Yum Brands Inc YUM.N posted a smaller-than-expected drop in comparable sales and beat profit estimates on Thursday, helped by strong online sales at its Taco Bell chain as COVID-19 pandemic fears kept customers at home.
Fast-food restaurants, including rivals McDonald’s Corp MCD.N and Chipotle Mexican Grill CMG.N, have benefited from earlier digital investments, especially when dining rooms were closed at the height of the health crisis.
Yum Chief Executive Officer David Gibbs said online sales in the third quarter surged by over a billion dollars to $4 billion from a year earlier, setting a new quarterly record.
“Drive-thru demand skyrocketed this quarter as Taco Bell served over 30 million more cars.”
Taco Bell, which trounced third-quarter comparable sales estimates, remains the crown jewel in Yum’s portfolio, Cowen analyst Andrew Charles said in a note.
CEO Gibbs said while the upward online sale trend continues in the current quarter, pandemic-related uncertainty persists. He said there could be more challenges from fresh lockdowns.
Yum’s net income rose about 11% to $283 million, helped by $8 million in pre-tax income due to change in fair value of its investment in Grubhub Inc GRUB.N, which would be acquired by European online food-ordering company Just Eat Takeaway.com NV TKWY.AS early next year, once approved by regulators.
Yum sold its stake in food delivery firm Grubhub for $206 million, more than two years after making a $200 million investment to improve its delivery services.
Comparable sales fell 2% for the KFC owner in the quarter ended Sept. 30, compared with the estimate of a 3.74% slide, according to IBES data from Refinitiv.
Excluding items, Yum earned $1.01 per share, 21 cents more than expectations.