Dive Brief:
- Yum Brands reported same-store sales rose 11% last year in its Taco Bell U.S. division, with performance partly driven by the chain’s Mexican Pizza LTO. The brand sold 45 million Mexican Pizzas in the four months the item was available in 2022, Yum CEO David Gibbs said on the company’s Q4 2022 earnings call.
- Though Pizza Hut’s U.S. systemwide sales were flat and same-stores sales fell 1% over the course of 2022, the introduction of Pizza Hut Melts in Q4 helped drive a 5% systemwide sales increase for the quarter.
- Delivery partnerships also strengthened Yum’s sales and, combined with value offerings, helped preserve its share of lower-income customers, Gibbs said.
Dive Insight:
Demand remained strong across Yum’s consumer segments in the U.S., with frequency increasing among high-income consumers as they trade down to QSR brands, Gibbs said. At the lower end of income distribution, Gibbs said specific value-heavy items were key to driving customer visits.
“There's a little bit more interest in value, which our brands are perfectly positioned to deliver on. You're seeing that with our menu offerings,” Gibbs said. “Taco Bell [has] the Cravings [Value] Menu and $2 burritos. The new [Pizza Hut] Melts product at Pizza Hut... is a screaming value. KFC just rolled out wraps at a great value price point. So I think the environment sets up well for us.”
Pizza Hut’s Melts product was particularly successful in Q4, Gibbs said.
“Melts overindex to pre-dinner timeframes, and individual occasion tickets, and helped to recover the lower household income base due to its strong value proposition,” Gibbs said.
Pizza Hut’s partnerships with delivery aggregators also helped improve sales — five marketing campaigns launched with DoorDash and Uber Eats increased Pizza Hut sales on those platforms by 30%, Gibbs said.
For Taco Bell, the chain’s consistently strong sales were also partially driven by a series of initiatives aimed at improving the performance of its breakfast segment. Chief among these initiatives was a Q4 campaign with Pete Davidson, which drove sales up 9% in the breakfast daypart, Gibbs said.
While new menu items have helped draw customers, Yum has been expanding dramatically, especially internationally. The chain opened 4,560 new restaurants in 2022, said Yum CFO Chris Turner. According to Turner, almost 90% of these units opened outside the U.S. Labor market conditions have begun to ease domestically, Gibbs said, with applications for jobs increasing at Yum restaurants and more units returning to pre-COVID-19 operating hours.
KFC’s systemwide sales were flat in the U.S. over the course of 2022, rising only 2% in the fourth quarter, according to the earnings release.
