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Taco Bell parent Yum Brands misses earnings estimates as higher costs weigh on profits

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Customers wearing Taco Bell foam taco hats exit the company’s restaurant, a unit of Yum! Brands Inc. in Bangkok, Thailand.
Brent Lewin | Bloomberg | Getty Images

Yum Brands on Wednesday reported mixed results for its fourth quarter as higher costs weighed on profits, leading to an earnings miss.

Shares of the company rose less than 1% in premarket trading.

Here’s what the company reported for the quarter ended Dec. 31 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

Earnings per share: $1.02 adjusted vs. $1.09 expected
Revenue: $1.89 billion vs. $1.88 billion expected

Yum reported fourth-quarter net income of $330 million, or $1.11 per share, down from $332 million, or $1.08 per share, a year earlier.

Excluding items, the company earned $1.02 per share, falling short of the $1.09 per share expected by analysts surveyed by Refinitiv.

Taco Bell, KFC and Pizza Hut all saw company restaurant margins shrink during the quarter. Across the restaurant industry, operators have been dealing with higher food, freight and labor costs.

Net sales rose 8% to $1.89 billion, topping expectations of $1.88 billion. Yum reported same-store sales growth of 5% compared with the year-ago period and 4% on a two-year basis.

Taco Bell reported the highest jump in same-store sales growth of Yum’s portfolio. The Mexican-inspired chain saw its same-store sales climb 8% after several weaker quarters, hurt by a lack of late-night and morning customers.

KFC’s same-store sales rose 5% in the quarter. In the U.S., its second-largest market, same-store sales jumped 12%. But its domestic market accounts for less than a fifth of its system-wide sales. Shrinking system-wide sales in China, its largest market, weighed on the chain’s overall same-store sales growth.

Pizza Hut reported same-store sales growth of 4%. The pizza chain’s U.S. same-store sales ticked up just 1% in the quarter as the market faced tough comparisons to last year’s same-store sales growth. In the U.S., Pizza Hut has been trying to mount a comeback, an effort that was initially helped by soaring demand for its pizza during lockdowns.

Read the full earnings report here.

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