Taco Bell's Breakfast Innovation Continues

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

Breakfast battleground
Yum’s Taco Bell launched its breakfast menu in March of 2014 with two items: the Waffle Taco and the A.M. Crunchwrap. Now, only 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.

No need for excuses
While McDonalds 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 inclimate Q1 weather that companies such as Chipotle Mexican Grill Inc CMG and Brinker International Inc 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 (SSS) in Q1.
Yum has recently undertaken measures to right the KFC ship in China, where SSS 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 Corp SBUX.
Pizza Hut, Yum’s third major brand, posted a 1 percent drop in SSS in Q1 in an environment of fierce competition from the likes of Domino’s Pizza Inc DPZ and Papa John’s International Inc PZZA.