Kiosks, AI Uses Among Yum Brands’ Q3 Earnings Chatter

Yum Brands—parent to KFC, Taco Bell, The Habit Burger Grill and Pizza Hut—had a few positives to share during its Q3 earnings call with investors, held Wednesday, Nov. 1.

For one, the company set a record on unit development, having opened 1,130 gross new units in its latest quarter, which ended Sept. 30. KFC led the way in unit growth, opening 664 new restaurants across 57 countries in the quarter.

Further, the brand saw new highs for its digital sales, which were up more than 20% year-over-year at more than $7 billion, and marked its fifth consecutive quarter of double-digit system sales growth globally.

A few more points of discussion were as follows:

• Kiosks. Currently, Yum Brands says it has kiosks in nearly 40% of KFC stores outside of China, all Taco Bell locations in the U.S. (except for licensed stores) and almost 70% of its Habit Burger Grill locations. By 2026, the company says it expects kiosks in the vast majority of its KFC stores outside of China. “Kiosks not only drive a higher check compared to our traditional front counter, but also drive higher margins through operational efficiencies and generate new opportunities to leverage customer data and create personalized ordering experiences,” Chris Turner, chief financial officer, told analysts. “… We’re on track to have our recommended ordering technology, which we’re calling AIM (or automated inventory management) rolled out across our KFC U.S. system by year-end.”

“Kiosks not only drive a higher check compared to our traditional front counter, but also drive higher margins through operational efficiencies and generate new opportunities to leverage customer data and create personalized ordering experiences.”—Chris Turner, CFO

• Tech advancements. Technologies being piloted at this time include a voice-enabled AI drive-thru platform which generates automated upsell recommendations as well as increases speed, productivity and efficiencies, says Yum Brands. The platform is currently being tested at a couple restaurants in California. Further, Yum Brands says it has developed a proprietary automated drinks fulfillment system that frees up team members’ time, plus increases drive-thru speed and accuracy.

• A changing pizza category. A few weeks before reporting earnings, Yum Brands’ Pizza Hut announced that thousands of its locations would stay open until midnight or later, with some staying open as late as 2 a.m. Delivery and carryout will be offered during those late-night hours, and a release notes the change is in response to an “undeniable trend toward late-night dining among the younger generation.” CEO David Gibbs noted on the call that Pizza Hut benefits from having the ability to outsource deliveries. “When it may have been a little bit harder for us to staff with drivers, being able to hand off those deliveries to our aggregator partners allowed us to extend our hours,” he explained. Gibbs also says he thinks lower price points will play a bigger role in the pizza category going forward. To that end, he says melts—a folded, two-piece pizza-like item—are likely to be a big part of Pizza Hut’s growth.