Yum! Brands ((YUM)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Yum! Brands’ recent earnings call conveyed a positive sentiment overall, with notable growth in digital sales and global unit expansion, primarily driven by Taco Bell and KFC. Despite these successes, Pizza Hut encountered sales challenges, and the closure of stores in Turkey affected overall unit numbers. Nevertheless, the company remains optimistic about future growth prospects and technology integration.
Digital Sales and Technology Advancements
Digital sales at Yum! Brands soared by approximately 15% in 2024, with over half of the system sales now coming through digital channels. This growth is supported by the introduction of ‘Byte by Yum!’, a new technology platform designed to enhance consumer experiences and streamline operations, marking a significant step in the company’s digital transformation.
Taco Bell and KFC Performance
Taco Bell in the U.S. reported a robust year, achieving a 6% increase in system sales, which notably outperformed the industry. Meanwhile, KFC International recorded a 14% growth in core operating profit in the fourth quarter, underscoring its strong performance in global markets.
Record Unit Openings
Yum! Brands celebrated a record number of new unit openings in 2024, with over 1,800 units opened in Q4 and more than 4,500 for the year. KFC led this expansion effort with nearly 2,900 new units, highlighting the brand’s aggressive growth strategy.
Core Operating Profit Growth
Despite challenges in the industry, Yum! Brands achieved an 8% growth in core operating profit for the full year. This signifies the company’s resilience and ability to navigate a competitive market environment effectively.
Habit Burger Operational Improvements
The Habit Burger saw improvements in same-store sales trends during Q4. The brand also managed to reduce labor expenses by 150 basis points, resulting in a restaurant-level margin of 10%, indicating operational enhancements and cost management.
Pizza Hut Sales Decline
Pizza Hut experienced a 1% decline in full-year system sales. The U.S. market, in particular, faced pressure due to increased competition, which impacted overall performance for the brand.
Same-Store Sales Challenges
Yum! Brands reported a 1% decline in overall same-store sales for the year, influenced by global consumer sentiment and geopolitical tensions in the Middle East, reflecting broader industry challenges.
Turkey Franchise Closure
The closure of franchise agreements in Turkey resulted in the removal of 284 KFC and 254 Pizza Hut stores from Yum! Brands’ unit count in Q1. This strategic decision impacted the company’s unit growth figures.
Forward-Looking Guidance
Looking ahead, Yum! Brands provided optimistic guidance for 2025. They anticipate maintaining an 8% growth in core operating profit and foresee unit growth of at least 4-5%, excluding the one-time closures in Turkey. The company is committed to further enhancing its digital sales infrastructure and expects Taco Bell and KFC to continue driving growth through innovative strategies and increased market penetration.
In summary, the Yum! Brands earnings call reflected a generally positive outlook, underscored by strong digital sales growth and expansion achievements by Taco Bell and KFC. While challenges such as Pizza Hut’s sales decline and geopolitical impacts exist, the company’s forward-looking strategies and commitment to technological advancements are expected to support sustained growth in the coming year.
