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Back|Yum Brands earnings beat estimates, but cyclospora outbreak weighs on Taco Bell
Yum Brands earnings beat estimates, but cyclospora outbreak weighs on Taco Bell
NEWS
CNBC US Markets·1 hour ago·Business·1 min read·🇺🇸United States

Yum Brands earnings beat estimates, but cyclospora outbreak weighs on Taco Bell

Taco Bell same-store sales dropped 4% due to a foodborne illness outbreak, but the chain has since rebounded.

Quick Look

  • Yum Brands reported Q3 earnings beating Wall Street expectations, though same-store sales growth was weighed down by a cyclospora outbreak linked to iceberg lettuce at Taco Bell.
  • Executive Chris Turner noted Taco Bell has since rebounded.

AI-generated summary

Why It Matters

Yum Brands completed the divestiture of Pizza Hut during the quarter, selling its China business and the rest to LongRange Capital.

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Yum Brands on Tuesday reported earnings that beat expectations, but a cyclospora outbreak linked to iceberg lettuce at Taco Bell weighed on the company's same-store sales growth.

However, Yum said Taco Bell, which the company considers a "growth engine" for its business, has since rebounded.

"Since the end of September, Taco Bell U.S. has been outpacing the [quick-service restaurant] industry on same-store sales growth," Yum CEO Chris Turner said in a statement.

Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: $1.56 adjusted vs. $1.49 expected

Revenue: $2.05 billion vs. $2.05 billion expected

Yum reported fiscal third-quarter net income of $1.62 billion, or $5.92 per share, up from $397 million, or $1.41 per share, a year earlier.

Excluding gains from its divestiture of Pizza Hut and other items, the restaurant company earned $1.56 per share.

Net sales rose 4% to $2.05 billion.

During the quarter, Yum completed its divestiture of Pizza Hut. It closed the sale of the pizza chain's business in mainland China to Yum China on Aug. 7 and sold the rest of Pizza Hut to LongRange Capital on Sept. 1. The company's third-quarter results include Pizza Hut up until those dates.

Excluding Pizza Hut, Yum's same-store sales were flat for the quarter as Taco Bell weighed on the company's overall results. Taco Bell's same-store sales declined by 4% as diners temporarily pulled back on visits due to the foodborne illness outbreak.

Yum executives previously said the weekend of July 18 saw the most severe impact to sales, but sales trends have improved since then.

Outside of the U.S., Taco Bell's much smaller international business reported same-store sales growth of 5%.

KFC's same-store sales ticked up 1%, helped by system sales growth in China and Europe. The U.S., now the chicken chain's third-largest market, saw system sales shrink 6% in the quarter.

Open Questions

  • ?What was the total financial cost of the cyclospora outbreak?

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This article was originally published by CNBC US Markets.

Quick Look

  • Yum Brands reported Q3 earnings beating Wall Street expectations, though same-store sales growth was weighed down by a cyclospora outbreak linked to iceberg lettuce at Taco Bell.
  • Executive Chris Turner noted Taco Bell has since rebounded.

AI-generated summary

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News tone
Neutral
Emotional intensity
Medium
News value
Moderate
Global impact
National
Follow-up likelihood
Unlikely
Relevance window
Days

Source & Reliability

Source
CNBC US Markets
Story type
Hard news
Source quality
Full
Published
1 hour ago

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