Yum Brands Surpasses Expectations in Q3 Earnings, Though Taco Bell Impacted by Cyclospora Outbreak

Yum Brands announced on Tuesday that its earnings surpassed expectations, although a cyclospora outbreak tied to iceberg lettuce at Taco Bell dampened same-store sales growth.

Yum noted that Taco Bell, which it views as a key growth engine, has recovered.

Chris Turner, Yum’s CEO, said that since the end of September, Taco Bell U.S. has been outperforming the quick-service restaurant industry in same-store sales growth.

According to CFO Ranjith Roy, Taco Bell’s same-store sales have risen roughly 1% in the fourth quarter, and in the final four weeks of the period they increased 3% versus the prior year.

The following figures compare Yum’s actual results with Wall Street expectations, according to a LSEG analyst survey:

• Earnings per share: $1.56 adjusted vs. $1.49 expected
• Revenue: $2.05 billion vs. $2.05 billion expected

Yum reported fiscal third‑quarter net income of $1.62 billion, or $5.92 per share, compared with $397 million, or $1.41 per share, a year earlier.

Excluding gains from the divestiture of Pizza Hut and other assets, the company earned $1.56 per share.

Net sales increased 4% to $2.05 billion.

During the quarter, Yum completed the divestiture of Pizza Hut, closing the sale of its mainland China operations to Yum China on August 7 and completing the sale of the remainder of Pizza Hut to LongRange Capital on September 1. The third‑quarter results therefore include Pizza Hut earnings through those dates.

Excluding Pizza Hut, Yum’s same-store sales were flat for the quarter, as Taco Bell’s decline of about 4% dragged down overall results. The drop reflected a temporary pullback in diners’ visits following the foodborne illness outbreak.

Yum executives earlier reported that the weekend of July 18 experienced the most severe sales impact, but conditions have improved since then.

Yum said Taco Bell’s most loyal customers returned more quickly, aided in part by weekly Tuesday deals for loyalty program members after the cyclospora outbreak dominated headlines.

Roy noted that traffic from medium‑ and light‑frequency customers has recovered to roughly 95% of pre‑outbreak levels, while heavy‑frequency visits are back to normal. To attract casual diners, Taco Bell has leveraged star power, including a collaboration with pop star Olivia Rodrigo on a pink Mountain Dew Baja Blast.

Outside the United States, Taco Bell’s relatively small international business posted 5% same-store sales growth.

KFC’s same-store sales rose 1%, driven by system sales growth in China and Europe, while its U.S. operations — now its third‑largest market — saw system sales decline 6% in the quarter.

Similar to Restaurant Brands International’s Popeyes, KFC has faced challenges in the United States amid growing competition and increasingly price‑sensitive consumers. Although the U.S. accounts for roughly 5% of KFC’s operating profit, it remains a symbolically important segment for Yum investors.

In the quarter, KFC U.S. introduced popcorn chicken, which sold out at many locations, but Yum noted that the limited‑time offering was insufficient to offset the strong performance of the Hot & Spicy Wings and Potato Wedges promotion in the prior year.

Globally, KFC aims to become “the most modern chicken quick‑service restaurant,” Turner said on the earnings call. To reach this goal, he announced plans to roll out buzzworthy promotions, refresh the brand identity, and expand the menu with enhanced sauces and additional beverage options.

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