Yum Brands, the owner of KFC, Taco Bell and Pizza Hut, is seeing increased marketing performance thanks to new bets on artificial intelligence (AI), executives said when discussing the company’s Q3 earnings results with analysts.
“This quarter, we successfully launched personalized AI-driven marketing campaigns that, relative to traditional digital marketing campaigns, generated significant increases in consumer engagement, leading to increased purchases and a reduction in consumer churn,” said Yum CFO Chris Turner on the call with investors earlier this week.
Turner declined to break out specific metrics stemming from Yum’s AI-powered marketing initiatives but offered additional color into how the fast food giant’s “AI factory” operates. For example, Taco Bell can accrue data from points of sale and digital menu boards in stores, as well as leverage the chain’s popular loyalty program and app. Linking these sources of intel together and enhancing them with AI allows for more personalized promotions and a refined picture of the customer for other marketing purposes.
Yum has been running AI pilots across its three largest brands in the U.S. and believes these capabilities will be “broadly and easily scalable” while providing an overall stronger return on marketing investment, according to Turner.
“We’ll continue to bring it to life across the brands and across markets as we progress,” Turner said of AI.
Separately, Taco Bell is expanding its AI voice technology at drive-thrus in the U.S., aiming to implement the solution in hundreds of stores by the end of 2024. Consumer response has been “very positive” so far, Turner said. Other restaurant brands have received backlash from relying on automated technology that can offer wonky and imprecise responses. Yum, in total, has over 40 AI-driven projects in the works.
Yum’s AI bullishness comes as Taco Bell continues to outperform the rest of the company’s portfolio. Same-store sales at the Mexican chain rose 4% year over year in Q3 and digital transactions soared 30%.
Taco Bell in the quarter also made breakfast optional for franchisees, providing it greater flexibility to spend marketing dollars on growth drivers like its Cantina Chicken and value menus, CEO David Gibbs said on the earnings call.
