KFC owner beats Wall Street estimates with Q3 results

Yum Brands topped Wall Street estimates for third-quarter results on Wednesday as a reboot of menu items at Taco Bell and promotional offers at KFC helped pull in budget-strapped customers looking for cheaper restaurant meals.

The company has banked on aggressive promotions and limited-time offers across its brands to attract customers. It brought back the fan-favorite Volcano Menu at Taco Bell in the quarter, while KFC launched a $20 Fill Up Box deal offering a family meal including 12-piece nuggets, fries and biscuits.

Taco Bell’s strategy to lean on offers has helped the chain offset an industry-wide slowdown in traffic, with visits increasing 3% in the quarter, according to data from location analytics firm Placer.ai.

Meanwhile, Pizza Hut has been losing market share to rivals including Papa John’s (PZZA.O), Papa Murphy’s and to a lesser extent Little Caesars, with losses noticeably worsening in September, data from research firm M Science showed.

“We’ve seen a lot of competition in the pizza space … and it is driving the incremental weakness at Pizza Hut,” said Sante Faustini III, director of product intelligence at M Science.

Pizza Hut’s same-store sales globally rose 1% in the quarter, missing estimates of 2.08%, according to LSEG data.

Global same-store sales at Taco Bell restaurants rose 8%, above estimates of an increase of 6.49%, while KFC posted an increase of 6%, compared with estimates of 5.39%.

Restaurants have benefited from a step down in costs of commodities such as vegetables, paper and some proteins like chicken, after months of struggling to protect margins from cost inflation.

Yum Brands’ operating margins expanded across all three of its top divisions in the third quarter ended Sept. 30.

Total same-store sales at Yum Brands rose 6% in quarter, beating analysts’ estimates of a 4.73% increase, while adjusted profit of $1.44 per share also topped estimates of $1.28.

Louisville, Kentucky-based Yum Brands’ shares were up marginally in choppy premarket trading.