What is in this article?:
- Yum 2Q profit falls 15%
- U.S., YRI produce steady results
Performance in the China division is improving but continues to dampen company-wide results.
U.S., YRI produce steady results
(Continued from page 1)
Yum expects 2013 to be the second consecutive year of net new-unit growth in the United States and a record year for openings in Yum Restaurants International, president Rick Carucci said.
The domestic system’s 1-percent same-store sales gain comprised a 2-percent increase at Taco Bell — which lapped the year-earlier quarter’s 13-percent gain, powered by the introduction of Doritos Locos Tacos — and a 3-percent rise at KFC, offset by a 2-percent decline at Pizza Hut.
Pizza Hut’s “del-co light” prototype would allow for renewed unit growth, Carucci noted, but Taco Bell would be the greatest contributor to the U.S. division’s fortunes, as franchisees remain enthusiastic about the “Live Más” marketing campaign and the Doritos Locos Tacos and Cantina Bell menu platforms.
“If you look at the entire U.S. QSR landscape, you could argue that Taco Bell has done the most in the past 18 to 24 months to improve its competitive position,” he said. “We sold 100 million Doritos Locos Tacos during the second quarter, and this continues to be one of the most successful new-product launches in history.”
The taco’s Cool Ranch flavor debuted during the second quarter, lapping March 2012’s introduction of the Nacho flavor. A third flavor, Flamas, is in the works and possibly could move its introduction up into late 2013.
“It’s pretty nice when you have products that no one will ever have but us,” Novak said. “Every time we market [Doritos Locos], whether we have product news or not, we’re advertising something only we have.”
Yum credited the new Original Recipe Boneless item with KFC’s sales growth and cited a lack of compelling value messaging for Pizza Hut’s soft sales. “In this environment, you win by delivering consistent and compelling value messages, and our competitors have won in this area so far this year,” Carucci said. “We expect better sales growth at Pizza Hut in the balance of this year.”
As for YRI, the idea of balance across established and emerging markets had Yum bullish about the international division’s prospects for the near and long terms, he added. YRI grew its unit count by 8 percent and same-store sales by 5 percent in emerging markets in the second quarter, compared with a 1-percent gain in units and 1-percent decline in same-store sales in developed markets.
“This franchise revenue stream is large, growing, global and diversified,” Carucci said, noting that franchise fees and royalties will reach nearly $1 billion in YRI in 2013.
Last year, YRI opened a record 949 new restaurants and plans to accelerate that pace this year to at least 1,000 openings. The growth would skew toward emerging markets, such as Russia, South Africa, Turkey and Thailand, where Yum is planning to operate more company-owned restaurants.
Louisville, Ky.-based Yum operates or franchises more than 39,000 locations of KFC, Pizza Hut and Taco Bell in more than 120 countries.
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