Yum! Brands, the owner of KFC, Pizza Hut and Taco Bell, is placing a “greater focus” on affordable options across its fast-food restaurants as it looks to appeal to budget-conscious consumers.

Speaking to investors yesterday (6 August) after unveiling results for the second quarter, ended 30 June 2024, CEO David Gibbs highlighted the introduction of “disruptive deals” across its restaurant brands, such as KFC Deals, Pizza Hut’s $7 Deal Lovers, and Taco Bell’s Cravings Value Menu that have helped drive growth for the business.

Gibbs praised Taco Bell as a “clear standout” in Yum! Brands’ portfolio, calling it an “always-on” value brand. He highlighted the Cravings Value Menu, which offers up to 10 meal-sized options, each priced at $3 or less and available at all times.

“In this environment where the consumer is probably pulling back a little bit, being the always-on value brand has served us well, and it really puts a moat around us when it comes to value,” he said.

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Sales from Taco Bell stores open for a year or more are “well ahead” of the quick-service restaurant category, Gibbs claims. Same-store sales were up 5% and revenue increased by 7% to $666m (£524bn) in the period.

He attributed this success to Taco Bell’s product innovation and value focus, highlighting the launch of the Chicken Cantina Menu, featuring slow-roasted chicken, as a key growth driver. Since its introduction, nearly one in four orders now includes a Chicken Cantina item, he claims.

“The Taco Bell business is serving consumers, creating buzz in the market, bringing great innovation to bear and delivering value when consumers need it,” he said.

Yum! Brands’ second-quarter revenue was up 4% to $1.76bn (£139bn). However, Same-store sales at KFC and Pizza Hut did not match those of Taco Bell – both businesses reported a 3% dip in the period. Gibbs pointed to conflicts in the Middle East, which have led to restaurant closures in the region.

AI focus

Yum! Brands is pushing forward with its ambition to become the “leading global digital restaurant company” by expanding the rollout of voice AI technology in Taco Bell drive-thrus across the US and initiating tests with KFC in an international market, according to Gibbs.

The voice AI system – which interprets customers’ orders based on voice recognition – has been in development for more than two years. The organisation claims it is designed to improve order accuracy, reduce waiting times and ease the effort for staff.

“As of today, we have this technology operational in over 100 Taco Bell stores. We plan to scale this technology to several hundred stores by year end,” he said. “We have witnessed consistent consumer experiences and higher team member productivity.”

In other areas of the business, KFC’s digital sales, excluding China, grew by nearly 20%. Gibbs noted that the KFC global loyalty program is now live across 14 markets.

Earlier this year, KFC marketing director Kate Wall told Marketing Week that the brand is entering its “next chapter” of its journey as it looks to reaffirm its appeal among young consumers by launching its biggest-ever brand platform.

KFC on entering the ‘next chapter’ of its brand journey to reach younger consumers

The chicken restaurant chain is building on several years of effective creativity, states Wall. KFC won Marketing Week’s Brand of the Year for the effectiveness of its work in 2021 following a series of activity to reconnect with consumers after its sales began to decline in 2016.

In its Pizza Hut division, Gibbs noted leadership changes for the pizza restaurant, welcoming Kalen Thornton, a former PepsiCo executive, as the new global chief brand officer

He will be responsible for leading the brand’s global strategy and marketing, with a focus on “connecting” with consumers across both physical and digital channels.

Earlier this month, Pizza Hut’s UK CMO told Marketing Week that the brand will be “bold” in its quest to become “the number one choice in pizza”.

In a bid to stand out to these younger consumers, Pizza Hut launched a new creative platform ‘Together We Pizza’, created with agency Iris, the first iteration of which went live on 15 July.

“We want to continue to innovate and ensure we are relevant and relatable,” she said.