LOUISVILLE, KY. — Delivery is becoming a bigger priority for Yum! Brands, Inc., which on Feb. 8 announced a partnership with Chicago-based Grubhub. Yum! Brands has agreed to purchase $200 million of Grubhub common stock, an investment that is expected to help Grubhub expand delivery services in the United States and drive more orders to Yum! Brands’ Taco Bell and KFC restaurants.
“As the nation’s leading online and mobile food ordering company, Grubhub offers delivery in over 1,300 U.S. cities,” said Greg Creed, chief executive officer of Yum! Brands. “This partnership will rapidly expand KFC and Taco Bell’s ability to offer online ordering for both pickup and delivery to our customers in all existing U.S. Grubhub markets with many more to come. Making it easy to access all of our brands is important, and the partnership with Grubhub is a key component of making our brands distinctive, relevant and easy.”
Delivery already is available in 1,500 Taco Bell restaurants and is being tested at KFC in several markets.
“What we’re excited about is for both KFC and Taco Bell, this really is an opportunity to expand the presence that we’ve got and the number of stores that we can, obviously, bring closer to our customer,” Mr. Creed said during a Feb. 8 earnings call. “On the POS system, obviously, we’re aligning the back-of-house systems. That work is, obviously, underway. It will be critical as a part of making it seamless for our customer, whether they order off our apps, website or the Grubhub’s apps and website, all that work is ongoing.”
At Taco Bell, the company is adding technology to improve consumer access, including self-service kiosks in all restaurants by the end of 2019 and order-ahead for scheduled pick-up in-store or curbside.
Yum! Brands also has been making improvements at Pizza Hut, where sales have struggled in recent years. New thermal pouches designed to deliver a pizza that is 15 degrees hotter and the addition of 14,000 delivery drivers in 2017 are part of the brand’s commitment to “ensuring every customer has a hot, fast and reliable experience,” Mr. Creed said.
“As another example of Pizza Hut innovation, we recently announced a partnership with Toyota to bring Pizza Hut to your door through a driverless vehicle, showcasing the innovation and forward thinking at both companies,” he said. “We are excited about the future for Pizza Hut U.S. and confident our investment in hot, fast and reliable experience will drive positive results.”
Net income in the year ended Dec. 31, 2017, was $1,340 million, down 18% from $1,643 million the year before. Earnings per share excluding special items rose 20% to $2.96 from $2.46. Revenues of $5,878 million were down 8% from $6,356 million.
For the fourth quarter, net income was $436 million, up 44% from $303 million, while earnings per share excluding special items increased 20% to 96c from 80c. Revenues declined 16% to $1,577 million from $1,886 million.
“The fourth quarter was a solid ending to the first full year of our transformation journey,” Mr. Creed said. “For the full year, Yum! delivered 5% system sales growth, excluding the impact of the 53rd week. This is comprised of 2% same-store sales growth and 3% net-new unit growth. We reached a significant milestone in 2017, as we closed the year with over 45,000 global restaurants in 139 countries and territories. We are excited about the long-term growth potential of Yum! Brands, and are on track with our strategic transformation initiatives.”