Yum! Brands Inc

Yum Brands delivered a decent growth in 2022 despite labor shortages and commodity inflation. It ended the year with an all-around beat in the last quarter and more than 55,000 restaurants operating globally. System sales and operating profit were up in the last quarter and the whole year as well, driven by the success of new Melts products, growth partnerships with aggregators, and new advertising to highlight both value and premium offerings. Taco Bell gave the most impressive performance by featuring premium products craved by customers, like the Grilled Cheese Burrito, with tight-priced products like Nacho Fries. Also, KFC International delivered significant performance. With the relaunch of the company’s cult classic Mexican Pizza, the powerful momentum from the last quarter continued. The company also made encouraging progress in its breakfast layer. Moreover, five distinct national marketing campaigns on DoorDash and Uber Eats helped aggregator transactions grow in the quarter. The Habit Burger Grill division continues making progress in setting up its business for the long term. We give Yum Brands a ‘Hold’ rating with a revised target price.