MW Yum Brands becomes latest fast-food chain to tap into AI

By James Rogers

The company's newly announced AI offerings touch on areas like ordering and labor management

Shares of Yum Brands Inc. $(YUM)$rose 2.5% in premarket trading after the operator of the Pizza Hut, Taco Bell and KFC restaurant chains topped Wall Street's profit and revenue estimates, with the Taco Bell and KFC businesses fueling that outperformance.

The Louisville, Ky.-based company had net income of $423 million, or $1.49 a share, for the quarter, down from $463 million, or $1.62 a share, in the prior year's quarter.

The company also announced Thursday Byte by Yum!, a collection of software-as-a-service artificial intelligence-driven products for its restaurants. Byte by Yum! encompasses mobile app and web ordering, point-of-sale, kitchen and delivery optimization, menu management, inventory and labor management, and team-member tools, Yum Brands said. Currently, 25,000 Yum restaurants worldwide are using at least one Byte by Yum! product, the company added.

Other restaurant chains are harnessing AI. Rival Chipotle Mexican Grill Inc. $(CMG)$, for example, is using AI to combat churn.

Yum's adjusted fourth-quarter profit was $1.61 a share, above the FactSet consensus estimate of $1.60 a share. Revenue rose to $2.362 billion from $2.036 billion, above the analyst revenue estimate of $2.356 billion.

Related: Yum Brands' stock falls after earnings miss with consumer still pressured

Yum Brands highlighted same-store-sales growth at Taco Bell U.S. and unit growth at KFC. "Our twin growth engines remain strong with Taco Bell U.S. delivering same-store sales growth of 5% in the fourth quarter, meaningfully outpacing the industry, and KFC International delivering its second consecutive year with over 2,000 net new units," Yum Brands Chief Executive David Gibbs said in a statement.

The KFC division opened 1,100 new restaurants during the fourth quarter.

"In 2024, we opened 4,535 new stores across more than 100 countries," CFO Chris Turner said. "Our digital progress this year was similarly enviable, with digital sales up approximately 15% and digital mix surpassing 50%, reflecting steady progress towards our ambition to reach 100% digital sales," he added.

Related: Taco Bell's success boosts Yum Brands' stock, as Pizza Hut and KFC see weakness

Separately, Yum Brands also announced a 6% increase in the company's quarterly dividend to 71 cents a share Thursday.

Related: Chipotle's sales have been 'volatile.' Can new menu items, kitchen upgrades and AI smooth things out?

Yum Brands shares have risen 0.7% in the last 12 months, compared with the S&P 500 Index's SPX gain of 21.4%.

-James Rogers

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 06, 2025 09:05 ET (14:05 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.