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YUM! Brands' KFC Unveils New Bowl Meal, Eyes Innovation

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YUM! Brands, Inc.’s (YUM - Free Report) subsidiary Kentucky Fried Chicken or KFC announced that it has added a new item to its menu, namely Mac & Cheese Bowl — a cheesy twist on its popular Famous Bowls — in order to attract more customers, specially mac & cheese fans.

The dish, which is part of KFC's $5 Fill Up menu, is a blend of its rich and creamy mac and cheese, with a topping of crispy popcorn chicken, and sprinkles of three different cheese. KFC reimagined this side dish to the all-new bowl meal for attracting more customers who love the affordable bowl concept. Notably, the new meal comes with a medium drink and chocolate chip cookie. This makes it an abundant, convenient, filling and affordable meal that is a perfect grab-n-go feast for the whole family.

Innovation to Drive Top-Line Growth

YUM! Brands is the global leader in multi branding that offers consumers more choice and convenience at one outlet. The KFC unit (which accounted for nearly 44.6% of total second-quarter 2019 revenues) positively impacted the company’s results over the last few quarters, backed by several sales-building initiatives.

In the first six months of 2019, its worldwide system sales, excluding foreign currency translation, grew 9% from the corresponding period of 2018. Comps growth was 4% compared with 1% in the comparable year-ago period.

Particularly, in the said segment, comps growth was 5% compared with 2% in the prior-year period. The segment’s operating margin was also up 840 basis points year over year, owing to refranchising, same-store sales improvement and unit growth.

The company has undertaken a three-year strategic transformation plan to drive growth across the segments. This transformation and growth strategy include greater focus on the development of its three iconic global brands, namely KFC, Pizza Hut and Taco Bell; increasing franchise ownership and most importantly, creating a leaner and efficient cost structure. It is also focusing on restaurant development to drive continued growth.

Coming to share price performance, the company’s shares have gained 25.4%, outperforming its industry’s rally of 20.1% in the past six months. Earnings estimates have moved 1.3% upward in the past month, reflecting analysts’ optimism over the stock. The solid performance was mainly backed by its strategic transformation plan to drive growth, efforts to boost the domestic business through various digital initiatives and refranchising efforts.

Zacks Rank

YUM! Brands, which shares space with Chuy's Holdings, Inc. (CHUY - Free Report) , Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) and Darden Restaurants, Inc. (DRI - Free Report) in the Zacks Retail - Restaurants industry, currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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