YUM Brands Inc. (YUM)

Earlier today, Yum Brands reported adjusted Q2 EPS of $1.16, surpassing our $0.97 forecast and sell-side consensus (according to Consensus Metrix) of $0.96. We attribute the EPS beat primarily to: (1) better-than-expected same-store sales at Taco Bell and KFC U.S., (2) leverage achieved due to sales strength, and (3) a better-than-anticipated adjusted tax rate of 20.0% (versus our 21.5% projection and consensus of 21.5%). Taco Bell, KFC, Pizza Hut, and The Habit Burger Grill all […]

With this report, we boost our Q2E same-store sales forecasts as follows: (1) for Taco Bell, up by +2 percentage points to +17% (according to Consensus Metrix, sell-side consensus is at +15.7%, although be aware that Yum Brands does not report its same-store sales out past the decimal point), and (2) for KFC U.S., up by +1 percentage point to +3% (consensus is at +2.5%). This better-than-expected sales momentum causes us to raise our full-year […]

Earlier today, Yum Brands hosted a virtual Analyst Meeting, focused on its KFC business. Management says that in terms of worldwide units, KFC is only about a third of the way to its potential; “we’ll be growing the brand for years.” As of the end of 2020, KFC had 25,000 units, so this statement implies a (very) long-term goal of roughly 75,000 KFC restaurants worldwide.

Earlier today, Yum Brands reported Q1 EPS of $1.07. This was above our $0.89 forecast and sell-side consensus (according to Consensus Metrix) of $0.87. Factors in the EPS outperformance include: (1) higher-than-anticipated Revenues ($1.486 billion vs. our $1.465 billion estimate and consensus of $1.466 billion), (2) better-than-expected company-owned restaurant margins (17.6% actual vs. our 16.9% forecast and consensus of 17.3%), (3) better-than-expected G&A/Revenues (13.9% actual vs. our 15.6% estimate and consensus of 15.6%), and (4) […]

Yum Brands plans to release its Q1 2021 earnings before the market open on Wednesday, April 28th. How do YUM shares tend to trade heading into earnings, and the day of (for a before-the-market-open) or after (for an after-the-market-close) an earnings release? To answer those questions, we compiled data for the 24 prior earnings releases from Yum Brands, examining the stock’s absolute performance, and performance relative to the S&P 500, for two time periods: (1) […]

With this report, we boost our Q1E same-store sales forecasts as follows: (1) for Taco Bell, up by +1 percentage point to +7% (according to Consensus Metrix, sell-side consensus is at +5.7%, although be aware that Yum Brands does not report its samestore sales out past the decimal point), and (2) for KFC U.S., up by +1 percentage point to +13% (consensus is at +11.6%). This better-than-expected sales momentum causes us to raise our full-year […]

On January 6, 2020, Yum Brands announced its plan to acquire The Habit Burger Grill, which as of full-year 2019 was the 17th-largest burger concept in the U.S. (in terms of domestic systemwide sales, at $450+ million), and in the top 100 overall. The Habit Burger Grill is meaningfully smaller than Yum’s core brands of KFC, Taco Bell, and Pizza Hut. As such, the acquisition of Habit (which closed on March 18, 2020) suggests that: […]

Earlier today, Yum Brands reported Q4 2020 adjusted EPS of $1.15, above our $1.01 forecast and sell-side consensus (according to Consensus Metrix) of $1.01. We calculate that the Q4 adjusted tax rate was approximately 8.5%, much more favorable than our 21.0% estimate and consensus of 20.8%. We further calculate that relative to our tax-rate projection, the actual adjusted Q4 tax rate added about +15 cents to Q4 adjusted EPS. Excluding this factor, Q4 adjusted EPS […]

With this report, we update our data-driven Kalinowski Quick-Service Other Index for Q4E to +2.3%. This figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during October, November, and December. We believe that October same-store sales were likely the best month of the quarter, while November was likely the worst month of the quarter. (As a reminder, we define “quick-service other” as all quick-service, excluding burger, pizza, and […]

With this report, we update our data-driven Kalinowski Quick-Service Pizza Index for Q4E to +12.1%. This figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during October, November, and December. We believe that December same-store sales were likely the best month of the quarter, while October was helped by arguably the busiest Halloween ever for pizza delivery/carryout. That said, our updated +12.1% figure for Q4 2020 is sequentially […]

