KFC’s U.S. comps increased 11 percent on a two-year basis, with less than one percent of stores temporarily closed. The chain finished Q1 with 25,292 units worldwide.
Globally, digital mixed at a record 43 percent, driven by expansion of delivery, click and collect, and new channel ordering options. KFC’s drive-thru speed in the U.S. improved by nearly 15 seconds year-over-year, and the company also deployed a pickup and ordering solution across all domestic restaurants, including the launch of its first custom-built app.
Taco Bell is raising its digital game, as well. During Q1, the chain launched its first digital-led product—a $5 Build Your Own Cravings Box, offered exclusively on the app and website. Gibbs said the innovative item drove a meaningful increase in loyalty membership during the quarter. At the beginning of Q2, Taco Bell took another leap by opening its first digital-only store in Times Square, which features 10 kiosks and 15 pickup cubbies.
The chain’s same-store sales increased 10 percent on a two-year basis. In addition, domestic stores achieved their fastest average drive-thru speed in eight years, while serving 17 million more cars quarter-over-quarter. One-third of those orders were digital, which comes with a higher average check. Taco Bell finished Q1 with 7,493 stores worldwide.
“We’re coming out of 2020 with a great loyalty program and a lot of loyalty members. That progress was made last year as we increased our digital sales,” Gibbs said. “That lays the foundation for more success going forward. We did the first digital-only promotion of the $5 Create Your Own Box—it’s a great example of how having that digital business increasing gives us new tools to grow sales. I think the brand is hitting on all cylinders.”
The Habit Burger, Yum!’s newest brand, saw same-store sales grow 3 percent on a two-year basis, with roughly two percent of stores still temporarily closed. It’s a major improvement for the burger chain, which experienced a comps decline of 5 percent in Q4 2020. The company said sales growth has been aided by reduced government restrictions and the injection of stimulus checks. Digital sales are still mixing above 40 percent even as dine-in sales rose throughout the quarter.
The first quarter also witnessed the acquisition of two key technology companies—Kvantum, a leading consumer insights and data analytics company, and Tictuk Technologies, a solution that allows customers to complete orders through social media and chat channels, including WhatsApp, Facebook Messenger, Telegram, SMS, QR codes, and email.
Yum! believes both purchases are high-return acquisitions and will create a distinct competitive advantage.
“They’re not designed to drive a profit for Yum! We want to provide them at the lowest cost to our franchisees,” Gibbs said. “The return for Yum! comes through top line growth in our franchised units, which leads to more royalty income. We think we really have a great model here where we do these smaller acquisitions, but we can scale them across the world. They have almost no impact on our P&L initially, and then the return comes from growing sales and units and improving franchise economics, which we all know is a virtuous cycle, which leads to more development and healthier franchisees.”
Yum!’s systemwide sales increased 11 percent year-over-year, and core operating profit grew 33 percent. The company saw 1 percent unit growth in Q1, including a 4 percent increase at KFC, a 1 percent increase at Taco Bell, and a 4 percent decline at Pizza Hut. Turner said the company is confident that it can reach 4 percent annual unit growth “sooner rather than later.” In 2021, Yum! is optimistic that it will accomplish at least 3 percent unit growth.
