LOUISVILLE, KY. — To the degree the businesses of Yum! Brands Inc. represent a barometer of global consumer sentiment, the signs are pointing in the right direction, said David W. Gibbs, chief executive officer.

Announcing strong financial results in the third quarter of 2023, Gibbs noted Yum! has generated double-digit system sales growth for five consecutive quarters, with positive preliminary indications for the fourth quarter of 2023 as well.

“When you think about the consumer and what we’re seeing in our business, obviously, it’s a pretty good trading environment for us,” Gibbs said Nov. 1 in response to an analyst question about challenges in the United States and China.

Still, he acknowledged that Yum! is not immune to developments negatively affecting US consumers.

“I know what's on a lot of people's minds is what's going on in the US,” he said. “It’s well documented that there is more pressure on US consumers, (with) student loan payments coming due. And certainly, our industry has softened a little bit, but the industry is doing better than most industries, if you look at any of the industry-specific data.”

Yum! Brands net income in the third quarter ended Sept. 30 was $416 million, equal to $1.46 per share on the common stock, up 26% from $331 million, or $1.14 per share, in the third quarter last year.

Fueled by what he called the “twin growth engines” of KFC International and Taco Bell US, Gibbs said Yum! was operating on all cylinders in the third quarter, generating 10% system sales growth, 6% same-store sales growth and 6% unit growth. More than 1,100 gross new units were opened in the quarter, a record. Growth was strong both in emerging and developed markets, he said.

“With our strong year-to-date performance, we continue to expect that our full-year 2023 results will outperform on all aspects of our long-term growth algorithm,” he said. “We set another digital sales record this quarter, with the next leg of our digital growth planned through enhancements of our customer insights platforms and expansions of our global loyalty programs.”

KFC operating profits in the third quarter were $344 million, up 13%. System sales were $8.62 billion, up 10% from $7.82 billion. System sales were flat in the United States and up 14% elsewhere. KFC opened 664 restaurants during the quarter across 57 countries.

The successful launch of nuggets in the United States prompted a rollout of the new products in Latin America and Caribbean in the third quarter. Further expansion will be forthcoming, Gibbs said.

Taco Bell operating profit in the third quarter was $226 million, up 11% from $204 million in the third quarter last year. System sales were $3.8 billion, up 11% from $3.4 billion. Taco Bell opened 74 new restaurants during the quarter. US same store sales were up 8%.

While KFC and Taco Bell may be twin engines globally, Taco Bell is the single engine fueling growth in the United States.

“Taco Bell US is in a class of its own in the domestic QSR category as a culturally iconic brand and clear leader in value perception with the most crave-worthy food in the industry,” Gibbs said.

He credited Taco Bell’s leadership team for deploying a “balanced set of commercial strategies,” building buzz around the brand and delivering value to consumers.

He cited the return of the $5 box as an example of offering product at a “compelling price point” but noted that value purchases remained within range of the Taco Bell’s intended 10% mix target.

Gibbs said Taco Bell sales growth in the United States is growing consistently across all income levels at about 2% to 3% per year in terms of transaction growth.

“So, our stores in lower-income trade areas are performing well with good transaction growth, just like our stores in high-income trade areas,” he said.

Product innovation included growth in chicken offerings, something Gibbs said will expand further with the launch of the Taco Bell Cantina menu.

In addition to new products, Taco Bell is working to develop updated restaurant formats and economic models, said Christopher L. Turner, chief financial officer.

“Taco Bell's newest small box design, Go Mobile 2.0, now open in El Paso, Texas, builds on the original Go Mobile concept,” he said. “This new design leverages digital capabilities to create more touch points for consumers to order and pick up in a seamless manner.”

Pizza Hut operating profit in the third quarter was $97 million, up 5% from $92 million in the same period last year. System sales were $3.24 billion, up 3% from $3.15 billion in the third quarter last year.

Same store US sales were flat. Efforts to build the brand recently have included innovations such as Melts and wings.

“This quarter, Pizza Hut US teamed up with the Teenage Mutant Ninja Turtles to relaunch our Big New Yorker pizza and deliver pizzas into the New York City subway stations, leading to over 1 billion media impressions,” Gibbs said. “As we head into the fourth quarter, the Pizza Hut US team launched a late-night initiative, strategically expanding operating hours in more than 1,000 restaurants to give consumers even more ways to access the brand.”

Gibbs said Yum! Has gained market share in a “tough category” three consecutive quarters.

Commenting on 20% growth in digital sales during the quarter, Turner said sales will nearly hit $30 billion this year, up from $12 billion in 2019.

“We like everything about those digital sales dollars,” he said. “Our customers, they have higher checks, higher frequency whenever we transition sales to digital, plus we get all of the benefits in terms of more efficient operations, which help our franchisees sustain strong unit economics.”

Despite the sensational growth experienced in recent years, Turner said Yum! remains in the “early innings” of its digital strategy, in terms of using technology to create an easy experience for consumers, easy operations at the store level and rich insights.