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YUM! Brands' KFC to Test Plant-Based Chicken, Eyes Innovation

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YUM! Brands, Inc.’s YUM subsidiary Kentucky Fried Chicken or KFC is gearing up to introduce a plant-based chicken — Beyond Fried Chicken — in partnership with Beyond Meat, Inc. BYND. This marks KFC’s continuous focus on both value and innovation to drive sales.

The test makes the YUM! Brands’ subsidiary the first national U.S. quick service restaurant to introduce a Beyond Meat item. KFC will start testing the product in an Atlanta restaurant soon. Feedback from the restaurant will determine whether there will be other tests or a nation–wide rollout.

Innovation to Drive Top Line

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) has been benefiting the company over the last few quarters, courtesy of several sales-building initiatives. Comps grew 5% at KFC in the first six months of 2019 compared with 2% in the prior-year period, buoyed by its continued focus on innovation balanced with an accelerated pace of promotion.

In the last reported quarter, the company re-introduced the very popular Chicken and Waffles and soon after launched Cinnabon Biscuits. The launch of a new channel for A La Carte menu items, a 2 for $6 Mix and Match, highlights the company’s focus on value.

Apart from sales-building initiatives, YUM! Brands’ strategic transformation plan to drive growth, efforts to boost the domestic business through various digital initiatives and refranchising efforts bode well.

Meanwhile, shares of YUM! Brands, a Zacks Rank#3 (Hold) company, have gained 27.6% year to date compared with the industry’s 29.8% growth. The company’s initiatives to drive sales are likely to pay off.

Key Picks

A few better-ranked stocks worth considering in the same space include  Darden Restaurants, Inc. (DRI - Free Report) and Dunkin' Brands Group, Inc. DNKN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Darden and Dunkin’ Brands have an impressive long-term earnings growth rate of 10.1% and 10.9%, respectively.

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