaurant brands are rethinking their brick-and-mortar stores. In some cases that means a smaller or no dining room altogether.  

Pizza Hut U.S. had another positive quarter with same-store sales growth of 6% with its off-premise channel generating 17% same-store sales growth, despite a 4% drag from closures and sales headwinds in express units.

Taco Bell

Taco Bell now accounts for approximately 35% of Yum’s divisional operating profit.

Taco Bell also continued to focus on a faster and easier customer experience by expanding its relationships with third-party delivery partners and digital reach while breaking records in drive-thru times.

“Drive-thru demand skyrocketed this quarter as Taco Bell served over 30 million more cars and was 17 seconds faster year-over-year,” said Gibbs.

During the quarter, Taco Bell unveiled its new Go Mobile design in the U.S. “These assets will have a smaller footprint with a big emphasis on digital and off-premise with dedicated mobile pickup lanes and bellhops for outside in-person ordering,” explained Gibbs. “Better experience for customers and better economics for franchisees is a winning formula.”

Gibbs complemented Taco Bell’s team when it comes to marketing and CX.  The brand recently rolled out updates to its digital experience and loyalty program.  “…I think Taco Bell always has their finger on the pulse of the consumer. That’s what makes the brand great, the way they connect with consumers. They’ve recognized we’re really in an environment where the food is … something a little bit more like entertainment. This is an environment where people are now comfortable with how things are going to be for awhile and they’re looking for a little bit more excitement.”

“So across multiple fronts, the brand is really connecting well with consumers and excited about the progress they made.”

The Habit Burger Grill

Same-store sales declined only 3% as off-premise solutions basically offset the dine-in sales mix loss, which was over half of sales pre-COVID.

“It’s worth really taking a look at what they have done in this environment,” said Gibbs.

The full earnings release is available here.

Taco Bell's new Go Mobile design is optimized for digital ordering and off-prem. The first locations are expected to open in Q1 '21.