Yum! Brands reported lower second quarter earnings after taking a $35 million charge stemming from its court battle over Taco Bell’s famous talking Chihuahua.
Last month, a jury awarded $30 million to two Michigan men who sued the restaurant chain, accusing it of stealing their idea for an advertising campaign featuring a talking Chihuahua. (Xtra, June 10)
The pretax charge dragged Yum!’s income down 13% to $122 million for the quarter compared to $140 million one year ago. The quarter ended June 14.
The company posted net income of $239 million for the first six months, down 9% from $264 million one year ago.
In its earnings report, the company said it planned to vigorously appeal the verdict and if unsuccessful, intended to seek reimbursement from “appropriate parties.”
Taco Bell, Irvine, CA, has said that the Chihuahua character was created by ad agency TBWA/Chiat/Day in Los Angeles.
Yum!, Louisville, KY, is the parent of KFC, Pizza Hut and Taco Bell.
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