(Reuters) - Yum Brands Inc (N:YUM) posted a smaller-than-expected drop in comparable sales and beat profit estimates on Thursday, helped by strong online sales at its Taco Bell chain as COVID-19 pandemic fears kept customers at home.
Fast-food restaurants, including rivals McDonald's Corp (N:MCD) and Chipotle Mexican Grill (N:CMG), have benefited from earlier digital investments, especially when dining rooms were closed at the height of the health crisis.
"For the second consecutive quarter, digital sales increased by more than $1 billion over the prior year and set a single quarter record of $4 billion," Chief Executive Officer David Gibbs said.
Net income rose about 11% to $283 million in the third quarter, as Yum recorded $8 million of pre-tax income due to the change in fair value of its investment in food delivery firm Grubhub Inc (N:GRUB).
Yum said it sold its Grubhub stake for $206 million in the reported quarter, more than two years after the company made a $200 million investment to improve its delivery services.
Grubhub is expected to be bought by European online food-ordering company Just Eat Takeaway.com NV (AS:TKWY) for $6.9 billion in the first half of 2021, pending approval from its shareholders and regulators.
Comparable sales fell 2% for the KFC owner in the quarter ended Sept. 30, but beat the average analyst estimate of a 3.74% slide, according to IBES data from Refinitiv.
Taco Bell posted comparable sales growth of 3%, well above the estimate of a 1.75% rise.
At Pizza Hut, Yum's pizza chain that has long been grappling with stiff competition from Domino's Pizza (NYSE:DPZ) and others, comparable sales were down 3% and slipped 4% at KFC.
Excluding one-time items, the company earned $1.01 per share, compared with the estimate of 80 cents.
Total revenue rose about 8% to $1.45 billion.