Yum Brands reported third-quarter earnings above Wall Street expectations, though a cyclospora outbreak linked to iceberg lettuce served at Taco Bell weighed on the chain’s same-store sales and the company’s overall results.
Taco Bell’s same-store sales declined 4% as diners temporarily reduced visits following the foodborne illness outbreak. Yum executives said the impact was most severe over the weekend of July 18, with sales trends improving afterward. CEO Chris Turner said Taco Bell U.S. had been outperforming the quick-service restaurant industry in same-store sales growth since the end of September.
Adjusted earnings were $1.56 per share, compared with analysts’ estimate of $1.49, according to LSEG data. Revenue came in at $2.05 billion, matching expectations, and rose 4% from a year earlier.
Yum reported net income of $1.62 billion, or $5.92 per share, for the quarter, up from $397 million, or $1.41 per share, a year earlier. The latest figure includes gains from the divestiture of Pizza Hut and other items; excluding those, earnings were $1.56 per share.
Yum completed the Pizza Hut divestiture during the quarter, selling its mainland China business to Yum China on Aug. 7 and the rest of the chain to LongRange Capital on Sept. 1. Third-quarter results include Pizza Hut through those sale dates. Excluding Pizza Hut, Yum’s same-store sales were flat.
Taco Bell’s international business, which is considerably smaller than its U.S. operation, recorded same-store sales growth of 5%. KFC’s same-store sales increased 1%, supported by system sales growth in China and Europe, while system sales in the U.S.—the chain’s third-largest market—fell 6%.
Sources: CNBC Markets.