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Taco Bell's Breakfast Innovation Continues

Taco Bell's Breakfast Innovation Continues

With global fast food giant McDonald's Corporation (NYSE: MCD) reeling from slumping global sales, Yum! Brands, Inc. (NYSE: YUM) is showing no signs of stopping its push into McDonalds’ territory.

Breakfast Battleground

Yum’s Taco Bell launched its breakfast menu in March 2014 with two items: the Waffle Taco and the A.M. Crunchwrap. Now, about a year later, breakfast accounts for 6 percent of Taco Bell’s business, and the breakfast menu is comprised of 16 items.

“We are not done innovating in breakfast by a long shot,” Yum Brands representative Jonathan Blum recently explained. Taco Bell's latest breakfast roll-out is a biscuit taco, and the company continues to produce advertisements directly targeting McDonalds’ Egg McMuffin.

Related Link: Yum vs. Chipotle: What's Wall Street Saying?

No Need For Excuses

While McDonald's reported global sales comps of negative 2.3 percent in Q1, Taco Bell’s comps rose by 6 percent for the second consecutive quarter in Q1. The inclement Q1 weather that companies such as Chipotle Mexican Grill, Inc. (NYSE: CMG) and Brinker International, Inc. (NYSE: EAT) used as an excuse for poor performance didn’t cool down Taco Bell’s success.

Yum’s Other Brands

Taco Bell wasn’t the only one of Yum’s brands that posted exceptional Q1 numbers. While Taco Bell’s innovation seems to be overshadowing Yum's other brands, KFC posted a 7 percent boost in domestic same-store sales in Q1.

Yum has recently undertaken measures to right the KFC ship in China, where same-store sales declined by 12 percent in Q1. In addition to new chicken products, Yum has launched a premium coffee line in 1,300 China KFC locations that is priced at a discount to coffee offered at McDonald's and Starbucks Corporation (NASDAQ: SBUX).

Pizza Hut, Yum’s third major brand, posted a 1 percent drop in same-store sales in Q1 in an environment of fierce competition from the likes of Domino’s Pizza, Inc. (NYSE: DPZ) and Papa John’s International, Inc. (NASDAQ: PZZA).


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