Yum! Brands, Inc. YUM is likely to benefit from digital transformation, product innovation and expansion efforts. Also, increased kiosk adoption and targeted loyalty initiatives bode well. However, an uncertain macroeconomic environment is a concern.

Let us discuss the factors that highlight why investors should retain the stock for now.

Factors Driving Growth

Year to date, the company’s shares have moved up 17.7% compared with the industry’s 1.4% growth. YUM has been benefiting from a strategic blend of value offerings and digital innovation.

During the fourth quarter of 2024, worldwide comps at Yum! Brands inched up 1% year over year against a 2% fall reported in the previous quarter. The upside can be attributed to strong recoveries in the Middle East and solid performances in Africa, Latin America and Canada. Additionally, several key markets, including Asia (except China), showed notable quarter-over-quarter momentum, with a five-point improvement.

Looking ahead to 2025, Yum! Brands aims to deepen market penetration by expanding relevant product offerings — such as tenders, nuggets, twisters and sandwiches — while refining pricing strategies to enhance value perception. The company expects continued same-store sales improvement, supported by stronger value perception scores, a recovery in Middle Eastern markets and sustained momentum at Taco Bell U.S.

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Yum! Brands is strengthening its digital ecosystem to enhance customer engagement and operational efficiency. In 2024, digital sales grew 15% year over year to over $30 billion, reflecting increased kiosk adoption and the success of targeted loyalty initiatives. Loyalty programs remain key growth driver, with early data showing a 12% increase in visit frequency among loyalty members. The company plans to further optimize loyalty strategies in 2025, reinforcing its commitment to digital-first consumer engagement.

YUM is focused on creating seamless interactions for customers to drive growth. In 2024, the company reported substantial progress in deploying the Byte digital ordering platform, previously known as Yum! Commerce. The platform focuses on streamlining restaurant operations through integrated technology solutions. It powers digital ordering at Taco Bell, KFC and Pizza Hut in the United States. Additionally, three international Pizza Hut markets, including the U.K., migrated to Byte, driving over 50% growth in digital transactions through the app and improving processing times. In 2025, YUM plans to expand Byte to five more markets, integrating AI-driven personalization and omnichannel loyalty software.

Yum! Brands continues to grow aggressively, reinforcing its market leadership. In 2024, the company opened 4,500 new units globally, led by 2,900 KFC locations. Taco Bell demonstrated strong growth in the United States, increasing consumer frequency across all income segments. International expansion remains a key focus, with notable growth in China, India and Latin America. The company is also testing innovative formats such as Saucy by KFC and Live Más Cafe by Taco Bell. YUM expects 4% to 5% net unit growth in 2025, signaling continued expansion.

Concerns

Yum! Brands continues to navigate several macroeconomic challenges that have influenced its performance. Global economic uncertainty, including shifts in consumer sentiment, has weighed on the company’s performance, particularly in regions affected by geopolitical conflicts. The company reported both challenges and recovery in its Middle Eastern operations during 2024. Additionally, fluctuations in foreign exchange rates remain headwinds.

YUM’s Zacks Rank & Key Picks

Yum! Brands currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Retail-Wholesale sector have been discussed below.

BJ's Restaurants, Inc. BJRI currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

BJRI has a trailing four-quarter earnings surprise of negative 84.7%, on average. The stock has gained 6.3% in the past six months. The Zacks Consensus Estimate for BJRI’s 2025 sales and EPS indicates growth of 3.3% and 17.7%, respectively, from the year-ago period’s levels.

Brinker International, Inc. EAT presently flaunts a Zacks Rank of 1. EAT has a trailing four-quarter earnings surprise of 24.7%, on average. The stock has surged 81.6% in the past six months.

The consensus estimate for EAT’s 2025 sales and EPS indicates growth of 18.7% and 98.8%, respectively, from the year-ago period’s levels.

Portillo's Inc. PTLO currently sports a Zacks Rank of 1. PTLO has a trailing four-quarter earnings surprise of 62.7%, on average. The stock has declined 7% in the past six months.

The Zacks Consensus Estimate for PTLO’s fiscal 2026 sales indicates a rise of 11.7% from the year-ago period’s levels.

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This article originally published on Zacks Investment Research (zacks.com).

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