(Reuters) -Yum Brands surpassed Wall Street estimates for fourth-quarter comparable sales on Thursday as value offerings from Taco Bell attracted budget-conscious U.S. consumers to the popular Tex-Mex chain, sending its shares up about 7%.
Fast-food chains from McDonald’s to Burger King are leaning on their value meals to revive demand, after high prices of essentials and steep borrowing costs forced customers to dine out less.
Taco Bell’s Luxe Carvings Box value meal, starting at $5, was a big hit and helped drive up same-store sales at U.S. outlets by 5% in the quarter.
Yum has also invested in growing international stores for KFC. Worldwide same-store sales for the chain grew 1%.
In the Middle East market, where almost all Western fast-food chains have been hit by informal boycotts over their perceived pro-Israeli stance in the Gaza conflict, Yum Brands stood out with positive sales growth.
KFC’s Middle East and North Africa sales grew 21%.
Transactions at KFC had rebounded to pre-conflict levels by December, Chief Financial Officer Chris Turner said in a post-earnings call.
The company’s core operating profit, more than 80% of which comes from Taco Bell U.S. and KFC international, jumped 8% in 2024, excluding the impact of an extra week in the year. Yum expects the metric to grow at least 8% this year, in line with its long-term target.
Its worldwide same-store sales rose 1% in the quarter ended Dec. 31, compared with analysts’ estimates for a 0.42% rise, according to data compiled by LSEG.
Yum executives touted efforts to digitize customer orders. CEO David Gibbs said half of the stores outside China have ordering kiosks, and the company plans to raise that number to at least 70% by 2026.
As digital orders ramp up, now accounting for more than half of Yum’s sales, the company is also investing in back-end technology such as its artificial intelligence-backed “Byte by Yum” software to help reduce wait times at restaurants, improve delivery times, and manage pricing and promotions on its app.
The company announced it was bringing its in-house software services for franchisees under one umbrella called Byte.
On an adjusted basis, profit for the quarter was $1.61 per share, beating estimates by a cent.
Same-store sales at its Pizza Hut division fell 1% in the fourth quarter, a sequential improvement from a 4% drop in the third quarter.
(Reporting by Juveria Tabassum and Neil J Kanatt in Bengaluru and Waylon Cunningham in New York; Editing by Devika Syamnath)
