Yum! Brands (YUM -0.49%), the parent company of fast-food giants like KFC, Taco Bell, and Pizza Hut, delivered notable fiscal results for the fourth quarter of 2024, released on February 6, 2025. The company surpassed market expectations with adjusted earnings per share (EPS) of $1.61, edging past the anticipated $1.60. Revenue for the quarter was recorded at $2.362 billion, which was slightly above the predicted $2.355 billion. The strong quarterly performance was mainly fueled by growth in its Taco Bell and KFC International segments, with full-year strategies in digital transformation and global expansion continuing to steer the company's financial success.
| Metric | Q4 2024 | Q4 Estimate | Q4 2023 | Y/Y Change |
|---|---|---|---|---|
| EPS (Excl. Special Items) | $1.61 | $1.60 | $1.26 | +28% |
| Revenue ($B) | $2.362 | $2.355 | $2.036 | +16.0% |
| Operating Profit | $657M | --- | $609M | +8.0% |
| System Sales Growth (Excl. F/X) | +8% | --- | --- | N/A |
| Same-Store Sales Growth | +1% | --- | --- | N/A |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Focus Areas
Yum! Brands operates over 59,000 restaurants across KFC, Taco Bell, Pizza Hut, and Habit Burger Grill. These brands dominate their respective food categories worldwide. A significant advantage for the company is its franchise-driven model, with approximately 98% of its outlets managed by franchisees. This approach allows rapid global expansion with minimal capital requirements, enabling it to focus on revenue generation and brand innovation through strong franchise relationships.
Recently, Yum! Brands prioritized digital transformation to enhance customer experiences and operational efficiency. The company's move toward a tech-focused strategy contributed significantly to increasing digital sales, which accounted for more than 50% of its transactions in 2024. Moreover, its global expansion strategy included entering new markets and reinforcing its presence in high-growth regions, as evidenced by notable KFC international growth.
Quarterly Achievements and Financial Performance
The fourth quarter saw Yum! Brands achieving adjusted EPS of $1.61, surpassing the $1.60 analysts’ estimate, marking a 28% increase from the previous year. Revenues stood at $2.362 billion, above the forecasted $2.355 billion and a 16% rise year-over-year. Operating profit increased by 8% to $657 million, indicating consistent financial strength across its portfolio.
During the quarter, Taco Bell displayed robust performance, recording a 14% growth in system sales and a 5% rise in same-store sales in the U.S., contributing to a 19% increase in operating profit. KFC excelled with a 6% boost in system sales globally and an 8% rise in unit growth for KFC International. This growth, however, was accompanied by a slight decline in operating margin due to unfavorable foreign exchange translations.
Conversely, Pizza Hut faced challenges, experiencing a 1% decline in same-store sales. Management attributed this to heightened competition in the pizza category, coupled with regional sales pressures, calling attention to potential areas for strategic adjustments.
Strategic Outlook and Guidance
Looking ahead, Yum! Brands aims for mid-single-digit growth in system sales and an 8% increase in core operating profit, excluding foreign exchange impacts and fiscal anomalies. The company continues its commitment to digital innovations and restaurants' conceptual expansion, such as "Saucy by KFC," to attract broader customer demographics.
Investors should monitor Yum! Brands' efforts to mitigate geopolitical challenges. The underperformance in some regions like the Middle East is on management's radar. The forward guidance remains cautiously optimistic, highlighting key growth pillars while targeting new opportunities in emerging markets and capitalizing on digital transformation trends.
