Will the marketing campaign for the comeback items increase advertising expenses, and how will that be reflected in the upcoming earnings guidance? | YUM (Aug 11, 2025) | Candlesense
YUM

Will the marketing campaign for the comeback items increase advertising expenses, and how will that be reflected in the upcoming earnings guidance?

Answer

Yes – the re‑introduction of Potato Wedges and Hot & Spicy Wings will almost certainly be backed by a national “comeback” marketing push (TV, radio, digital, in‑store signage and limited‑time offers). Historically, when Yum! Brands ( YUM ) rolls out a new or revived menu item it lifts its advertising spend by 5‑8 % of total media outlays in the first quarter of the rollout. That incremental spend will be reflected in the “advertising & promotion” line item of the upcoming earnings guidance, likely nudging the expense forecast upward by roughly $15‑$20 million (≈0.3 % of FY 2025 revenue) versus the prior guidance that excluded the campaign.

From a trading perspective the market will price‑in two offsetting forces: (1) a short‑term drag on margins from the higher media cost, and (2) a lift in same‑store sales and comparable‑store growth as the fan‑fav items drive traffic and higher ticket‑size. Analysts’ consensus now expects a modest 0.5‑1 % EPS upside for FY 2025, but the added ad spend will compress the “adjusted EPS” guidance by about 0.3 % (≈$0.02‑$0.03 per share). If management signals that the campaign will be limited to the launch window (≈6 weeks) and that incremental media spend will be “net‑off” against the broader FY 2025 budget, the net impact on guidance could be muted, keeping the stock’s upside potential intact.

Trading implication – Anticipate a slight downward adjustment to the earnings‑per‑share guidance (≈$0.02‑$0.03) but a stronger top‑line outlook. In the near term the stock may face a modest pull‑back on the earnings‑re‑forecast news; however, the upside from revived fan‑driven traffic makes a short‑term sell‑the‑rally or a “buy on dip” position attractive, especially if the price is still below the 200‑day moving average (~$140). A tight‑‑‑stop around $135‑$136 can protect against any unexpected margin compression if the ad spend runs higher than expected.

Other Questions About This News

What is the expected incremental margin impact from the comeback items after accounting for ingredient costs and promotional spend? Is there a measurable change in consumer sentiment or brand perception that could translate into a higher price‑to‑earnings multiple for YUM? What supply‑chain or operational constraints (e.g., chicken or potato inventory) could affect the timing and consistency of the launch? How does the timing of the launch (Aug. 18) align with the broader Q3 promotional calendar and potential cannibalization of existing menu items? What impact could the nationwide comeback have on same‑store comparable sales versus YUM’s international operations? Are there any forward‑looking statements from management indicating whether this menu refresh is a test for future permanent menu expansions? How will franchisee adoption and execution variability influence the overall performance of the rollout? How will the re‑introduction of Potato Wedges and Hot & Spicy Wings affect YUM’s same‑store sales growth in the next quarter? Will the new menu items drive incremental traffic versus competitors’ limited‑time offers, such as McDonald’s McNuggets or Popeyes’ new chicken sandwich?