Yum! Q3 results: Strong recovery driven by record digital sales, off-premise growth

LOUISVILLE, Ky. — Yum! Brands, Inc. (NYSE: YUM) on Thursday reported results for the third-quarter ended Sept. 30, 2020. Worldwide system sales excluding foreign currency translation grew 1%, with 2% net-new unit growth and a 2% same-store sales decline. Third-quarter GAAP EPS was $0.92, an increase of 14% over the prior year quarter. Third-quarter EPS excluding Special Items was $1.01, an increase of 27% over the prior year quarter.

Third-quarter highlights

  • Worldwide system sales excluding foreign currency translation grew 1%, with Taco Bell at 5%, offset by KFC at (1)% and Pizza Hut at (4)%.
  • We reported 2% net unit growth year-over-year and a unit decline of (267) during the quarter.
  • We recorded $8 million of pre-tax investment income related to the change in fair value of our investment in Grubhub, which resulted in a $0.02 benefit to EPS on the third-quarter. Our Grubhub investment favorably impacted year-over-year EPS growth by $0.17, as we lapped a $60 million of pre-tax investment expense in the third-quarter of 2019 for a ($0.15) impact to EPS. We disposed our Grubhub investment during the third-quarter for $206 million.
  • Foreign currency translation unfavorably impacted divisional operating profit by $2 million.

CEO David Gibbs said:

Third-quarter results were encouraging, demonstrating the resilience of the Yum! portfolio as Yum! generated year-over-year core operating profit growth, continued to reopen temporarily closed restaurants and achieved global same-store sales growth of approximately flat, in aggregate, for our open store base. For the second consecutive quarter, digital sales increased by more than $1 billion over the prior year and set a single quarter record of $4 billion. These results are a testament to the hard work and collaboration across our four brands, and I want to thank our entire global system for exceptional execution of our Recipe for Growth and Good strategy this quarter. Our employees, franchisees and restaurant team members continued to adapt to this year’s ever-changing environment while also accelerating progress on our digital and technology journey. Importantly, our balance sheet and liquidity position are strong and franchisee health improved. I’m confident that by continuing to leverage our unmatched scale and champion the technology-centric customer experience, we will drive global growth, enhance unit-level economics and maximize long-term value for all of our stakeholders.