Taco Bell Shines as Yum, Restaurant Brands Struggle; Marqeta Shares Sink 30%

Earnings Misses and Market Challenges Pressure Yum Brands, Restaurant Brands, and Marqeta

Today’s earnings reports from Yum Brands, Restaurant Brands International, and Marqeta reveal a challenging environment for major consumer and payment players, each grappling with specific industry pressures. Yum and Restaurant Brands, two giants in the global fast-food industry, face mixed results, while digital payments firm Marqeta contends with a stock price tumble following a disappointing outlook. Here’s a closer look at each company’s results, the challenges they face, and the potential implications for investors.

Yum Brands Faces Global Headwinds, Taco Bell Shines as Sales Driver

Yum Brands, the parent of KFC, Pizza Hut, and Taco Bell, missed third-quarter earnings expectations, reporting adjusted EPS of $1.37 versus an anticipated $1.41, and revenue of $1.83 billion, just shy of the $1.90 billion forecast.

Same-store sales dipped 2% due to weak performances from KFC and Pizza Hut, with U.S. KFC sales down 5% and Pizza Hut’s international sales slipping 6%. CEO David Gibbs attributed the decline to “political conflicts and challenged consumer sentiment,” affecting KFC’s market share, especially against competitors like Popeyes.

Taco Bell, however, bucked the trend, with same-store sales rising 4% as consumers embraced its value-oriented offerings. While the challenges facing KFC and Pizza Hut may impact near-term growth, Taco Bell’s continued appeal provides a strong anchor for Yum’s portfolio.

Restaurant Brands International Stumbles on U.S. Sales, Tim Hortons Offers Hope

Restaurant Brands International (QSR), the company behind Burger King, Popeyes, Tim Hortons, and Firehouse Subs, also fell short of Wall Street’s expectations. The company posted 93 cents in adjusted EPS against a 95-cent estimate, and revenue of $2.29 billion, just below the $2.31 billion target.

Overall, same-store sales rose just 0.3% as Burger King, Popeyes, and Firehouse Subs struggled with domestic declines. Burger King’s U.S. same-store sales fell 0.7%, highlighting the uphill battle for its turnaround. Popeyes dropped 4% domestically, despite adding boneless wings in June, while Firehouse Subs reported a surprising 4.8% decline.

Tim Hortons emerged as a standout, with Canadian same-store sales up 2.3%. Though Tim Hortons offers a silver lining, Restaurant Brands’ future hinges on reinvigorating Burger King and Firehouse Subs to sustain growth.

Marqeta’s Stock Takes a Hit as Revenue Outlook Falls Short of Expectations

Digital payments firm Marqeta saw its shares plummet by over 30% after issuing a disappointing forecast for Q4, projecting revenue growth of 10-12%, well below Wall Street’s expected 17%. For Q3, Marqeta posted revenue of $128 million, narrowly missing the $128.1 million estimate, and a loss per share of 6 cents versus the anticipated 5-cent loss.

While processing volumes rose 30% year-over-year, Marqeta attributed its cautious outlook to increased scrutiny within the banking sector and adjustments from key clients. The company is attempting to broaden its offerings with Marqeta Flex, a buy now, pay later (BNPL) product compatible with Mastercard and Visa, but the stock remains under pressure as macroeconomic challenges cloud its growth trajectory.

Outlook for Investors: Mixed Signals with Opportunities and Risks

Yum Brands: Mildly optimistic on Taco Bell’s success, though KFC and Pizza Hut’s struggles could drag on results.

Restaurant Brands International: Cautious as Burger King’s U.S. turnaround and Firehouse Subs’ recovery remain in question.

Marqeta: Bearish due to weaker guidance and market headwinds, despite solid growth in processing volume.

Investors may find selective opportunities within these stocks but should be mindful of broader economic pressures impacting each company’s performance.