Yum! Brands Is Cheap and Delicious
Moreover, the double-digit year-over-year growth is also partly due to Yum!'s poor performance in the first quarter of 2013, when the company's same-store sales plummeted by 20%. This drop was attributed to the bird flu outbreak and a food-safety scandal in China that severely hurt the demand for chicken.
The strong year-over-year growth suggests that Yum! is on track for a full recovery. The company still has a ways to go. Prior to the avian flu and poultry supply issues, in the third quarter of 2012, Yum! Brands reported revenues of $1.98 billion, 43% higher than the most recent results.
The increase in sales was partly due to the new ad campaign for KFC's crispy chicken and a new menu which includes 15 additional items. Plus, the company is planning to open 700 new outlets in China in the current year, which will drive its future growth.
In India, Yum! reported a 15% year-over-year increase in sales in the first quarter. As in China, Yum! is eyeing future growth in India through new store openings, better advertising and new product launches. The company, however, still has to work on improving its same-store sales, which fell 1% in the first quarter of 2014, following a 1% drop in FY 2013.Unlike with its China and India divisions, there is no U.S. division. That is because Yum! has changed its reporting style by combining Yum! Restaurants International, which included 14 different developed and emerging markets, and the U.S. divisions into three brands: KFC, Pizza Hut and Taco Bell. Consequently, this time Yum! has not reported the specific revenue and profit numbers for its U.S. operations. However, in the first quarter of 2014, the company said that it struggled at home due to the severe weather conditions. A key difference between the U.S. and other markets is that the U.S. is heavily weighted toward Taco Bell, which represents two-thirds of the country's operating profits. Currently, Taco Bell is responsible for a fifth of Yum!'s operating profits, 97% of which come from the U.S. In the U.S., Yum! has launched the third round of its breakfast advertising campaign, mainly aimed at younger customers. The company is a new player in this industry, which is dominated by its rivals McDonald's and Starbucks (SBUX). Yum! is focusing on expanding its breakfast menu in new cities, which could drive Taco Bell's revenue growth in the coming quarters. McDonald's, on the other hand, has downplayed any threat to its position in the breakfast industry from Taco Bell's entry in the market. >>Read More: Bank of America Disappoints Now but You Just Wait >>Read More: Biotech Stock Mailbag: Previewing InterMune's Big Week Ahead >>Read More: 4 Reasons Why Natural Gas Prices Will Tumble >>Read More: Here's Why Apple Can't Dawdle in Replacing Leadership At the time of publication, the author held no positions in any of the stocks mentioned. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.