Taco Bell, KFC sales power Yum's results beat as Pizza Hut lags

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Oct 28 (Reuters) - Taco Bell owner Yum Brands Inc (YUM.N) beat Wall Street estimates for quarterly revenue and profit on Thursday, as strong demand for its fried chicken and tacos cushioned the blow from a slowdown in sales at its Pizza Hut chain.

The company also benefited from customers returning to its restaurants in the United States, Canada and Europe following vaccinations, even as rising concerns over the Delta variant of the coronavirus kept consumers away from its chains in other markets.

Chipotle Mexican Grill (CMG.N) and McDonald's (MCD.N) have also delivered a strong beat in the third quarter, aided by product price hikes and the reopening of seating areas in their restaurants.

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"We did see a return to dine-in, yet we saw digital sales go up ... that is still something that is going to continue to grow for us," Yum Brands Chief Executive Officer David Gibbs said on a call with analysts.

Taco Bell, which reintroduced its breakfast menu in the quarter, delivered an 8% jump in system sales - which excludes the impact of foreign currency translation - while KFC's sales were up 3% in the United States.

A delivery staff member wearing a protective mask enters a KFC fast food outlet after a delivery, amid concerns about the spread of the coronavirus disease (COVID-19), in Colombo, Sri Lanka, July 9, 2020. REUTERS/Dinuka Liyanawatt/File Photo

However, Yum Brands' Pizza Hut division saw its U.S. system sales drop 2% in the quarter, as pizza chains grapple with a slowdown in delivery demand following a surge during last year's lockdowns.

Shares of the company were down 1% at $124.81.

Earlier this month, rival Domino's Pizza Inc (DPZ.N) posted its first drop in U.S. same-store sales in over a decade amid a tight labor market that created a shortage of drivers. read more

Yum Brands said it was well-positioned to tackle rising industry-wide inflation and growing labor shortages.

The company reported an adjusted profit of $1.22 per share on revenue of $1.61 billion, beating estimates of $1.08 per share on revenue of $1.59 billion.

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Reporting by Deborah Sophia in Bengaluru; Editing by Shailesh Kuber and Ramakrishnan M.

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