Nacho Fries a hit at Taco Bell, but KFC drags Yum Brands
NEW YORK (AP) — Taco Bell's new Nacho Fries were a hit with diners, with a quarter of all orders including the $1 spicy fries since they became available earlier this year. Still, sales growth at its parent company Yum Brands was weaker than expected, hurt by a chicken shortage at KFC chain restaurants in the U.K. and Ireland.
The company's shares fell more than 5 percent.
Overall sales rose 1 percent at Yum's established restaurants worldwide in the first quarter, far below the 1.9 percent growth Wall Street analysts expected. Yum said the figure would have risen 2 percent if it weren't for the KFC issues.
The fried chicken chain had to temporarily close most of its 900 stores in the U.K. and Ireland in February after delivery delays let to a chicken shortage. Sales rose 2 percent at established KFC stores.
Taco Bell sales rose 1 percent at established stores. It kept the limited-time Nacho Fries on the menu longer than it expected when it realized it was a hit. It sold 53 million Nacho Fries in its first five weeks on the menu, the company said.
Sales also rose 1 percent at established Pizza Hut restaurants. Yum is working to revive the brand as it faces increased competition from Domino's Pizza. It is topping pizzas with more cheese and hiring drivers to make more deliveries, Yum CEO Greg Creed said.
Yum's other first-quarter financial results beat Wall Street expectations.
Net income soared 55 percent to $433 million, or $1.27 per share. Adjusted earnings came to 90 cents, far outpacing analyst projections for 76 cents, according to a survey by FactSet.
A year earlier, the company made $280 million, or 77 cents per share, a year earlier.
Yum got a boost from refranchising restaurants, as well as $66 million related to a deal with delivery company Grubhub that will expand delivery at KFC and Taco Bell nationwide.
Revenue for the Louisville, Kentucky, company was $1.37 billion. That also beat the $1.08 billion that industry analysts had expected.
Shares of Yum Brands fell $4.97 to $81.67 in afternoon trading Wednesday.