Key facts
- Yum Brands' second-quarter adjusted earnings per share were $1.62, surpassing analyst expectations of $1.58.
- Overall comparable sales for Yum Brands increased by 3% in the second quarter.
- Taco Bell, Yum's primary growth driver, saw its same-store sales rise by 7% in the quarter.
- Foot traffic at Taco Bell chains has dropped significantly since mid-July due to a cyclospora outbreak.
- KFC, another major chain under Yum Brands, reported 2% same-store sales growth.
Yum Brands exceeded profit and comparable sales expectations for the second quarter, with Taco Bell serving as a key growth engine. However, the company faces challenges as a cyclospora outbreak linked to Taco Bell has led to a significant decline in customer traffic since mid-July. This outbreak, considered one of the largest foodborne illness incidents in the U.S. recently, has impacted consumer confidence, although brand experts suggest long-term damage may be limited. Taco Bell's same-store sales grew 7% in the quarter, compared to 4% a year prior, and overall Yum comparable sales rose 3%. KFC chains reported 2% same-store sales growth. The outbreak's financial impact remains unclear, but it presents the first major test for CEO Chris Turner. Competitor Chipotle also posted strong results but noted potential third-quarter softness due to similar consumer confidence issues.