Dive Brief:
- Yum Brands is leveraging its loyalty programs and artificial intelligence (AI)-driven personalization strategies to boost digital sales and sustain its growth trajectory, as discussed during a recent Q4 2024 earnings call.
- The company is consolidating its digital operations through Byte by Yum, a proprietary software-as-a-service (SaaS) platform, as detailed in a press release issued on Thursday.
- Enhanced personalization will be a pivotal advantage of this platform. CFO Chris Turner articulated during the earnings call, “We anticipate scaling AI-driven personalization across all brands and digital channels, fostering more relevant and engaging consumer interactions through Byte’s continually expanding capabilities.”
Dive Insight:
Yum Brands is poised to fulfill its aspiration of achieving 100% digital sales, supported by robust loyalty programs and data-driven customer insights, which will also enhance customer experience (CX).
In fiscal 2024, Yum Brands reported a notable 15% increase in digital sales, with digital channels contributing to over 50% of the company’s total sales mix, as indicated in their earnings report. This digital revenue encompasses orders placed online as well as transactions conducted through in-store electronic kiosks.
The digital strategy appears to be bearing fruit, as Yum’s global sales experienced an 8% year-over-year growth in the fourth quarter. Within this period, KFC saw a 6% increase, Taco Bell achieved a substantial 14% rise, and Pizza Hut recorded a 3% growth. Additionally, global comparable restaurant sales rose by 1% for the quarter.
CEO David Gibbs emphasized that the potential for loyalty program growth will be significantly enhanced through increased digital engagement. He stated, “Loyalty remains a high potential growth area, and in 2025 we will sharpen our focus on optimizing program effectiveness.” Gibbs further noted that this will involve expanding the adoption of loyalty technology across Yum’s portfolio to deepen consumer engagement and drive repeat visits through personalized, data-driven experiences.
A prime example of this strategy is KFC, which is currently expanding its global loyalty program into 14 markets. Early data indicates that loyalty program members exhibit a 12% increase in visit frequency post-enrollment.
The Byte platform is expected to positively impact customer experience as well, according to Turner. The Byte digital ordering system streamlines the process for customers placing digital orders and simplifies order fulfillment for staff, enhancing operational efficiency.
The integration of operations, guest experience, and consumer data will fuel Yum’s AI and personalization strategies, as highlighted by Turner. In the U.S., the company is utilizing AI technologies to hyper-personalize customer messaging and experiences. Early tests of AI-driven email promotions have shown remarkable results, producing double the consumer engagement compared to traditional marketing methods.
“This breakthrough is just the beginning,” Turner asserted, expressing confidence in the scalability of AI-driven personalization across all brands and digital channels, which will enable the company to foster more relevant and engaging interactions with consumers.
As Yum Brands continues to innovate within its digital framework, the combination of loyalty programs, advanced technology, and data analytics is set to significantly enhance the customer journey. With the growing importance of personalized experiences in the fast-food industry, Yum Brands is strategically positioned to not only meet but exceed customer expectations, driving brand loyalty and increasing overall sales.
