YUM! BRANDS INC. $73 (New York symbol YUM; Aggressive Growth Portfolio; Consumer sector; Shares outstanding: 442.9 million; Market cap: $32.3 billion; Price-to-sales ratio: 2.6; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.yum .com) will soon start selling breakfast foods and coffee through 5,500 of its Taco Bell outlets in the U.S.
The new breakfast menu features the Waffle Taco, a warm waffle wrapped around either bacon or sausage, with scrambled eggs, cheese and maple syrup. The A.M. Crunchwrap sandwich holds sausage, eggs and cheese inside a soft tortilla shell.
These foods are sure to draw a lot of criticism from health advocates. But that may be part of Yum’s plan to attract media attention and spur sales.
For example, in 2010 the company’s KFC chain launched its Double Down sandwich. Instead of bread or a bun, the Double Down uses two slices of breaded, deep-fried chicken filets and is stuffed with bacon and processed cheese drowned in a “secret sauce.” Despite warnings from nutritionists, the Double Down became a big seller.
Taco Bell faces strong competition from larger fast-food chains like McDonald’s. However, sales of breakfast items are growing faster than lunch or dinner meals. Expanding into this market should help Taco Bell reach its goal of doubling its sales and adding 2,000 restaurants by 2022.
Yum Brands is a buy.
