Mexican Pizza and Pete Davidson… the secret ingredients to Taco Bell’s strong quarter. Yum Brands — which owns Taco Bell, KFC, and Pizza Hut (#KenTacoHut) — delivered expectation-beating sales and profit yesterday, largely driven by its shining star, T. Bell. Covid lockdowns weighed on Pizza Hut and KFC sales in China (KFC’s largest market). But same-store sales at US Taco Bells grew 11%. Some viral hits driving demand:
- Tortilla triumph: Execs said Taco Bell sold a whopping 45M Mexican Pizzas during the four months that the culinary creation was available last year (Dolly Parton is a fan).
- Breakfast with Pete: Taco Bell’s breakfast biz is making a comeback as people return to offices, and an ad featuring Pete Davidson generated breakfast buzz.
A mixed (takeout) bag... Pizza Hut had a solid quarter as consumers recovered from “pizza fatigue” after over-ordering during lockdowns. The Hut also got a boost from demand on delivery platforms and cheaper pizza-novations like Melts, which attracted folks with lower incomes. Some other fast-eating results:
- Burrito bust: Chipotle disappointed as transactions fell for the second straight quarter. It’s hiked prices a lot, but says it hasn’t seen backlash to its inflated bowls.
- McWin: McDonald’s had strong earnings last quarter after lowering prices, as consumers returned for its affordable staples.
“Value” has become more valuable… because both high and low-income consumers are trading down for better deals. While Yum hiked some prices, it kept a mix of affordable items. Yum’s CEO said, “We’re winning because of value.” But Chipotle’s relatively pricey bowls may’ve unwhetted some appetites. Now even it says it doesn’t have plans for more hikes this year.