Rise in Fast-Food Sales Benefits Tricon
Led by resurgent Taco Bell, fast-food and pizza chain operator Tricon Global Restaurants Inc. said Tuesday that sales at restaurants open at least a year rose 3% in the fourth quarter, its best performance since early 1999.
Like other fast-food operators, the Louisville, Ky.-based parent of Taco Bell, KFC and Pizza Hut has benefited from a slumping economy, picking up some customers who have abandoned higher-priced restaurants. But analysts said strong marketing campaigns and new menu items also have fueled growth, especially at Irvine-based Taco Bell, the nation’s largest Mexican fast-food restaurant chain.
Tricon said same-store sales at U.S. company-owned restaurants, a key industry measurement, increased by 8% at Taco Bell and 7% at KFC from the fourth quarter of 2000, while falling 5% at Pizza Hut. Tricon owns more than one-fifth of its 20,037 U.S. restaurants. Sales for domestic franchise restaurants were not disclosed.
“That’s a very impressive performance by Taco Bell and KFC,” said Douglas A. Christopher, an analyst at Crowell, Weedon & Co. in Los Angeles.
In September, Taco Bell unveiled a series of television ads that struck a nerve with consumers, said Andrew Barish, an analyst at Banc of America Securities in San Francisco.
The spots encourage consumers to “think outside the bun” and head to Taco Bell instead of burger joints or other fast-food restaurants.
The advertisements, Taco Bell’s most popular since it muzzled its Chihuahua 1 1/2 years ago, the chain’s upgraded menu, offering pricier items such as grilled steak-stuffed burritos and chicken quesadillas in an effort to lure customers beyond the chain’s core market of 18- to 24-year-old men, said Greg Creed, the chain’s head of marketing.
Taco Bell’s grilled steak-stuffed burrito goes for $2.89, while such mainstays as its bean burritos and tacos typically sell for 69 cents each.
KFC has benefited from humorous television spots featuring former “Seinfeld” star Jason Alexander and a popcorn chicken promotion, Barish said.
The fast-food chains fared even better in December, with same-store sales jumping a record 12% at Taco Bell, gaining 8% at KFC, and increasing 3% at Pizza Hut.
Shares of Tricon moved up $1 to $52.85 on the New York Stock Exchange. The company will release its fourth-quarter and 2001 earnings Feb. 11 after the close of regular U.S. trading hours.
