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Despite the blow of pandemic restrictions in 2020, Yum Brands’ earnings for the year topped analysts’ estimates.

According to the research data analyzed and published by Stock Apps, the company’s Q4 2020 revenue amounted to $1.74 billion against an expected $1.72 billion. Compared to the previous one-year period, it marked a 3% year-over-year (YoY) increase.

Earnings per share (adjusted) were $1.15 compared to an estimated $1.01 per Refinitiv analysts. Q4 2020 net income totaled $332 million, equivalent to $1.08 per share, a 32% decline from $488 million ($1.58 per share) in Q4 2019. For the full-year 2020, EPS plummeted by 29% from $4.14 to $2.94.

Same-store sales worldwide dropped by 1% in Q4 2020 due to declines in its KFC and Pizza Hut Brands. Taco Bell was the only brand to post same-store sales growth, rising by 1% YoY. The reason for this is that most of the outlets are in the US where the fast-food business has recovered considerably.

For KFC, international same-store sales plummeted by 2% in spite of an 8% increase in the US. With the exception of the US, its international locations posted a 4% sales decline during the quarter.

Notably, only 18% of KFC sales come from the US. Interestingly, China accounts for a higher share than the home market, holding a 27% share of Q4 2020 sales.

Similarly for Pizza Hut, US same-store sales rose by 8% while internationally, there was a 7% decline. As a result, its overall same-store sales were down by 1% for the period.

 

Digital Investments Yield 18% Growth for Pizza Hut Off-Premise Sales

For the full year 2020, Yum Brands reported record digital sales amounting to $17 billion, up by 45% YoY. Among the features contributing to the growth were a series of moves aimed at speeding up the company’s digitalization process.

The launch of the KFC US eCommerce ecosystem streamlined order handling for third-party delivery as well as pickups. KFC saw transaction times at the window decrease by 16 seconds compared to Q4 2019.

The Habit, which joined Yum Brands in 2020, worked to shift its dine-in focus to an off-premise business. It added curbside pickup and pop-up drive-thrus. As a result, curbside accounted for 10% of all sales and 50% of mobile sales.

Taco Bell unveiled Go Mobile, a synchronized digital experience. It incorporates multiple drive-thru lanes, bellhops who handle orders via tablets and curbside pickup. Its average drive-thru transaction time dropped below four minutes, setting a new record. As of August 2020, the brand had a 50% increase in the number of drive-thru customers since the start of the pandemic.

In Q4 2020, the digital investments that Pizza Hut made yielded 18% growth in same-store sales from off-premise channels. Taco Bell had a digital sales mix of 12% while The Habit’s digital ordering platform posted a sales mix of more than 40%.

 

US Digital Restaurant Market Sales Rose by 124% in 2020 to $45 Billion

Yum was not the only brand to benefit from a shift to digital. For McDonalds, digital sales raked in over $10 billion in 2020 across the brand’s top six markets. That translated to about 20% of its total sales for the year. To aid in the digitalization process, McDonalds as well as its franchisees invested $1 billion in various tech initiatives.

According to The NPD Group, restaurant digital orders in the US shot up by 145% YoY in the month of December 2020 alone. In January 2020, the share of restaurant traffic that was sourced to digital was a paltry 5%. By June 2020, it had shot up to 13%.

By the end of 2020, carry-out accounted for 46% of off-premises orders while drive-thru had a 44% share. Per research published by PYMNTS, US consumers spent $434 billion in 2020 on food orders. That was a whopping 89% of the total $486 billion that consumers spent on food eaten at home.

As a result of the shift, digital restaurant market sales rose by 123.8%, going from $20.08 billion in 2019 to $44.94 billion in 2020 according to eMarketer. The figure is expected to keep rising, albeit at a relatively muted pace.

In 2021, it is projected to increase by 22.3% to $54.97 billion and in 2022, by 16.3% to $63.93 billion.

According to a report by Incisiv, digital sales are expected to account for 54% of the limited and quick-service restaurant businesses by 2025. That would be an increase of 70% over pre-pandemic estimates.

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Nica San Juan
Nica San Juan

Nica is a BA Political Science graduate, startup founder and financial expert. She has an entrepreneurial spirit and started several startups from a young age, eventually becoming fascinated with stocks, cryptocurrencies and the blockchain economy. She specializes in financial tech and her expertise is in writing detailed tutorials and guides on how to invest in stocks and cryptocurrencies. Nica has written for many other websites, including Crypto Browser, Coin Review, LearnBonds, and Inside Bitcoins.

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