Strong Taco Bell sales, low taxes drive Yum profit beat | Reuters

Yum Brands Inc (YUM.N) posted a better-than-expected quarterly profit, helped by lower taxes, vigorous sales of Taco Bell’s Naked Chicken Chalupas and lower costs at KFC restaurants.

Shares of the company were up 1.7 percent at $67.45 before the opening bell on Wednesday.

Sales rose 8 percent at Taco Bell restaurants open for more than a year, topping the 3.7 percent growth expected by analysts polled by research firm Consensus Metrix.

The sales figure was boosted by $1 Double Stacked Tacos and the sale of more than 25 million Naked Chicken Chalupas, which are tacos in a fried chicken shell.

Chief Executive Greg Creed promised “more Naked products in the second quarter.”

While KFC’s same-store sales growth of 2 percent missed analysts’ estimates, its operating profit jumped 12 percent on lower costs and as it sold more restaurants to franchisees.

Pizza Hut continued to struggle, reporting a 3 percent drop in same-store sales, its third straight quarterly decline, even as rival Domino’s Pizza Inc (DPZ.N) last week reported domestic growth of 10.2 percent.

Yum and Pizza Hut franchisees this month struck a deal that includes corporate marketing and technology investments.

Yum Brands’ income from continuing operations rose to $280 million, or 77 cents per share, in the first quarter ended March 31, from $226 million, or 54 cents per share.

Excluding items, the company earned 65 cents per share, beating the average analyst estimate of 60 cents, according to Thomson Reuters I/B/E/S.

Total revenue fell 1.8 percent to $1.42 billion as it sold more restaurants to franchisees but managed to beat Street expectations of $1.35 billion.

(Reporting by Sruthi Ramakrishnan in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Saumyadeb Chakrabarty, Bernard Orr)