Earlier today, Yum Brands reported adjusted Q3 EPS of $1.01, ahead of our $0.83 forecast and sell-side consensus (according to Consensus Metrix) of $0.81. Third-quarter company-owned restaurant margins came to 17.9%, better than our 17.3% estimate and consensus of 16.1%. Taco Bell in particular generated very good restaurant-level margins (27.5% in Q3), although on today’s conference call management commented that over time margins should become more normalized as larger orders may become less of the […]

With this report, we update our data-driven Kalinowski Quick-Service Other Index for Q3E to +4.3%. As a reminder, we define “quick-service other” as all quick-service concepts excluding the pizza, burger, and sandwich categories. At present, sell-side consensus is less optimistic than us as regards the quickservice other segment’s same-store sales for the third quarter. When we weight the segment components identically as they’re weighted in the Kalinowski Quick-Service Other Index, and apply the current consensus […]

With this report, we update our data-driven Kalinowski Quick-Service Pizza Index for Q3E to +13.6%. This figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during July, August, and September. At present, sell-side consensus is less optimistic than us as regards the quickservice pizza segment’s same-store sales for the third quarter. When we weight the segment components identically as they’re weighted in the Kalinowski Quick-Service Pizza Index, and […]

With this report, we introduce our quarterly EPS estimates for Yum Brands (YUM; Neutral, $96.15) for 2021E as follows: Q1E: $0.84 Q2E: $0.90 Q3E: $1.00 Q4E: $1.16 These quarterlies sum to our (unchanged) full-year 2021E EPS forecast of $3.90. With this report, we also introduce our full-year 2022E EPS projection of $4.40. Read the Full Report

Earlier today, Yum Brands (YUM; Neutral, $91.46) reported that its adjusted Q2 EPS came to $0.82, well ahead of our $0.55 forecast and sell-side consensus (according to Consensus Metrix) of $0.57. The $0.82 figure included a +21 cent benefit related to Yum’s investment in Grubhub (GRUB; Not Rated). Adjusted EPS would have been about $0.61 excluding the mark-to-market for this investment. We attribute the Q2 EPS beat to more favorable company-owned restaurant-level margins (13.4% actual […]

Earlier today, Yum Brands (YUM; Neutral, $94.25) filed an 8-K which included a business update. As a result, we raise our Q2E EPS estimate by +5 cents, to $0.55. Our full-year 2020E EPS forecast goes up by +10 cents, to $3.00. And, given this higher anticipated base of earnings coming off of this year, we raise our 2021E EPS projection by +5 cents, to $3.80. Read the Full Report

Yum Brands (YUM; Neutral, $88.27) reported adjusted Q1 EPS of $0.64 — ahead of our $0.50 forecast, and a little short of sell-side consensus (according to Consensus Metrix) of $0.66. Yum notes that its investment in Grubhub (GRUB; Not Rated) cost it -6 cents of EPS in Q1. Worldwide same-store sales declined by -7% in Q1, slightly better than our -8% projection and consensus of -8%. Taco Bell same-store sales rose by +1%, besting our […]

With this report, we change our rating on Yum Brands (YUM; $85.61) to Neutral (from Buy). This change largely reflects the following factors: (1) currencies that may work against Yum’s earnings over the remainder of 2020, (2) other costs that may creep up in Q2, (3) the possibility of store closures hurting Q2 by more than the Street anticipates, (4) possible same-store sales issues at Taco Bell, and (5) YUM shares’ +55% rise off of […]

We lower our worldwide aggregate same-store sales estimates for Yum Brands (YUM; Buy) as follows: Q1E 2020: down by -8 percentage points to -8% Q2E 2020: down by -23 percentage points to -23% Q3E 2020: down by -15 percentage points to -13% Q4E 2020: down by -7 percentage points to -5% Full-year 2020E: down by -14 percentage points to -13% Full-year 2021E: up by +5 percentage points to +7% Read the Full Report

Earlier today, Yum Brands (YUM; Buy) reported adjusted Q4 EPS of $1.00 — which included a -$0.05 hit related to the mark-to-market adjustment for Yum’s investment in Grubhub (GRUB; Not Rated). Excluding this GRUB-related adjustment, adjusted EPS would have been $1.05 — still short of our $1.14 forecast and $1.13 sell-side consensus (according to Consensus Metrix). We calculate that G&A/Revenues amounted to 17.7% in Q4 — meaningfully above our 16.0% forecast and consensus of 16.1%. […]

