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Nacho Fries a hit at Taco Bell, but KFC drags Yum Brands
NEW YORK (AP) — Taco Bell’s new Nacho Fries were a hit with diners, with a quarter of all orders including the $1 spicy fries since they became available earlier this year. Still, sales growth at its parent company Yum Brands was weaker than ex- pected, hurt by a chicken shortage at KFC chain restaurants in the U.K. and Ireland.
The company’s shares fell more than 5 percent.
Overall sales rose 1 percent at Yum’s es- tablished restaurants worldwide in the first quarter, far below the 1.9 percent growth Wall Street analysts expected. Yum said the figure would have risen 2 percent if it weren’t for the KFC issues.
The fried chicken chain had to tempo- rarily close most of its 900 stores in the U.K. and Ireland in February after delivery
delays let to a chicken shortage. Sales rose 2 percent at established KFC stores.
Taco Bell sales rose 1 percent at es- tablished stores. It kept the limited-time Nacho Fries on the menu longer than it expected when it realized it was a hit. It sold 53 million Nacho Fries in its first five weeks on the menu, the company said.
Sales also rose 1 percent at established Pizza Hut restaurants. Yum is working to revive the brand as it faces increased com- petition from Domino’s Pizza. It is topping pizzas with more cheese and hiring drivers to make more deliveries, Yum CEO Greg Creed said.
Yum’s other first-quarter financial results beat Wall Street expectations.
Net income soared 55 percent to $433 million, or $1.27 per share. Adjusted
earnings came to 90 cents, far outpacing analyst projections for 76 cents, according to a survey by FactSet.
A year earlier, the company made $280 million, or 77 cents per share, a year earlier.
Yum got a boost from refranchising restaurants, as well as $66 million related to a deal with delivery company Grubhub that will expand delivery at KFC and Taco Bell nationwide.
Revenue for the Louisville, Kentucky, company was $1.37 billion. That also beat the $1.08 billion that industry analysts had expected.
Shares of Yum Brands fell $4.97 to $81.67 in afternoon trading Wednesday.
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