Taco Bell growth helps Yum beat comparable sales estimates

(Reuters) – Yum Brands Inc reported a smaller-than-expected drop in comparable sales on Thursday, helped by a spike in online orders for its tacos as pandemic fears kept customers at home.

Fast-food chains, including Yum and rivals McDonalds and Chipotle Mexican Grill , have been benefiting from earlier investments in their digital presence, as online orders jumped, especially when dining rooms were closed at the height of the COVID-19 health crisis.

“For the second consecutive quarter, digital sales increased by more than $1 billion over the prior year and set a single quarter record of $4 billion,” Chief Executive Officer David Gibbs said.

Net income rose about 11% to $283 million in the third quarter, as Yum recorded $8 million of pre-tax income due to the change in fair value of its investment in food delivery firm Grubhub Inc .

Yum said it disposed its investment in Grubhub, a food delivery app it invested in over two years ago, during the quarter for $206 million.

Grubhub will likely be bought by European online food-ordering company Just Eat Takeaway.com NV for $6.9 billion.

Yum’s comparable sales fell 2% for the KFC owner in the quarter ended Sept. 30, but beat the average analyst estimate of a 3.74% slide, according to IBES data from Refinitiv.

Taco Bell posted comparable sales growth of 3%, well above the estimate of a 1.75% rise.

At Pizza Hut, the company’s pizza chain that has long been grappling with stiff competition from Domino’s Pizza and others, comparable sales were down 3% and slipped 4% at KFC.

Excluding one-time items, the company earned $1.01 per share, compared with the estimate of 80 cents.

Total revenue rose about 8% to $1.45 billion.

(Reporting by Nivedita Balu in Bengaluru; Editing by Shinjini Ganguli)