Yum Brands beats earnings estimates despite Taco Bell food safety outbreak

Yum Brands reported third-quarter financial results that surpassed Wall Street expectations, with net income reaching $1.62 billion, up from $397 million in the previous year. Net sales grew 4% to $2.05 billion. The results were influenced by the divestiture of Pizza Hut, which contributed a $1.68 billion gain to operating profit.

Performance was tempered by a cyclosporiasis outbreak linked to iceberg lettuce at Taco Bell, which caused a 4% decline in same-store sales during the quarter. The outbreak, which resulted in 570 hospitalizations and two deaths in the US, led to a temporary 20% drop in weekly foot traffic at the peak. However, company leadership noted that Taco Bell has since recovered, with recent four-week growth reaching 3%.

To stabilize the brand, Yum Brands has focused on digital loyalty programs and technology. Taco Bell reported a 25% year-over-year surge in US loyalty membership, and the company is expanding its “Byte” voice AI technology at drive-thrus. Meanwhile, KFC saw a 1% increase in same-store sales, driven by growth in China and Europe, though its US market contracted by 6%.