Yum! Brands has announced a 2% increase in its fourth quarter US earnings, with US same-store sales climbing 3% in December. As growth continues to slow for its key brands, Yum! is wise to be shoring up its bottom line by with innovative ideas inspired by industry trends.
Yum! Brands, which owns Taco Bell, Pizza Hut, and KFC, recently announced a rise of 3% in US same-store sales for the month of December. US same-store sales for Q4 2004 rose 2% though, below company forecasts of 3-4% for its US business.
While sales in the US were slower than expected, Yum! has seen robust growth overseas. December saw international sales climb 12%, or 7% before currency conversion. In the US, Taco Bell has proven to be the brightest spot. Same-store sales for the Mexican-style fastfood outlet grew 4% during Q4. KFC, on the other hand, saw a 2% decline.
The company is trying hard to boost the struggling KFC chain by introducing new product offerings to appeal to consumers’ increasing preference for wider menu options and ‘value’ meals for the whole family. KFC recently began offering the Variety Bucket – a dinner option containing portions of different chicken recipes. The new product, promoted as a family-friendly addition, has been successful and analysts speculate that it has driven much of KFC’s recent sales.
The company is also taking steps to increase brand appeal by tapping into the consumer trend towards healthier living. Rivals such as McDonald’s have launched promotions with a “get moving” theme, using pedometers and booklets to interest consumers. Yum!, however, has gone one step further, having recently partnered with popular health club chain Bally Total Fitness for its own exercise campaign. Beginning in January 2005, the company will give out free month-long memberships to customers in all of its restaurant chains.
By taking steps to appeal to consumers’ needs through new menu items and exercise promotions, Yum! is making real strides to keep its US operations on track. Indeed, the company is also working to ensure continued growth on a global scale, through double-digit growth overseas and new business ventures in the burgeoning Chinese market. By moving to shore up its chains’ offering, the company is ensuring it stays on the right track.
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