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Yum Brands is all in on capturing the Gen Z market, its CEO David Gibbs announced during his final call as chief executive on Tuesday.
Gibbs, who will be succeeded by CFO Chris Turner in October, told investors during the company’s Q2 earnings call that he believes the company is employing the right innovation strategy as its brands double down on trending drink and sauce concepts aimed at younger customers.
The parent company of Taco Bell, KFC, Pizza Hut, and Habit Burger & Grill, reported its quarterly earnings before the bell. With $1.44 adjusted earnings per share and $1.93 billion in revenue, it narrowly missed analyst expectations.
Taco Bell’s Live Más Café model, focused on customizable drinks, will be expanding this year, as will KFC’s chicken strip and sauce concept, Saucy, and its Kwench line of drinks, Gibbs said. Both chains’ specialty spinoffs, designed to attract Gen Z customers, have been driving increasing sales, according to the earnings call.
In March, Taco Bell announced it would launch twice as many new menu items in 2025 as it did in 2024, focusing largely on limited-time offerings to drive consumer excitement. Combined with its December launch of the Live Más Café, the new launches are panning out well for the quick-service conglomerate.
“The café was inspired by Gen Z’s love for curated, customizable drinks and offers over 30 signature beverages from Churro Chillers and specialty coffees to Refrescas and Dirty Mountain Dew Baja Blast Dream sodas,” Gibbs told investors during the call, adding that the test store saw “a significant increase in transactions while more beverage users are visiting the café and choosing to dine in.”
Data from the location intelligence and foot traffic data software firm Placer.ai found that Taco Bell carried Yum Brands’ US foot traffic in Q2. New, value-driven menu offerings drove Taco Bell’s visits up 2.6% year over year, with average visits per location growing by 1.5%, the firm found.
Yum Brands announced last month it would expand its Live Más Café model within existing Taco Bell restaurants to 30 locations across Southern California and Texas by year-end.
“While Taco Bell is sort of leading the way on getting into the new category entry points on beverages for Yum!, we see the same opportunity for KFC,” Gibbs said. “And KFC has their own program, Kwench, which is now going into test. I’m very excited about the impact that that can have on the business.”
KFC’s Kwench line of drinks, including refreshers, shakes, and iced coffees, is being tested at select locations, primarily in Australia and the UK. Gibbs did not elaborate on whether or when the new drink offerings would be tested in the US market.
Despite soft numbers in the US, KFC’s international business in South Africa, Spain, Canada, and Japan strengthened the chain’s sales in Q2.
Business Insider previously reported that the first week of KFC’s “Kentucky Fried Comeback” campaign in the US market saw a record-breaking surge in KFC Rewards sign-ups, unprecedented digital traffic for the chain, and a marked improvement in foot traffic from the week prior, suggesting the turnaround might have some early traction.
In an effort to attract younger customers in the States, KFC also plans to continue leveraging its new Saucy restaurant concept, focusing on customizable chicken tenders and a variety of dipping sauces. Gibbs announced plans to open “several additional test units” by year’s end near the existing Saucy location in Orlando, which opened in December.
“We continue to be encouraged that weekly sales have averaged materially higher than the pre-existing KFC since opening and that we’re connecting with a younger demographic as 1/3 of Saucy consumers are under age 30,” Gibbs said during the Tuesday call. “We have a lot of learning ahead of us, and we are eager to leverage the invaluable consumer insights relevant for our larger KFC US system.”
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