By Neil J Kanatt
Nov 3 (Reuters) – Yum Brands said same-store sales at Taco Bell were recovering after a wider-than-expected decline in the third quarter following a multistate cyclosporiasis outbreak that hurt traffic at the Tex-Mex chain.
Taco Bell has been offering value deals such as its combo boxes to attract inflation-hit consumers in the United States. Executives said on a post-earnings call that such deals were helping attract lower-income households.
The business was first linked to the outbreak in early July, causing a 20% drop in weekly foot traffic at its outlets at the peak of the epidemic, according to Placer.ai.
US health authorities declared the outbreak was over last month.
Yum said loyalty-program promotions and partnerships were helping it bring back customers, and added that Taco Bell’s same-store sales have risen about 1% so far this quarter.
“(Customers are) actually spending 5% more and visiting 6% more frequently than the consumers we lost,” CEO Chris Turner said.
Shares of the company, which completed its divestiture of its Pizza Hut chain in September, were flat.
“We think consumers will continue to intensely scrutinize value propositions as inflationary pressure persists, and Taco Bell is well positioned to keep delivering,” Morningstar analyst Ari Felhandler said.
Taco Bell’s same-store sales fell 4% in the reported quarter, its first decline in about six years, missing analysts’ expectations for a 0.9% drop, according to data compiled by LSEG.
A focus on value also helped Burger King parent Restaurant Brands International beat sales expectations last week. Bigger rival McDonald’s is set to report quarterly results on Wednesday.
Overall Yum same-store sales were flat from a year earlier, below estimates for 0.9% growth. KFC same-store sales rose 1%, missing expectations for a 2.1% increase.
Yum’s adjusted profit per share fell 1.3% to $1.56, but beat estimates of $1.49.
(Reporting by Neil J Kanatt in Bengaluru and Waylon Cunningham in New York; Editing by Shinjini Ganguli)
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