Quick service restaurant group Yum! Brands Inc. (Yum!), including Kentucky Fried Chicken, Taco Bell, and Pizza Hut, enjoyed a solid 3Q23. Network-wide sales were up by 10% to USD 8.6bn.
Yum has a stable credit outlook for now. Management reported that 3Q23 momentum has continued into 4Q23, broadly confirming the short-term outlook for the first half of FY24, which offers some support for a further modest deleveraging.
While management has pointed to an increasingly tougher consumer backdrop, the market anticipates that the company can adapt menu offerings. The attractive range of value offerings should continue to help support stable operating performance.
Yum is a well-established HY issuer and several selected bonds offer an attractive risk-reward opportunity. One can expect its bonds to be less volatile than those of more cyclical issuers and see select notes as appealing for long-term-oriented and income-seeking investors.