Taco Bell returning to glory? Parent Yum’s income up 73%

Taco Bell appears to have emerged from a miserable 2011.
(Reed Saxon / AP Photo)

Is it the Doritos Difference? A breakfast-based boost? The days of slumping sales seem to be over for tortured Taco Bell, which helped owner Yum Brands Inc. haul in a 73% income increase in the first quarter.

The Mexican-style fast-food chain appears to have emerged from a miserable 2011, during which a controversy over its seasoned beef filling caused it to freely shed customers. Executives quickly rolled out initiative after initiative: Brand new breakfast offerings. Doritos Locos Tacos. A Cantina menu positioned as a Chipotle competitor.

The rescue mission is working, according to the company. Louisville-based Yum, which also owns KFC and Pizza Hut, reported profit of $458 million, or 96 cents a share, up from $264 million, or 54 cents a share, during the same quarter a year earlier. Excluding one-time items, EPS was 76 cents a share for the quarter, which ended March 24.


Same-store sales at U.S. Taco Bell stores jumped 6%; they rose 5% at Pizza Hut and 2% at KFC. Yum’s overall revenue soared 13% to $2.7 billion from $2.4 billion a year earlier.

Granted, Taco Bell shouldn’t take all the credit. Yum has been heavily expanding abroad, opening a record 168 restaurants in China alone, where Chief Executive David Novak said the business “continues to fire on all cylinders.”

“While we realize there is much work to do, we are optimistic we will dramatically improve our U.S. brand positions, consistency and returns,” Novak said in a statement.

Investors seemed unimpressed, however. Yum, which closed down less than a percent, or 25 cents, at $72.94, dropped 1.7% to $71.70 a share in after-hours trading after the company released its earnings.

Yet, despite Taco Bell’s previously sour news, Yum’s stock has been on a steady upward track since October.



Yum CEO David Novak on rubber chickens, China and Taco Bell

Yum Brands profit soars 30% largely from Chinese expansion

Taco Bell trying ‘First Meal’ breakfast and fresh ‘Cantina’ menus

Taco Bell to launch Doritos Locos Tacos to boost sales

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