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Yum president Rick Carucci compared KFC’s current doldrums in China to Taco Bell’s struggle two years ago in the United States, when a consumer lawsuit criticizing the contents of the chain’s seasoned beef dramatically wrecked Taco Bell’s sales. But the brand withstood that controversy and innovated its way out of it, he said.

“Some time had to pass, we got a little momentum, and then when we hit with new products like Cantina Bell and the Doritos Locos Tacos, the brand really took off,” Carucci said. “We need something similar to that progression in China.”

Taco Bell, which increased same-store sales 2 percent in the United States during the third quarter, would maintain that progression into next year, officials said. The brand’s performance lapped a 7-percent increase a year earlier.

In the most recent third quarter, Taco Bell’s same-store sales gain offset domestic declines of 1 percent at Pizza Hut and 4 percent for KFC, leading to overall flat comparable sales for the United States division.

Novak noted that Taco Bell “definitely has mojo” in the United States and would display the kind of menu development in 2014 that has been crucial to its propulsion of its own sales and Yum’s profit in the United States. For instance, the chain will roll out its Firstmeal breakfast menu nationally during the first half of the year.

“We now know we have a winning proposition with [Taco Bell’s] breakfast platform, with destination products,” he said. “Based on market tests, 90 percent of breakfast sales are incremental and are driving total brand sales.”

Novak added that Pizza Hut is also expected to have another year of net-positive domestic unit growth, and the big innovation for that brand in the United States next year will be the launch of national advertising for the Wing Street platform for the first time. Novak said commercials for Wing Street, now in place in virtually every Pizza Hut in the United States, would debut at the start of 2014, presumably in time for the Super Bowl.

Elsewhere, same-store sales in YRI increased 1 percent during the third quarter, led once again by performance in the division’s emerging markets. Same-store sales were flat in Yum’s India division, though that segment’s unit count grew 24 percent year-over-year.

In early trading Wednesday, Yum’s stock price tumbled nearly 8 percent to open at $65.75 per share, after closing Tuesday at $71.30 per share.

Yum operates or franchises nearly 40,000 locations of KFC, Pizza Hut and Taco Bell in more than 130 countries.

Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN