Yum! Brands Drives Digital Sales In Q4 With In-House Technology

Yum! Brands, Inc., the parent company of KFC, Taco Bell, Pizza Hut and other multinational restaurant chains, reported on Thursday (Feb. 4) that it saw record-high digital sales in 2020, totaling $17 billion for the year. This marked a 45 percent year-over-year increase, according to the news release. As CEO David Gibbs explained on a call with analysts, partnering with more meal aggregators allowed the company to offer delivery from 35,000 restaurants worldwide.

CFO Chris Turner noted that part of the company’s success in the digital market has come from investing in building out loyalty programs. Taco Bell has been implementing a loyalty program “with promotions geared toward customer acquisition and adoption” that helped drive sales. The QSR promotes personalization by analyzing customers’ favorite orders and offering novel rewards items they are likely to find appealing. This expands customers’ menu preferences, giving them more reasons to return to the restaurant for different meals.

Additionally, the company has plans to roll out internally-built digital technologies later this year. Turner added that KFC U.S. is about to test out its own eCommerce platform, while Taco Bell will try out its own POS system, which features highly customizable tablet-based software. The company is also using new technologies to improve performance internally. One example is Pizza Hut’s new “HutSpot” app, an “intelligent coaching app” that can “improve shift-level store performance,” according to Gibbs. “After launching HutSpot and other process improvements in the U.K., delivery times improved over six minutes and drove a 20-point improvement in customer satisfaction scores,” he noted.

The company saw a same-store sales decline of 1 percent, a GAAP operating profit decline of 12 percent, a core operating profit decline of 9 percent and a GAAP EPS decrease of 32 percent year over year. Of the chain’s major brands, Pizza Hut performed the most poorly, seeing a 6 percent sales decline, while KFC performed the strongest, seeing only a 1 percent sales decline. Despite these downturns, however, Yum! Brands outperformed estimates. Its adjusted EPS of $1.15 topped the Zacks Consensus Estimate by 16 percent, while its $1.74 billion total revenue surpassed the consensus estimate by 0.7 percent.