February 8, 2018 / 12:21 PM / in 3 months

KFC parent Yum's posts profit, takes stake in GrubHub

(Reuters) - Yum Brands Inc (YUM.N) on Thursday reported fourth-quarter profit that beat analyst estimates, boosted by sales at its KFC chain, and announced a stake in delivery company GrubHub Inc (GRUB.N).

A Yum! Brands Inc. Taco Bell is shown in Encinitas, California,U.S., October 3, 2016. REUTERS/Mike Blake

The results from the owner of the KFC, Taco Bell and Pizza Hut fast-food chains come as industry leader McDonald’s Corp (MCD.N) is intensifying a price war with its new $1, $2, $3 menu.

Shares in Yum were up 1.1 percent at $81 in premarket trading.

A Pizza Hut location, which is owned by Yum Brands Inc, is pictured ahead of their company results in Pasadena, California, U.S., July 11, 2016. REUTERS/Mario Anzuoni

KFC same-store sales were up 3 percent in the fourth quarter, slightly more than analysts expected, according to Consensus Metrix.

    Taco Bell, which has a $1 value menu and had been Yum’s fastest-growing brand, reported a 2 percent gain in same-store sales. Those sales cooled throughout 2017 and fell just short of analysts’ estimate in the latest quarter.

    Pizza Hut reported a 1 percent rise in same-store sales, just missing analysts’ target.

    Yum separately said it would buy a 3 percent stake in online food-ordering company GrubHub for $200 million to increase sales through pickup and deliveries at its KFC and Taco Bell restaurants in the United States, where restaurant chains are experimenting with third-party delivery and looking for the most profitable way to meet demand for the service.

    Excluding items, the company earned 96 cents per share, topping analysts’ average estimate of 80 cents, according to Thomson Reuters I/B/E/S.

    Total revenue fell 16.4 percent to $1.58 billion, lower than the analysts’ estimate of $1.59 billion.

    The company said net income rose to $436 million, or $1.26 per share, in the quarter ended Dec. 31, from $303 million, or 83 cents per share, a year earlier.

    Reporting by Nivedita Balu; Editing by Bernard Orr and Bill Trott

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