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Yum! Brands' (YUM) KFC to Boost Presence With New Buyout Deal
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Yum! Brands, Inc.’s (YUM - Free Report) KFC division recently entered into a definitive agreement with EG Group to acquire 218 KFC restaurants in the U.K. and Ireland. In sync with the company's asset-light approach, it expects to complete the transaction by the first half of 2024.
Through the initiative, the company intends to leverage the experienced management team and enhance the customer experience through digital strategies, paving a path for higher sales and market dominance.
In 2023, the company reported a solid growth trend across its 1040 KFC restaurants in the U.K. and Ireland. During the year, system sales were up 7% year over year, while same-store sales were up 5% year over year. The management stated that it solidified its position in the local chicken market by inaugurating 200 new outlets. Also, it moved closer to a £2-billion business mark in the U.K.
Given the revived potential in the region, the company is optimistic and anticipates opening an additional 500 KFC outlets across the market by 2030.
Price Performance
Image Source: Zacks Investment Research
Coming to price performance, shares of Yum! Brands’ have declined 2.7% in the past year against the industry's 2.5% growth. The downside was mainly due to a challenging macroeconomic environment. Also, higher labor costs and commodity inflation added to the downside.
However, the company implemented various digital features in mobile and online platforms across all brand segments to enhance guest experience. This and the focus on off-premise channels, strategic investments in digital technology and refranchising efforts are likely to benefit the company in the upcoming periods. The company stated that its in-house developed AI module, Automated Inventory Management or AIM, is expected to be launched across the KFC US system by the 2023-year end. Earnings estimates for 2024 have moved up in the past 30 days, depicting analysts’ optimism regarding the stock’s growth potential.
Zacks Rank & Key Picks
Yum! Brands currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail-Wholesale sector include:
The Zacks Consensus Estimate for Wingstop’s 2024 sales and EPS suggests rises of 15.6% and 17.2%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) sports a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 223.6%, on average. Shares of EAT have increased 19.8% in the past year.
The Zacks Consensus Estimate for EAT’s fiscal 2024 sales and EPS indicates a 5.1% and a 26.2% rise, respectively, from the year-ago period’s levels.
FAT Brands Inc. (FAT - Free Report) currently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 36.6%, on average. The stock has declined 1.5% in the past year.
The Zacks Consensus Estimate for FAT Brands’ 2024 sales and EPS suggests an increase of 35.6% and 27.4%, respectively, from the year-ago period’s levels.
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Yum! Brands' (YUM) KFC to Boost Presence With New Buyout Deal
Yum! Brands, Inc.’s (YUM - Free Report) KFC division recently entered into a definitive agreement with EG Group to acquire 218 KFC restaurants in the U.K. and Ireland. In sync with the company's asset-light approach, it expects to complete the transaction by the first half of 2024.
Through the initiative, the company intends to leverage the experienced management team and enhance the customer experience through digital strategies, paving a path for higher sales and market dominance.
In 2023, the company reported a solid growth trend across its 1040 KFC restaurants in the U.K. and Ireland. During the year, system sales were up 7% year over year, while same-store sales were up 5% year over year. The management stated that it solidified its position in the local chicken market by inaugurating 200 new outlets. Also, it moved closer to a £2-billion business mark in the U.K.
Given the revived potential in the region, the company is optimistic and anticipates opening an additional 500 KFC outlets across the market by 2030.
Price Performance
Image Source: Zacks Investment Research
Coming to price performance, shares of Yum! Brands’ have declined 2.7% in the past year against the industry's 2.5% growth. The downside was mainly due to a challenging macroeconomic environment. Also, higher labor costs and commodity inflation added to the downside.
However, the company implemented various digital features in mobile and online platforms across all brand segments to enhance guest experience. This and the focus on off-premise channels, strategic investments in digital technology and refranchising efforts are likely to benefit the company in the upcoming periods. The company stated that its in-house developed AI module, Automated Inventory Management or AIM, is expected to be launched across the KFC US system by the 2023-year end. Earnings estimates for 2024 have moved up in the past 30 days, depicting analysts’ optimism regarding the stock’s growth potential.
Zacks Rank & Key Picks
Yum! Brands currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail-Wholesale sector include:
Wingstop Inc. (WING - Free Report) sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 28.9%, on average. The stock has surged 60.6% in the past year. You can see the complete list of today’s Zacks Rank #1 stocks here.
The Zacks Consensus Estimate for Wingstop’s 2024 sales and EPS suggests rises of 15.6% and 17.2%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) sports a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 223.6%, on average. Shares of EAT have increased 19.8% in the past year.
The Zacks Consensus Estimate for EAT’s fiscal 2024 sales and EPS indicates a 5.1% and a 26.2% rise, respectively, from the year-ago period’s levels.
FAT Brands Inc. (FAT - Free Report) currently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 36.6%, on average. The stock has declined 1.5% in the past year.
The Zacks Consensus Estimate for FAT Brands’ 2024 sales and EPS suggests an increase of 35.6% and 27.4%, respectively, from the year-ago period’s levels.