Yum Brands’ Acquisitions Build a Digital Foundation for AI Advancements

As Yum Brands aims to be a “leading global digital restaurant company,” per CEO David Gibbs, the quick-service restaurant (QSR) giant is tapping its tech acquisitions to create a unified eCommerce ecosystem on which to layer artificial intelligence (AI) capabilities to drive sales and productivity.

The company, which owns KFC, Pizza Hut, Taco Bell and Habit Burger Grill, shared Tuesday (Aug. 6) on a call discussing its second-quarter 2024 financial results how it is approaching its ambitious digital goals.

“The first phase of this journey is focused on acquiring, building and scaling a comprehensive suite of owned platforms that enable ownership of our data, control the digital ecosystem, speed of innovation and cost advantages through scale leverage,” CFO Chris Turner stated. “In the next phase, we are focused on maximizing the value creation potential of our platforms through AI and leveraging our extensive data assets.”

Turner highlighted as key to this foundation the company’s proprietary Poseidon point-of-sale (POS) system, its Yum Commerce Platform launched in 2021, its 2021 acquisition of ordering technology solutions provider Dragontail, its SuperApp back-of-house management app and its Global Data Hub.

The company’s digital bets are paying off, reporting close to $8 billion in digital sales in Q2, with a digital mix exceeding 50%. KFC’s digital sales excluding China rose 20%, and kiosk sales were up 40%, while Taco Bell’s loyalty sales rose 30% year over year.

Turner added that the company is partnering with “an innovative startup in the AI-driven personalization space to leverage our massive first-party data assets.” These kinds of initiatives can be key, as PYMNTS Intelligence research finds that 83% of consumers want personalized offers, but only 44% are satisfied with the ones they are receiving. Turner noted that the partnership aims to leverage deep learning in a way that will be “broadly and easily scalable across brands.”

All-in on Voice Ordering

Yum Brands announced Wednesday (July 31) that it is expanding its AI drive-thru voice ordering test to “hundreds” of additional Taco Bell locations by the year’s end and trying out the technology in five KFC stores in Australia.

Turner observed on Tuesday’s call that tests of the technology, in addition to boosting productivity, have yielded “consistent consumer experiences.” Additionally, the capability plays into efforts to provide a connected in-store experience, integrating with digital menu boards.

Consumers are growing more accustomed to engaging in commercial transactions using voice AI. The 2024 edition of PYMNTS Intelligence’s “How the World Does Digital” report, which drew from a survey of 67,000 consumers across 11 countries, found that 27% use voice technology to shop at least monthly.

Overall, Yum Brands’ global system sales grew 3%, driven by impressive gains at Taco Bell and KFC, with Taco Bell achieving a notable 7% growth in system sales. However, same-store sales saw a slight 1% decline. In an effort to return to growth, the company is rolling out initiatives to appeal to cost-conscious consumers.

“The impacts from the Middle East conflict, in addition to a more cost-conscious consumer, have presented headwinds to same-store sales,” Gibbs stated. “Ensuring we provide consumer’s affordable options has been an area of greater focus for us since last year, with all of our brands having offered disruptive deals and introduced or reintroduced the track of everyday value. … Our brands experienced improving trends relative to the first quarter in the US market, and we continue to refine our offerings in international markets to recapture similar momentum.”