Taco Bell’s Winning Streak Comes to an End as KFC’s Turnaround Gains Momentum
For the past two years, Taco Bell has been one of the hottest names in fast food, posting quarter after quarter of strong sales growth. That run has now hit a speed bump. Parent company Yum! Brands reported third-quarter results on 3 November, revealing that Taco Bell’s U.S. same-store sales fell 4%, ending a long winning streak. Meanwhile, KFC kept growing, powered by strong international demand and rapid expansion. Here’s what happened and what it means for both brands.
Taco Bell’s First Decline in Years
After eight straight quarters of U.S. same-store sales growth ranging from 4% to 9%, Taco Bell’s U.S. same-store sales dropped 4% in the third quarter of 2026. That’s a sharp turnaround from the same period last year, when they grew 7%. Overall, Taco Bell’s division system sales fell 2%, and operating profit declined 5%. The brand’s international business held up better, with same-store sales up 5%.
What Caused the Slump?
Yum! blamed the drop on an industry-wide food safety issue during the quarter. Taco Bell was linked in early July to a multistate cyclosporiasis outbreak, an illness caused by a parasite often spread through contaminated fresh produce. According to foot traffic data from Placer.ai, weekly visits to Taco Bell restaurants fell by about 20% at the peak of the outbreak. Executives said some lighter and occasional customers have still not fully returned, with their visits at roughly 95% of previous levels.
Signs of a Rebound
The good news for Taco Bell is that sales appear to be bouncing back. CEO Chris Turner said Taco Bell’s U.S. same-store sales strengthened week after week, and since the end of September the brand has been outperforming the wider quick-service restaurant industry. So far in the fourth quarter, same-store sales are up about 1%, and around 3% over the most recent four weeks. The company credits value deals like its combo boxes, along with loyalty promotions and partnerships, for helping bring customers back.
KFC Keeps Growing
While Taco Bell stumbled, KFC continued to expand. The chain’s system sales grew 6%, excluding currency changes, supported by 7% growth in new restaurants and a 1% rise in same-store sales. KFC now accounts for 62% of Yum!’s divisional operating profit, excluding Pizza Hut, and it surpassed 35,000 restaurants worldwide after opening 878 new locations during the quarter.
KFC’s strongest growth came from outside the U.S. and China. In those international markets, system sales rose 9% and same-store sales climbed 4%, with standout performances in the Middle East, India and the United Kingdom. KFC China grew system sales by 3% thanks to new restaurants, though same-store sales declined.
KFC Still Has Work to Do in the U.S.
KFC’s momentum isn’t universal. In the U.S., KFC system sales fell 6% in the quarter, and the brand’s overall 1% same-store sales growth came in below analysts’ expectations of about 2%. Still, with international markets accelerating and new restaurants opening at a rapid pace, KFC has become the main engine of Yum!’s growth.
Yum! Completes the Pizza Hut Sale
The quarter also marked a major change for the company. Yum! completed the sale of its Pizza Hut business, recording a pre-tax gain of about $1.7 billion. The company now focuses on three brands: KFC, Taco Bell and Habit Burger & Grill. Overall, Yum!’s third-quarter revenue rose 4% to $2.05 billion.
What It Means Going Forward
Taco Bell’s slump appears to be tied to a one-off event rather than a lasting loss of popularity, and early fourth-quarter numbers suggest customers are returning. If that recovery continues, the brand could quickly get back on track. KFC, meanwhile, is giving Yum! a steady boost through global expansion, even as it works to improve its U.S. performance.
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