Yum! Brands, an American fast-food company operating global chains of KFC, Pizza Hut, and Taco Bell, faced a setback in their Q4 2020 financial results as they missed estimates for quarterly earnings. The giant was impacted by KFC and Pizza Hut’s reports of same-store sales declines.
Worldwide, the company witnessed a same-store sales drop of 2% compared to the growth of 0.7% analyst had anticipated. The company’s reported revenue totaled around $1.74bn, just a tad above the expected figure of $1.72bn. The earnings were down to $1.01 per share against the estimated $1.02, excluding items.
KFC and Pizza Hut seemed to be the weakest links in Yum! Brands’ portfolio in the critical 4th quarter. At KFC, same-store sales were down 2%, whereas analysts were predicting a 2.3% drop. Meanwhile, Pizza Hut, arguably the biggest underperformer, saw a same-store sales decrease of 6% which is a stark contrast to the projected decrease of 1.7%.
On the other hand, Taco Bell, the other pillar of Yum! Brands, has shown resilience even in such a challenging environment by exceeding estimates. The taco chain reported a same-store sales increase of 1%, surpassing the 0.4% increase anticipated by analysts. Such an unexpected surge might be due to Taco Bell’s effective marketing strategy and its focus on rolling out new, innovative menu options.
Yum! Brands’ digital sales, which soared to a staggering $17 billion, a 45% increase compared to 2019, played a pivotal role in offsetting the physical sales decline due to the pandemic. As traditional dine-in options kept shrinking, Yum! Brands turned to digital sales to manage the losses, a move that might define the future of the food industry.
Despite the hurdles caused by the global pandemic, the company opened 227 net new units in the fourth quarter, up by 1%, which remarkably adds to its overall chain of almost 50,000 restaurants spread across 150 countries. This growth in the number of outlets, despite a global setback, reflects the strong resilience and adaptability of Yum! Brands against all the odds.
However, the company has seen its shares down by 2.4% in the premarket trading following the release of its Q4 results. Yet, the company remains optimistic about a strong rebound with the gradual return of normalcy.
To sum it up, Yum! Brands’ Q4 results furnished a clear picture of the pandemic’s impact on the international fast-food industry. Yet, the company’s adept management, investment in digital sales, and the resilience of Taco Bell hinted that Yum! Brands is capable of weathering the stormy waves of the pandemic. It remains imperative to observe how the company will continue to adapt and transform in this ever-changing food industry in the post-pandemic world.
