Ties to Grubhub drove down investor confidence in Yum! Brands on Wednesday (Oct. 30) even as the quick-service restaurant (QSR) operator — which runs the Taco Bell, Pizza Hut and KFC brands — touted its expansions in digital and mobile services. It also announced new leadership, and a new hire who will oversee the brand’s ongoing digital and mobile push.
For its third quarter 2019 financials, Yum reported revenue of $1.339 billion, which compared to analyst expectations of $1.334 billion. But earnings came in at 80 cents per share, lower than expectations of 94 cents. The culprit? According to Yum, it changed the fair value of its investment in Grubhub, which drove down those earnings.
Grubhub, in fact, was having its own problems this week as the online food delivery space continues to evolve and become more competitive. Its shares tanked early this week after the company posted what investors apparently viewed as a disastrous third-quarter 2019 financial report.
“Competitive food delivery offerings (Uber, DoorDash and others) are eroding GRUB usage and [is] expected to worsen in 4Q, suggesting historical [long-term value] is no longer reliable,” said Oppenheimer Analyst Jason Helfstein, according to a report from CNBC. The report added that “Grubhub has lost more than half of its market value this year as competing food delivery services like Uber Eats, DoorDash and Postmates pressure fundamentals.”
For its part, Yum continues to expand its delivery offerings via Grubhub, company officials said during the Q3 analyst conference call on Wednesday. “KFC U.S. continues to partner with Grubhub to add locations for delivery and click-and-collect,” said SVP and Corporate Controller David Gibbs. “We officially launched online ordering at KFC.com on October 13 in conjunction with the introduction of Kentucky Fried Wings and our Rudy-inspired advertising.”
That’s not all, he said. “We continue to expand our Grubhub partnership test with Pizza Hut, which is now active in over 700 restaurants,” Gibbs said in that call. “Pizza Hut is well positioned to leverage being listed on the Grubhub marketplace, but by fulfilling delivery orders through our own delivery network. This gives us better control of the customer experience.”
The Yum-Grubhub relationship keeps building, according to the PYMNTS Order to Eat Tracker. That’s because Grubhub is taking a page out of the loyalty rewards playbook.
Loyalty and Kiosks
The platform recently launched Perks, a loyalty system that offers customers redeemable points that can be used through the Grubhub and Seamless delivery apps. The program offers free food from chains like Taco Bell and Red Lobster. Taco Bell is also pursuing solutions to improve customers’ in-restaurant and home delivery orders.
The QSR chain expanded its partnership with delivery service provider Grubhub earlier this year and is planning to install self-service kiosks. “Taco Bell now has kiosks in over 6,100 restaurants and we launched localized AI-driven product recommendations to efficiently give our customers what they want,” Gibbs said. “Delivery is now live in 4,800 Taco Bell restaurants in the U.S. Mobile and online ordering continue to be a priority, and we are seeing strong results with over 14 million registered users.”
Indeed, when it comes to mobile-order ahead services, both Taco Bell and Pizza Hut made the Top 10 list of such offerings in the latest PYMNTS Mobile Order Ahead tracker. Pizza Hut took the No. 4 spot, just behind Chick Fil-A, while Taco Bell was at No. 8, just behind McDonald’s. Starbucks was in first place.
Gibbs also made some new of his own this week — he will take over as CEO from Greg Creed in January. That was not the only personnel news, either. Yum has hired Clay Johnson as the company’s chief digital and technology officer. “Clay has over 20 years industry experience and comes to us from Walmart, where he served as CIO,” said Yum CFO Chris Turner. “In his new role as CDTO, Clay will oversee Yum’s Global Technology Strategy partnering with our KFC, Pizza Hut and Taco Bell divisions.”