Fast food giant Yum! Brands Inc. (YUM) on Thursday, Nov. 2, reported increasing same-store sales in all three of its chains—KFC, Pizza Hut and Taco Bell.
Shares were up nearly 6% to $79.02 at 12:24 p.m., EDT, Thursday.
During the quarter ending Sept. 30, Yum reported earnings of 68 cents per share, ahead of analysts' expected 67 cents per share. Sales of $1.44 billion, down 5% year over year, also exceeded the consensus estimate of $1.39 billion.
Yum's KFC concept had the strongest sales growth during the quarter, with system sales of $6.3 billion, up 8% year over year. Same-store sales grew 4% during the period, and U.S. sales rose 1%. KFC opened 291 new international restaurants in 51 countries, 249 of which were in emerging markets.
Taco Bell's system sales growth of 6%, to $2.4 billion, with system-sales rising 3% and U.S. sales up 3%. Yum CEO Greg Creed touted Taco Bell's $1 Potato-rito and $5 Double Chalupa Supreme, among other product launches, which he said drive customer loyalty. He identified India, Brazil, China and Canada as the brand's key growth markets.
At Yum's third segment, Pizza Hut, which has been trying to improve its geographic mix and delivery capabilities to compete with rival Domino's Pizza Inc. (DPZ) , system sales of $2.97 billion were up 3%, and same-store sales rose 1%. U.S. sales were flat.
"The foundations are not always sexy, but I think delivering hot, reliable pizza is important," Creed said. Its efforts include a new delivery pouch made with 3M Co. (MMM) insulation technology. Improved delivery both increases the size of checks and increases the variety of occasions for pizza purchases that Pizza Hut can capture.
Customer satisfaction is up 9% from the prior year at Pizza Hut, Creed added.
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"The NFL has hurt us by not resolving the current debacle to the players' and owners' satisfaction," CEO John Schnatter said on a call Wednesday, Nov. 1, with analysts. "NFL leadership has hurt Papa John's shareholders."
COO Steve Ritchie added that the "unexpected decline in viewership of the NFL" and negative customer views of the company's league sponsorship will also hurt sales in the next quarter.
There may be some truth to Papa John's claims, according to Nomura analyst Mark Kalinowski.
"It indeed appears that National Football League strife may be weighing on same-store sales, with Papa John's as the NFL's Official Pizza Sponsor bearing some brunt of this issue," he wrote. "Sponsorship of NFL = No Free Lunch."
But that doesn't seem to be a problem at Pizza Hut.
"We also love live sport, whether it's baseball, college football, NFL," Creed said. "We're not seeing any impact from any of that on our business," and the company will continue to promote all three of its brands with sports-centered marketing. Pizza Hut is an official NCAA sponsor, CFO David Gibbs added.
Yum shares rose 0.9% to $75.00 in premarket trading Thursday.
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Editors' pick: Originally published Nov. 2.