Taco Bell has been a golden goose for Yum in recent quarters, helping to offset ongoing issues at Pizza Hut. The chain's innovative menu items, like the Naked Chicken Chalupa, have lured in diners and boosted sales.
Restaurants rely heavily on quirky menu items to drive sales and attract new customers. Taco Bell, in particular, has had a strong track record, with several of its limited-time additions becoming part of its permanent menu.
Despite the weaker-than-expected same-store sales at Taco Bell, the company exceeded analysts' earnings and revenue expectations during the quarter.
Yum posted earnings excluding items of 68 cents a share on revenue of $1.45 billion. Yum Brands had been expected to post earnings of 61 cents per share on $1.42 billion in revenue, according to Thomson Reuters estimates.
Net income from continuing operations fell to $206 million, or 58 cents per share, from $266 million, or 64 cents per share a year earlier.
The company has made strides to bolster sales at its pizza division. In April, CEO Greg Creed said the company would invest $130 million towards upgrading equipment, improving restaurant technology and boosting advertising through 2018 at its Pizza Hut restaurants.
The company struck a deal with franchisees in May for this effort, which is aimed improving brand alignment and accelerating improvements. In the latest period, Yum took steps towards these goals, and reported a $12 million charge related to investments it's making in digital initiatives at its pizza division.
Pizza Hut has already announced that it will hire 14,000 delivery drivers by the end of 2017 and launched a loyalty program on Tuesday. The company declined to say how much of the investment money has gone toward these two initiatives.
In 2015, Yum announced that it would invest $180 million into KFC to help boost deflated sales. The chicken chain has seen 12 quarters of same-store sales growth since third-quarter 2014.
Yum chains compete with fast-food giants McDonald's, Restaurant Brands, and Dunkin' Brands.