Yum! Brands’ Stock to Receive Boost with Return of KFC’s Double Down

Yum! Brands' KFC chain is set to reintroduce its infamous Double Down sandwich to their menu this week, a decision which may not be welcomed by people's ateries but is likely to be welcomed by the company's stock—if only temporarily.

The double down sandwich, which uses chicken filets as buns instead of bread, would be filled with bacon and cheese. The highly popular sandwich was first introduced by KFC nearly a decade ago, and is sure to be a fan favorite again now that it has returned.

When it was first announced on April 1, 2010, the timing of the KFC Double Down gave many the impression that it was an April Fools' joke. However, when it did roll out to restaurants, it quickly gained a rabid fan following and even earned a semi-permanent place on the menu until the end of 2014.

Fast-forward over a decade and the world is a different place. No shock-food item is out of scope, from cronuts to Burger King's Quadruple BK Stacker and all the various iterations of the Double Down, like the Double Down Dog and the Famous Bowl. Despite this, the Double Down's original buzz endures, proving it retains an impressive amount of staying power despite the passage of time.

It could be a challenge to recreate the success of the Double Down. The chicken sandwich competition has become very intense, making it more difficult for KFC to re-enter the market. Nevertheless, if the franchise is successful in their attempt to replicate their previous success, investors could potentially be in for a pleasant surprise.

From the introduction of the Double Down in April 2010 until it was eventually taken off the menu in 2014, Yum! stock rose by 87%, compared to the S&P 500's 77% increase and a 40% climb for McDonald’s (MCD). But subsequently, the performance of Yum! stock has been weaker. From 2015 onwards, the company's stock has gained 143%, while McDonald’s stock rose by 185%. During the past 12 months, Yum! shares rose by an approximate of 5.7%, which is roughly half of the 10.9% growth in McDonald’s stock. Furthermore, Yum! has lagged behind McDonalds MCD +1.85% over the past five years, as well as trailed both McDonald’s shares and the S 500 over the 10 year period.

The Double Down, a temporary offering from KFC, has some seeing a return to Yum!'s golden age. However, the restricted time period of the offering appears to be limiting its potential impact.

KFC is Yum!'s largest division in terms of revenue, making up over 40% of the company's overall income. While investing in Yum! and McDonald's has been a successful venture compared to the broader market - the two are both in the green year to date and over the past 12 months - it remains to be seen whether the Double Down's popularity can be sustained in the long term.

The S&P 500 has significantly underperformed both Yum! and McDonald's over the past two, three, five, 15 and 20 years, potentially pointing to the success of their respective business models over the long run.