TRICON RAISES EARNINGS GUIDANCE

Improved Same-Store Sales for Chains Boost Expectations

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CHICAGO (AdAge.com) -- Tricon Global Restaurants raised its full-year earnings guidance on strong revenue and same-store sales after it beat Wall Street's first-quarter earnings estimate by 3 cents.

The Louisville, Ky.-based company raised its earnings guidance to a range of $3.63 to $3.70 per diluted share, from $3.56 to $3.63.

$1.6 billion in revenue
Revenue from Tricon's KFC, Pizza Hut and Taco Bell restaurant chains increased 7% to $1.6 billion, up from $1.5 billion for the same period last year. Blended sales at stores open at least one year improved 5%, led by an 8% gain at Taco Bell, 5% at KFC and 2% at Pizza Hut.

Tricon said it could

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not provide same-store sales for its "multibranded concepts" -- for example, stores combining Taco Bell and KFC under one roof -- and executives suggested using only overall blended sales as an indicator of those restaurants' sales. Systemwide sales climbed to $5.2 billion, up 5% quarter over quarter.

Tricon Chairman-CEO David Novak forecasted full-year blended same-store sales to grow 2%, fueled by improved operations and second-half menu introductions.

"We're tired of being bottom-tier and middle-tier operators," Mr. Novak said regarding Tricon's service improvement programs during a call with analysts today. While he said the chains still have work to do, he said the company will continue to expand its program to improve customer satisfaction.

New products
Mr. Novak wouldn't specify what new products Tricon will roll out, but items in the chains' testing pipeline include Border Bowls rice and meat dishes at Taco Bell, and Cinnaparts cinnamon-topped bread and Grabbers meat-and-cheese-filled rolls at Pizza Hut.

The chain expects to close its acquisition of Yorkshire Global Restaurants in the coming weeks and is considering additional fast-casual opportunities, including Asian food, pasta and sandwiches that can complement existing chain assets.

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