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Yum! Brands Records 40% Year-Over-Year Increase in Digital Sales
After closing 6,000 stores this spring, KFC saw its highest-ever average sales per store in May.
If you want a concise but comprehensive picture of how foodservice franchising has fared since the arrival of COVID-19, look at Yum! Brands, the parent company behind iconic QSR franchises KFC, Taco Bell and Pizza Hut, among other brands. In April, 11,000 of Yum!’s 50,000 restaurants were temporarily closed. Since that peak, the corporation has reopened all but 2,500 units. But as Yum! continues to reopen stores, it does so in a new consumer landscape, in which customers are largely avoiding public dining. On that front, Yum! offers perhaps an even more inspiring example for the industry at large, showing a dramatic increase in digital sales in Q2.
According to QSR Magazine, Yum! Brands saw $3.5 billion in digital sales in Q2, “a 40 percent year-over-year boom that equated to a $1 billion step-up from 2019 levels.” Those gains can be attributed to an aggressive pivot toward off-site sales. “Yum! now has 34,000 restaurants offering delivery globally, up from 30,000 this time last year, and witnessed its digital sales mix cross 30 percent of system sales — a 15-point improvement.”
KFC has seen the most substantial gains, recording its highest average sales per store in the brand’s history in May and finishing Q2 with seven-percent same-store sales growth. Last October, well before the pandemic, KFC launched a direct pickup and delivery model, which the brand has leaned on heavily in recent months.
For Pizza Hut, progress seen during the pandemic has actually staved off a slate of closings that Yum! had previously planned for 2020.
Pre-virus, Pizza Hut was in the midst of a footprint overhaul as it tried to evolve toward more asset-light, delivery, and carryout-friendly real estate.
The chain closed 278 domestic locations in Q2, while opening 47.
Those plans changed when the coronavirus sparked a massive jump in pizza delivery orders across brands.
Sales trends and momentum have picked up in pandemic-saddled months, however. Not unlike Pizza Hut’s category peers (Domino’s comps lifted 16.1 percent in its most recent report; Papa John’s grew same-store sales 24.4 percent in June).
[Yum! CEO David] Gibbs said Pizza Hut, in early May, recorded its highest average sales week for delivery and carryout in eight years. Off-premises attributed 21 percent same-store sales growth. Pizza Hut launched a contactless initiative in Q2 by adding additional pickup and payment options.
What lesson can the rest of the franchise industry take from Yum!’s record-breaking Q2? Reopening stores is good, but pivoting to digital and delivery is even better.
