Yum! Brands leans on digital sales to net double-digit YOY growth

Fast-casual restaurant group Yum! Brands released its second quarter earnings report at the end of July, revealing that despite the troubles and tribulations facing many dining establishments, the group’s brands remained relatively insulated from sales declines.

Sales at all four of its restaurant brands – KFC, Pizza Hut, Taco Bell and the Habit Burger Grill – surpassed pre-pandemic sales levels from 2019.

KFC sales jumped 19% over a two-year period and were up 11% over the same timeframe in 2020. Pizza Hut saw 9% and 4% growth, respectively, Taco Bell grew 12% as compared to 2019 and 21% over 2020. The Habit Burger Grill experienced a 7% bump from 2019 but a 31% jump from the same timeframe in 2020.

The company’s CEO David Gibbs pointed to the group’s new digital platforms on an earnings call as the reason for Yum! Brands’ insulation from the struggles faced by other dining establishments. Gibbs specifically referenced Taco Bell recently rolling out a new e-commerce website and KFC replacing a third-party online ordering solution with an in-house app as reasons for the restaurant chains' significant growth over the past year. As a result of its combined efforts to migrate the sales process for its restaurants onto digital platforms, Yum! Brands recorded a 35% year-over-year increase in digital sales to $5 billion for Q2. Over a 12-month period, the company made $20 billion in online sales.

The reason why digital ordering platforms have been so instrumental for Yum! Brands' growth is the tendency for digital orders to be larger than those made in-store, according to Gibbs. Visits to Taco Bell were down 9.8% compared to 2019 levels and the figure was even lower for KFC, which recorded a 14.1% drop in visits as compared to 2019.

Not only do digital orders generally come with a larger price tag for the restaurant group, but they also reduce the associated labor costs for taking and processing orders. According to Gibbs, digital ordering also provides customers with a better overall experience. As such, Yum! Brands CEO noted that the group will invest heavily in digital ordering platforms going forward as it looks to improve unit economics as well as grow its sales volumes alongside its average order check size.