Earlier today, Yum Brands (YUM; Buy) reported adjusted Q3 EPS of $0.80 — which included a -$0.15 hit related to the mark-to-market adjustment for Yum’s investment in Grubhub (GRUB; Not Rated). Excluding this GRUB-related adjustment, EPS would have been $0.95, matching our $0.95 forecast, although a penny shy of the sell-side consensus (according to Consensus Metrix) of 0.96. The Grubhub issue is weighing on YUM shares today. Part of this may be greater awareness of […]

We maintain our Buy rating on YUM and note the following: * With this report, we introduce our quarterly EPS forecasts for Yum Brands (YUM; Buy) as relates to 2020E. They are as follows: (1) Q1E $0.89, (2) Q2E $1.00, (3) Q3E $1.10, and (4) Q4E $1.25. These quarterlies sum to our unchanged full-year 2020E EPS projection of $4.24. * With this report, we also introduce our full-year 2021E EPS forecast of $4.80. * When […]

Earlier today, Yum Brands (YUM; Buy) reported Q2 adjusted EPS of $0.93, topping our $0.89 forecast and sell-side consensus of $0.87. Yum’s updating of its fair value of its investment in Grubhub (GRUB; Not Rated) added $0.06 to Q2 EPS, but we’d also note that the Q2 adjusted tax rate of 23.7% hampered EPS by $0.03 according to our math relative to our 20.6% projection (and consensus of 20.6%). Second-quarter restaurant-level margins for company-owned stores […]

Ahead of Yum Brands’ (YUM; Buy) second-quarter earnings release scheduled for before the market open on Thursday, August 1st, we raise our Q2 EPS estimate by $0.01 to $0.89, placing us two cents above sell-side consensus according to Consensus Metrix. Our EPS estimate increase is driven by (1) an update to our Q2E Taco Bell same-store sales projection to +5% (which places us as tied for the high on the sell-side in this respect), from […]

Not too long ago, the Taco Bell concept owned by Yum Brands (YUM; Buy) filed its 500+ page Franchise Disclosure Document (FDD) for 2019. In this report, we cite some of the highlights from that document following our review of it, including our review of it in comparison to last year’s Franchise Disclosure Document. For example, based on data provided, our best guess is that during 2018 U.S. companyowned traditional Taco Bells generated average sales […]

With third-party delivery aggregators continuing to grow, providing additional convenience to the consumer, we decided to look at various quarterly data provided by Grubhub (GRUB; Not Rated), correlating these data sets with various sectors’ same-store sales (for U.S. chain restaurants). To do this, we used six different Kalinowski Restaurant Industry Index sector indices, which are sorted by brand type and based on the weighted-average components from 48 different publiclytraded restaurant concepts. (The weightings are based […]

In April, Restaurant Business reported that “Yum [Brands], the parent company of Taco Bell, KFC and Pizza Hut, will ‘absolutely’ acquire another brand one day, [CEO Greg] Creed said. ‘In the future, other brands will want to become part of the Yum family,’ he said. ‘We’ll do it because these brands want to join us more than I want to pay some huge multiple.’” Read the Full Report

With this report, we increase our data-driven Kalinowski Quick-Service Other Index for Q2E by +30 basis points, to +2.6%. This figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during April 2019 and the beginning of May 2019. As a reminder, we define the quick-service other category as all quick-service except for the burger, sandwich, pizza, and fast-casual categories. At present, sell-side consensus is less optimistic than us […]

With this report, we update our data-driven Kalinowski Quick-Service Pizza Index for Q2E by +40 basis points, to +1.7%. This figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during April 2019 and the beginning of May 2019. At present, sell-side consensus is a touch less optimistic than us as regards Q2E. When we weight the segment components identically as they’re weighted in the Kalinowski Quick-Service Pizza Index, […]

In our April 8th report “Tidbits re: Burger-Sector Same-Store Sales Trends, and SBUX,” we noted that “With March 2019 now in the rear-view mirror, we are pleasantly surprised that this month appears to have turned out very well for burger-sector same-store sales. In fact, based on our proprietary, data-driven checks, the midsingle digit number put up by U.S. quick-service burger chains for March 2019 looks like the best month in this regard since February 2016, […]

