Stop us if you’ve heard this one before — Taco Bell had a strong quarter.
Parent company Yum Brands reported its third quarter results before the market opened Tuesday, which exceeded Wall Street expectations in large part, once again, because of Taco Bell’s performance. While much of the quick-service category is limping through a challenged macroeconomic environment impacting lower- and middle-income consumers, Taco Bell turned in 9% systemwide sales growth and U.S. same-store sales growth of 7%.
“The Taco Bell business continues to take share in the U.S. A lot’s been written about the consumer, (but) we’re not seeing consumer pullback in the Taco Bell business. We do think the consumer in the U.S. is cautious but incredibly resilient,” Yum Brands chief executive officer Chris Turner said during the company’s earnings call Tuesday morning.
He added that the consumer expects three attributes from Taco Bell — craveable food, a convenient and easy experience, and unbeatable value.
“Taco Bell provides the combination of those three in a way that no other brand can,” Turner said.
In the third quarter, the chain launched a host of innovations, for instance, including a lineup of Refrescas (fruity, caffeinated beverages), Mountain Dew Baja Midnight, Cheesy Street Chalupas, the return of its Decades Menu, a sweet Chipotle BBQ sauce to complement its Crispy Chicken offerings, and the continuation of the Luxe Value Menu.
“You add those to the tremendous core that we have, the craveability is clear,” Turner said. “Then, of course, Taco Bell has always provided the best value.”
The chain’s Luxe Box offerings include $5, $7, and $9 options and were first introduced last year. They have helped establish a strong position for the brand as the QSR category becomes more value focused. The chain also began testing a value menu in Q3 with items for $3 or less during the quarter. As a result, Taco Bell’s growth during the period came from all income cohorts, as well as “more younger consumers and families,” Turner said.
“It’s that combination, coupled with the Taco Bell buzzy brand, that is resonating with consumers and delivering what they need,” he added.
Live Más Café, Taco Bell’s in-restaurant beverage concept, has also continued growing and is also expected to reach 30 locations this year. It will continue to add new markets with a national footprint goal targeted. The concept has so far bolstered beverage attachment rates and generated new customers.
“Assuming we get the kind of results that we expect to see in that pilot, you can expect us to lean into growth around the system,” Turner said. “That’s one of the drivers of the long-term growth plan for Taco Bell.”
“We are on track or ahead of our plan to get the $3 million (average unit volumes) by 2030, and you’ll continue to see those layers come to life in 2026,” Turner said.
Also, despite beef inflation, which has hit historic levels in recent months, Taco Bell expects full-year restaurant-level margins to fall within its guidance of 24%. These stronger unit economics are expected to accelerate development in the Taco Bell system, both in the U.S. and internationally. Turner said plenty of white space exists and the chain is pulling from its sister brand KFC’s robust development playbook to understand exactly where those opportunities exist.
“We think there can be at least 75,000 KFCs around the globe,” he said. “There’s white space in just about every market. On the Taco Bell side as well, if you look at what happened in the most recent quarter, (the) acceleration of same-store sales growth globally gives us a lot of faith in the pipeline that we see for Taco Bell International in 2026 and beyond.”
Meanwhile, in the U.S., Turner said Taco Bell is providing “durable, defensive, long-term growth via sustainable market share gain.”
“Taco Bell (is) one of the most exceptional brands in the U.S.,” he said.
Contact Alicia Kelso at Alicia.Kelso@informa.com
Follow her on TikTok: @aliciakelso
