Yum Brands says it has $30 billion in annualized digital sales

Yum Brands, one of the largest restaurant companies with several brands including KFC International, Taco Bell, Pizza Hut, etc. says more than half of its sales are coming from digital.

KFC digital transformation
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Yum Brands is making significant progress scaling proprietary digital and AI-powered platforms. Digital sales continued an upward trajectory approaching $8 billion and were up 11 percent year over year.

This is a major milestone for Yum Brands after making significant investment in its digital transformation journey. Joe Park, chief digital and technology officer, is driving digital transformation.

David Gibbs, Chief Executive Officer of Yum Brands, said: “The deployment of our capabilities in this first phase of our journey has driven the dramatic increase in our digital sales from approximately 20 percent in 2019 to over 50 percent now.”

Taco Bell U.S. outperformed the industry on same-store sales and delivered industry-leading margins, while 1Q unit openings at KFC International set us up for a strong unit growth story in 2024.

Through kiosk deployment, greater adoption of click-and-collect, and stable third-party aggregator sales, digital mix improved five points and, for the first time ever, represented over 50 percent of system sales in Q1. It has $30 billion in annualized digital sales.

Digital and technology strategy

Yum Brands started the first phase of its journey to become the leading digital restaurant company in 2019. The first phase of its focus was on building or acquiring a suite of owned platforms, spanning Easy Experiences, Easy Operations, and Easy Insights and accelerating deployment of those platforms across brands and markets.

Taco Bell U.S., one of its twin growth engines, has achieved the most extensive deployment of key platforms, including the Poseidon POS system, the Yum e-commerce platform and the AIM, inventory management platform.

KFC International, the primary growth engine, has been accelerating the rollout of those same platforms and is the leader in deploying in-store kiosk technology. Pizza Hut has been deploying Dragontail to thousands of restaurants around the globe.

Behind the scenes, global data hub houses data generated from these platforms. Yum Brands says the deployment of capabilities in this first phase of the journey has driven the significant increase in digital sales from approximately 20 percent in 2019 to over 50 percent now.

The impact of this growth has been significant thanks to digital transformation. Yum Brands said its consumers enjoy more convenient and frictionless experiences, leading to high frequency and check sizes. Franchisees enjoy significant productivity benefits as their team members no longer spend time taking orders and payments for half of all transactions, leading to stronger unit economics.

The second phase will focus on maximizing the value creation potential of platforms through the acceleration of AI capabilities in combination with fully leveraging the immense data assets. With the platform-driven approach, Yum Brands can more easily integrate AI capabilities across digital ecosystem. Yum Brands currently has more than 40 AI initiatives in progress across the company spanning marketing, operations, insights, engineering, and our internal back-office functions.

Yum Brands has been testing voice AI to enhance our consumer experience. It is testing this capability at the drive-thru in five Taco Bell stores in California. It will be expanding that test to 30 stores in Q2 based on positive consumer feedback.

Another example is the piloting of AI-powered technology in its Super App restaurant general manager support tool, making it even easier and faster for managers to access critical operational information to make better decisions. Dragontail platform was the first AI-enabled operational system to enhance the consumer and team member experience in a multichannel fulfillment environment.

In Q1, it launched the R.E.D. 360 U.S. Consumer Data Insights system. This is an example of how it is elevating the use of data assets. As of Q1, both Pizza Hut U.S. and Taco Bell U.S. have integrated into the system and KFC U.S. will integrate in the second quarter. This system allows it to leverage insights into consumer behavior across brands in the U.S. After full deployment, R.E.D. 360 will be the first scaled cross-brand U.S. restaurant consumer data engine in the quick service industry and will pave the way for insights and personalization opportunities on digital and social channels.

Yum China has AI-enabled digital tools to allow its restaurant general managers to oversee multiple restaurants, creating unmatched savings that can be passed to consumers. The Serrano Group based in Latin America and Ramcar based in the Philippines run their own poultry processing facilities in addition to distribution capabilities, giving them cost and reliability advantages.

Its Super App, which provides smart, automated routine management tools for restaurant managers, is now used in nearly 9,500 Pizza Hut and KFC restaurants with significant expansion plans underway for KFC.

KFC and Pizza Hut have continued to scale a new experienced management program allowing the brands to draw insights from an expanded source of consumer reviews across digital channels, including third-party aggregators and social media in addition to guest survey responses. KFC is now live in 10,000 restaurants and has seen a five-fold increase in per-store data points. Pizza Hut expanded this service to 7,000 restaurants across more than 50 countries, says Chris Turner, Chief Financial Officer of Yum Brands.

Baburajan Kizhakedath

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