LOUISVILLE, KY. — New menu items at KFC, Pizza Hut and Taco Bell drove more consumers to the Yum! Brands, Inc. subsidiaries in the second quarter.
KFC saw strength in its new chicken sandwich, while Pizza Hut benefited from its Detroit-style pizza, Edge Pizza and two new offerings featuring plant-based sausage from Beyond Meat, said David Gibbs, chief executive officer, during a July 29 conference call with analysts. Taco Bell kicked off the quarter with the return of the Quesalupa as part of its $5 Cravings Box, followed by the relaunch of the Naked Chicken Chalupa.
The new additions, along with continued investments in digital capabilities, boosted earnings at Yum! above pre-pandemic levels.
Net income for the second quarter ended June 30 was $391 million, equal to $1.29 per share on the common stock, up 86% from $206 million, or 67¢ per share, in the same period a year ago. On a two-year basis, net income was up 26%. Total revenues were $1.6 billion, up 34% from $1.2 billion a year ago and 18% from $1.3 billion two years ago.
Worldwide system sales excluding foreign currency translation grew 26%, with KFC at 35%, Taco Bell at 24% and Pizza Hut at 10%.
Worldwide same-store sales grew 23% year-over-year and 4% on a two-year basis.
In the United States, comparable sales at KFC and Pizza Hut were above pre-pandemic levels, growing 19% and 9%, respectively. Comparable sales in international markets declined on a two-year basis, due to renewed COVID-19 restrictions in certain markets.
“Looking across the more than 150 countries in which we operate, we've seen that while the overall is positive, the recovery will neither be consistent from country-to-country nor linear within a country,” Mr. Gibbs said. “We've seen that increased customer mobility driven by reopening trends and vaccinations contributed to strong performance in many of our markets.”
Even as economies continue to reopen, the importance of the off-premises occasion remains a top priority for the company, he added. Yum! delivered more than $5 billion in digital sales in the second quarter, up 35% from a former all-time high of $3.5 billion in the same period a year ago.
Recent digital investments include an in-house intelligent coaching app for Pizza Hut stores and an internally built KFC e-commerce platform. The company also has agreed to acquire Dragontail Technologies, a food preparation optimization company that automates kitchen flow, driver dispatch and customer order tracking.
“It's really hard to single out which part of the business is going to benefit most from digital because all of our brands are very rapidly becoming digital brands,” said Chris Turner, chief financial officer. “You’re seeing that in the numbers.”
The company is moderately increasing its product pricing across the United States to offset higher commodity costs and wages, he said.
“When we have commodity inflation, we have greater purchasing at scale than most players in the industry,” Mr. Turner said. “We are also seeing some wage inflation… but when we think about dealing with both of those, the next lever that our franchisees and our brands pull is pricing. We are confident that our brands have strong pricing power and our franchisees, who are the ones who actually make those decisions in their restaurants, are being very thoughtful about how to do that. They use analytics. They tend to layer these in over time so that they don't get too far ahead of the consumer, and our brands are very smart about how they create mix in the menu."