Yum! Brands (YUM) Stock Climbs After Taco Bell Crushes Q1 Estimates

TLDR

• Yum! Brands beat Q1 earnings estimates with EPS of $1.50 vs. $1.38 expected and revenue of $2.06 billion vs. $2.04 billion expected
• Taco Bell posted 8% same-store sales growth, well ahead of the 5.6% Wall Street forecast
• Global same-store sales rose 3%, topping analyst expectations of around 2.5%
• KFC same-store sales grew 2%, slightly below estimates; U.S. system sales fell 2%
• Pizza Hut U.S. same-store sales dropped 4%, though global results beat the expected decline of 0.7%

Yum! Brands posted a strong first quarter, clearing Wall Street’s bar on both earnings and revenue. The fast-food parent company reported adjusted EPS of $1.50, topping the $1.38 consensus, while revenue of $2.06 billion edged past the $2.04 billion estimate.

Net income jumped to $432 million, or $1.55 per share, from $253 million, or 90 cents per share, a year ago. Net sales climbed 15%, lifted by higher revenue from company-owned restaurants after Yum purchased more than 100 Taco Bell locations across the Southeast last year.

The stock rose roughly 2.5% on the news.

Yum! Brands, Inc., YUM

Taco Bell was the clear standout. Its same-store sales grew 8% in the quarter, well ahead of the 5.6% estimate from StreetAccount. CEO Chris Turner called it “an outstanding” performance that was “meaningfully ahead of the QSR industry.”

Digital sales were also a bright spot. System-wide digital sales approached $11 billion, with the digital mix hitting a record 63%.

Yum also said it plans to expand its use of AI-driven A/B testing in Taco Bell drive-thrus after a successful pilot in Q1. The tech lets the chain adjust layouts, visuals, and messaging shown to drivers to find what works best.

KFC Struggles at Home

KFC reported 2% global same-store sales growth, missing the projected 2.5%. In the U.S., KFC system sales fell 2% in the quarter. Yum has stopped reporting U.S. same-store sales for KFC separately, a move that signals the segment is now considered small relative to the broader business.

The U.S. is now KFC’s third-largest market by system sales, behind China and Europe. Turner said the U.S. operation remains “strategically important,” but the chain has work to do. KFC is leaning into value and innovation, drawing on learnings from its Saucy spinoff, which focuses on chicken tenders.

Pizza Hut’s Uncertain Future

Pizza Hut had a mixed quarter. Global same-store sales were flat, beating the expected decline of 0.7%, but its U.S. same-store sales fell 4%. International same-store sales rose 2%.

The chain has been the weakest link in Yum’s portfolio for some time. In November, Yum announced it would explore strategic options for Pizza Hut. Reports earlier this month named Apollo Global Management and Sycamore Partners among potential buyers.

Yum did not provide a formal update on that process Wednesday, but its earnings release notably included a breakdown of system sales, unit count, and core operating profit excluding Pizza Hut — a signal the company is preparing to present its business without the chain.

Yum added 1,030 gross new units in the quarter, keeping unit growth at 5%. Core operating profit rose 6%.

Long-term, Yum is targeting 5% unit growth, 7% system sales growth excluding foreign exchange, and at least 8% core operating profit growth on average.

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