Taco Bell Naked Chicken Chalupas, lower taxes boost Yum's profit

Wed May 3, 2017 12:24pm EDT
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(Reuters) - Yum Brands Inc (YUM.N: Quote) posted a better-than-expected quarterly profit, helped by lower taxes, vigorous sales of Taco Bell's Naked Chicken Chalupas and lower costs at KFC restaurants.

Shares of the company were up 2.7 percent at $68.13 in midday trading on Wednesday.

Sales rose 8 percent at Taco Bell restaurants open for more than a year, topping the 3.7 percent growth expected by analysts polled by research firm Consensus Metrix.

That sales figure at the company's "cult brand" was boosted by $1 Double Stacked Tacos, the return of the Triple Double Crunchwrap and the sale of more than 25 million Naked Chicken Chalupas, which are tacos in a fried chicken shell.

Taco Bell traffic rose 5 percent during the first quarter, bucking a stubborn restaurant industry slump that is nagging major brands including McDonald's Corp (MCD.N: Quote).

Yum Brands Chief Executive Officer Greg Creed promised to sell more Naked products, saying "we'd be crazy not to," with soon-to-be launched Naked Chicken Chips that will be served with nacho cheese dipping sauce.

KFC's same-store sales growth of 2 percent missed analysts' estimates, while its operating profit jumped 12 percent on lower costs resulting from restaurant sales to franchisees.

The fried chicken chain, which contributes almost half of Yum's operating profit, recently debuted actor Rob Lowe as its new Colonel Sanders mascot. It is also catching up with rivals by switching to chicken raised without medically important antibiotics.

Pizza Hut continued to struggle, reporting a 3 percent drop in same-store sales, its third straight quarterly decline, even as rival Domino's Pizza Inc (DPZ.N: Quote) last week reported domestic growth of 10.2 percent.   Continued...

FILE PHOTO: A Taco Bell fast food restaurant, which is owned by Yum Brands Inc, is pictured ahead of their company results in Pasadena, California, U.S., July 11, 2016.   REUTERS/Mario Anzuoni