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Yum! Brands (YUM) Boosts Digital Ordering With Tictuk Buyout

By Zacks Investment ResearchStock MarketsMar 25, 2021 08:19AM ET
www.investing.com/analysis/yum-brands-yum-boosts-digital-ordering-with-tictuk-buyout-200569460
Yum! Brands (YUM) Boosts Digital Ordering With Tictuk Buyout
By Zacks Investment Research   |  Mar 25, 2021 08:19AM ET
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Yum! Brands (NYSE:YUM), Inc. YUM recently announced the acquisition of Tictuk Technologies, a leading Israeli omnichannel ordering and marketing platform company, in a bid to strengthen its digital ordering. This marks the company’s second acquisition in less than a month. However, the financial details of the deal have been kept under wraps.

Following the acquisition of Tictuk, the company’s customers will have more options to order and access its KFC, Pizza Hut, Taco Bell and The Habit Burger Grill brands globally via WhatsApp, Facebook (NASDAQ:FB) Messenger, Telegram, SMS, QR codes, and email.

David Gibbs, chief executive officer, Yum! Brands said “As we navigate a consumer landscape reshaped by the events of 2020, we continue to intensify our focus on leveraging our scale and reinforcing our growth model with investments in digital and technologies to enhance the customer and employee experience, strengthen restaurant unit economics and enable our brands and franchisees to compete and win in a rapidly changing world.”

The company has installed Tictuk’s platform in nearly 900 KFC, Pizza Hut and Taco Bell restaurants in 35 countries outside of the United States. In facts, it is planning to deploy Tictuk’s platform to more markets and franchisees globally.

Earlier this month, the company reached an agreement to acquire the Kvantum business, an artificial intelligence-based consumer insights and marketing performance analytics firm. Yum! Brands’ acquisition of the Kvantum business is likely to be completed by the end of first-quarter 2021. Both the buyouts will have an immaterial impact to its 2021 financial results.

In the past six months, shares of the company have gained 16.5%, compared with the industry’s rally of 12.7%.

Digitalization: A Major Growth Driver

The digital wave has hit the U.S. fast-casual restaurant sector. More and more restaurants are deploying technology to enhance guest experience. Yum! Brands is also not far behind in the race as the company is continuing the transformation process toward a single point-of-sale system in the United States.

At the end of fourth-quarter 2020, the company had more than 35,000 restaurants offering delivery globally, up 16% year over year. In 2020, digital sales were reported at $17 billion, suggesting an increase of 45% over the prior year. During the quarter, Pizza Hut U.S. delivered 18% same-store sales growth in the off-premise channel. Moreover, in the Pizza Hut International segment, off-premise sales generated same-store sales growth of 9% in fourth-quarter 2020. The company’s newest brand The Habit Burger Grill has generated strong off-premise sales, accounting for almost more than 10% of total sales.

We believe the acquisitions of Tictuk Technologies and Kvantum business will boost its digital sales further.

Zacks Rank & Key Picks

Yum! Brands, which shares space with McDonald's Corporation (NYSE:MCD) MCD, carries a Zacks Rank #3 (Hold). Some better-ranked stocks that warrant a look in the same space include Jack in the Box Inc. JACK and Chuy's Holdings (NASDAQ:CHUY), Inc. CHUY, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Jack in the Box has an impressive long-term earnings growth rate of 17%.

Chuy's Holdings has beat estimates in each of the trailing four quarters, with average being 126.5%.

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Yum! Brands (YUM) Boosts Digital Ordering With Tictuk Buyout

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