Earlier today, Yum Brands (YUM; Buy) reported Q1 adjusted EPS of $0.82, surpassing our $0.72 forecast (which had incorporated an anticipated -$0.09 hit from markto-market of Yum’s investment in GrubHub [GRUB; Not Rated]) and the $0.81 consensus number (likely not apples-to-apples with our forecast). Yum notes that “We reflected the change in fair value of our investment in Grubhub by recording $20 million of pre-tax investment expense, resulting in a negative ($0.05) impact in EPS.” […]

Ahead of Yum Brands’ (YUM; Buy) first-quarter earnings release — scheduled for before the market open on Wednesday, May 1st — we look at a key positive and a key risk surrounding YUM. Most importantly on the positive side of the ledger, based on our data-driven checks, we raise our Q1 same-store sales forecast for Taco Bell by one percentage point, to +5%, as we believe that brand’s momentum, innovation, and differentiation continue to pay […]

We briefly note the following tidbits regarding pizza-sector market-share trends in the U.S., McDonald’s (MCD; Buy), and privately-held Luckin Coffee: * U.S. PIZZA-SECTOR MARKET-SHARE TRENDS. In the U.S., the quick-service pizza segment generated $42.95 billion in sales during 2018, according to data from Technomic. This represents year-over-year growth of +3.5%. Putting these numbers in context, the overall U.S. restaurant industry totaled about $556.36 billion in 2018 sales, up by +3.6% year-over-year. (FYI, Technomic projects U.S. […]

We briefly note the following tidbits regarding McDonald’s (MCD; Buy), Domino’s (DPZ; Buy), and KFC (owned by Yum Brands [YUM; Buy]): * McDONALD’S. The Chicago Tribune reports that “Representatives of a large company have met with village engineers as part of a due diligence process leading to the possible purchase of the McDonald’s campus property in Oak Brook [Illinois], Village President Gopal Lalmalani said Thursday. Lalmalani stopped short of identifying the company interested in purchasing […]

We briefly note the following tidbits regarding Domino’s (DPZ; Buy), Taco Bell (owned by Yum Brands [YUM; Buy]), and Pizzeria Locale (owned by Chipotle Mexican Grill [CMG; Not Rated]): * DOMINO’S UK. Following up on our tidbits report yesterday — our latest report detailing the strife between UK-based master franchisee Domino’s Pizza Group plc [DOM.LN; Not Rated] and several of its franchisees — Domino’s Pizza Group has responded to Sunday’s comments that appeared in the […]

We briefly note the following tidbits regarding KFC (owned by Yum Brands [YUM; Buy]), Dunkin’ (owned by Dunkin’ Brands Group [DNKN; Neutral]), and Domino’s (DPZ; Buy): * KFC UK. Multiple UK-based media outlets report that another supplier issue may be brewing as regards KFC UK. For example, in an article dated March 14th, The Sun reports that “KFC fans fear another chicken shortage after main supplier DHL quit. From Monday [March 18th] the finger-lickin’-good food […]

We briefly note the following tidbits regarding the market for coffeeshops in China, and the Kalinowski Restaurant Industry Index: * COFFEESHOP MARKET IN CHINA. Yum China (YUMC; Not Rated) — the master franchisee for Yum Brands (YUM; Buy) in China — recently hosted an Analyst Meeting in Shanghai. We believe that not enough attention was paid to the part of Yum China’s presentation about its plans regarding coffee. We believe highlighting some of the details […]

With this report, we introduce our data-driven Kalinowski Quick-Service Other Index for Q1E at +1.9%. This figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during January 2019 and most of February 2019. As a reminder, we define the quick-service other category as all quick-service except for the burger, sandwich, pizza, and fast-casual categories. At present, sell-side consensus is more optimistic than us as regards Q1E. When we […]

With this report, we introduce our data-driven Kalinowski Quick-Service Pizza Index for Q1E at -0.1%. This figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during January 2019 and most of February 2019. At present, sell-side consensus is a little more optimistic than us as regards Q1E. When we weight the segment components identically as they’re weighted in the Kalinowski Quick-Service Pizza Index, and apply the current sell-side […]

We briefly note the following tidbits regarding Wendy’s (WEN; Neutral), Taco Bell (owned by Yum Brands [YUM; Buy]), and privately-held Chick-fil-A: * WENDY’S. We hear that Wendy’s is considering testing the Impossible Burger, described by its creator as “Love meat? Eat meat. Impossible delivers all the flavor, aroma and beefiness of meat from cows. But here’s the kicker: It’s just plants doing the Impossible.” Read the Full Report

