LOUISVILLE, KY. — Taco Bell is thriving in the United States, but KFC and Pizza Hut are having difficulty dealing with a challenging environment in the quick-service restaurant industry, contributing to softer third-quarter earnings at parent Yum! Brands, Inc.

In the quarter ended Sept. 30, Yum! net income was $382 million, equal to $1.36 per share on the common stock, down 8% from $416 million, or $1.48 per share, in the third quarter of 2023. Net sales were $1.83 billion, up 7% from $1.71 billion.

Core operating profit in the third quarter rose 3%.

“Despite the complex consumer environment around the globe, our team managed to grow profits 3% year-over-year with the quarter bringing to light the real strengths of our twin growth engines: Taco Bell US, which meaningfully outperformed the industry on comp sales and KFC International, which meaningfully outperformed on unit growth,” said David Gibbs, chief executive officer, during a Nov. 5 conference call with analysts.

Operating profit of Taco Bell in the third quarter, Yum!’s largest US business, was $251 million, up 11% from $226 million the previous year. Sales were $666 million, up 6%. In the United States, system sales grew 5% in the quarter and same-store sales increased 4%.

“Although the US QSR industry experienced negative traffic trends in Q3, Taco Bell US posted an impressive 4% increase in same-store sales and led the industry in Q3 on value perception among all QSR users,” Gibbs said. “Taco Bell delivered another quarter of significant market share gains driven by the execution of the brand’s magic formula involving brand buzz, value, category entry points and digital engagement. Taco Bell’s competitive advantages in innovation, value leadership at compelling price points and strong consumer connection are clear reasons why the brand remains a category of one when it comes to winning with consumers in any economic environment.”

Gibbs said Taco Bell gained momentum in the quarter due to the launch of Cheesy Street Chalupas, the first innovation from the company’s canteen chicken platform, as well as the reintroduction of Cheez-It products. Additionally, a strategic move made near the end of the quarter to make breakfast optional for its franchise partners was well received. Moving forward, Gibbs said Taco Bell plans to reintroduce breakfast with “a bolder, more distinctive Taco Bell approach.”

In Yum! Brands’ KFC division, strong sales growth was achieved in Africa, Latin America, the Caribbean and parts of both Europe and Asia. But in other geographies, including the United States, KFC has struggled.

Operating profit at KFC totaled $339 million in the third quarter, down 2% from the same period a year ago. Sales totaled $785 million, up 12% from a year ago.

“In the US, limited-time offers underperformed expectations due to a more intense competitive environment, particularly within the chicken QSR category,” Gibbs said. “In Q4, the team will focus on strengthening its value proposition and has recently introduced boneless innovation like original recipe chicken tenders. Additionally, the team will capitalize on the success of the KFC Rewards membership growth, which has contributed to digital sales growth over 20% from last year.”