Aside from the juggernaut that is Taco Bell, Yum Brands’ second quarter results weren’t much to write home about, especially its domestic results. Its same-store sales of Pizza Hut, KFC, and Habit Burger Grill all experienced second-quarter declines.
Of course, Yum is not alone here. The second half was pretty lacking except for a few spots (Chipotle, Wingstop, and Texas Roadhouse come to mind). The Dow Jones US Restaurants and Bars Index is showing a slow recovery from a torturous first quarter, as consumers have shown they are fed up with high menu prices and are instead spending their money at restaurants. a grocery or specialty restaurant chain. they’ve created a strong sense of quality (Chipotle, Wingstop, and Texas Roadhouse come to mind here, too).
There was a sense that things were not going to be easy going into Q2 earnings, especially once industry bellwether McDonald’s reported its first sales decline since the pandemic quarter in 2020. For Yum Brands , the quarter marked its second consecutive negative quarter for its three brands, including its KFC US position
However, Yum, like many of its peers, has emphasized the positives, including continuous improvements across its system. The question now is whether that sequential improvement will continue, and whether it will end the declining trends we’ve seen in the past few episodes. From the little color provided during Tuesday morning’s earnings call, we know that digital and other technologies will continue to play a growing role in the company’s long-term and long-term strategy. company, which is a revolutionary strategy at this point.
Global system giant Yum surpassed 50% in digital sales in Q1, representing nearly $30 million in annual digital sales. That momentum continued in Q2 as the company entered the next phase of what it calls its “journey to become the world’s leading digital restaurant company.” This journey includes increased investment, which the company is reducing through “total costs” and “a continuous program to improve equipment,” which frees up general and administrative costs for new technology investments.
“We are confident that the investments we are making at the same time will be agile, resilient, and robust as part of the next phase of our technology journey leading up to this year. promise by 2025,” said CEO David Gibbs during the call.
In other words, Yum is optimistic about 2025 because of its long-term focus on technology, which began in earnest shortly before the pandemic when the company created its Digital Innovation Lab. The focus accelerated during the pandemic and now, Yum is entering the next phase, heavy on artificial intelligence and the development of proprietary platforms.
“We are accelerating the deployment of our core platforms, such as the Poseidon POS system, the Yum e-commerce platform, Dragontail, SuperApp and our Global Data Hub. In the next phase, we are focused on expanding the capabilities of building the value of our platform with AI and leveraging our extensive assets,” chief financial officer Chris Turner said, adding that data is a “key differentiator” that enables the company’s marketers to perform. good decisions.
As part of AI’s “value win,” Taco Bell is rolling out AI-powered voice commands to “hundreds” of US stores by the end of this year. Turner said the pilot demonstrated a consistent customer experience and high employee productivity. The technology also uses digital menu boards, which will be the standard for the Taco Bell brand in 2025.
Additionally, Yum’s commerce platform is being deployed to Pizza Hut US, while its Poseidon POS system has been fully deployed to Taco Bell US and is in the early stages of rolling out to KFC US. Dragontail, the AI-enabled restaurant management system acquired by Yum in 2021, is expected to be in all Pizza Hut US systems by the end of this year and has so far raised customer satisfaction scores by 7%, which leading to more and more. And, Yum partnered with a personal AI startup in Q2 to leverage its data assets.
“This collaboration covers the application and integration of a deep learning AI technique known as reinforcement learning, which we expect to be more widely and easily available across the board,” Turner said. said. “This partnership will focus on our core business [customer relationship management] channels and in the future may extend to other sales channels and customer communications. ”
Gibbs says the benefits of Yum’s digital and technology strategy are increasing, helping to drive operating profit growth of 10% – a silver lining in an otherwise (very) difficult time.
Contact Alicia Kelso at [email protected]
#Yum #Brands #sees #technology #silver #lining