We briefly note the following tidbits regarding McDonald’s (MCD; Buy) and Taco Bell (owned by Yum Brands [YUM; Buy]): * McDONALD’S. The latest blog post of the National Ownership Association — the first-ever independent association of McDonald’s U.S. franchisees — is worth reading in full: Read the Full Report

We briefly note the following tidbits regarding privately-held Subway, privately-held Chick-Fil-A, Starbucks (SBUX; Neutral), and Pizza Hut (owned by Yum Brands [YUM; Buy]): * SUBWAY AND CHICK-FIL-A. We have obtained a copy of the Technomic Top 500 Chain Restaurant Advance Report — the preliminary report of the annual Technomic Top 500 — and there were many intriguing findings within. We look forward to the final numbers. Keeping in mind the caveat that these are not […]

We briefly note the following tidbits regarding Dunkin’ (owned by Dunkin’ Brands Group [DNKN; Neutral]), Taco Bell (owned by Yum Brands [YUM; Buy]), and The Cheesecake Factory (CAKE; Neutral): * DUNKIN’. We look for Dunkin’ to introduce an Irish Creme Swirl and a Mint Brownie Donut as part of the promotional approach for March 2019. In addition, a $2 medium iced coffee for the hours of 2-6 PM could be part of the promotional calendar […]

We briefly note the following tidbits regarding Taco Bell (owned by Yum Brands [YUM; Buy]), Baskin-Robbins (owned by Dunkin’ Brands Group [DNKN; Neutral]), and mid-sized restaurant concepts: * TACO BELL. In our January 22nd report “Tidbits re: Taco Bell (owned by YUM), DPZ, and MCD” we indicated that Taco Bell would launch Rattlesnake Fries nationwide in late February. We now have some additional details… first, the fries will actually be Steak Rattlesnake Fries (see following […]

We briefly note the following tidbits regarding McDonald’s (MCD; Buy), more McDonald’s, Taco Bell (owned by Yum Brands [YUM; Buy]), privately-held Chick-filA, and privately-held Subway: * McDONALD’S. Canadian Business Franchise reports that “McDonald’s Canada now allows customers to collect McCafé Mobile Rewards through its McD’s app with the purchase of any hot beverage. The new McCafé mobile rewards will not replace the on-cup loyalty program. Customers can collect mobile rewards by scanning the McCafé mobile […]

Earlier today, Yum Brands (YUM; Buy) reported adjusted Q4 EPS of $0.40, which includes a -$0.41 impact from mark-to-market related to the company’s investment in GrubHub (GRUB; Not Rated). Even adding this $0.41 back, EPS would have been short of our $0.99 forecast and the sell-side consensus (according to Consensus Metrix) of $0.97 (more on this shortly). The magnitude of the GRUB Q4 2018 mark-to-market adjustment was quite severe; we note GRUB shares ended Q3 […]

We briefly note the following tidbits regarding Taco Bell (owned by Yum Brands [YUM; Buy]), Domino’s (DPZ; Buy), and McDonald’s (MCD; Buy): * TACO BELL. Breaking news! We have learned that Taco Bell is testing a taco with BACON used as the taco shell. One of our industry sources who was fortunate enough to try it indicates that it was similar to Taco Bell’s popular Naked Chicken Chalupa, but with bacon instead of chicken. Taco […]

With this report, we once again raise our data-driven Kalinowski Quick-Service Pizza Index for Q4E, this time from +1.2% to +2.4%. (In late November, we had already moved our Q4E index number from +0.3% to +1.2%, based on our checks regarding the first half of the fourth quarter.) Our latest increase is based on our latest proprietary checks/data as regards same-store sales performance for this segment during the second half of November and all of […]

Following the completion of our data-driven check process for Yum Brands (YUM; Buy), we raise our Q4E same-store sales projections for each of the company’s domestic brands. Our Q4E same-store sales forecast for Taco Bell rises by one percentage point to +5% (above sell-side consensus of +4%), and we would not rule out the possibility of an even better performance should a best-case scenario arise. Our Q4E same-store sales estimate for KFC U.S. goes up […]

With this report, we update our data-driven Kalinowski Quick-Service Other Index for Q4E from +2.2% to +3.1%. This 90 basis-point increase is based on our latest proprietary checks/data as regards same-store sales performance for the second half of November and all of December. Sell-side consensus is currently not as optimistic as us regarding the outlook for Q4E same-store sales for the quick-service other sector, which we define as quick-service excluding burger, sandwich, pizza, and fast-casual […]