By Juveria Tabassum

(Reuters) -Yum Brands beat estimates for first-quarter comparable sales on Wednesday, driven by strong performance at its Taco Bell stores in the U.S. and KFC outlets internationally.

The results come at a time when consumer spending on dining out slowed in February and March due to sticky inflation and worries about the Trump administration’s tariff policies.

However, visits to Tex-Mex chain Taco Bell rose 3.7% in the first quarter in the United States, compared with a 1.6% drop in the overall quick-service restaurants category, according to research firm Placer.ai.

"I know this is a tough operating environment for everybody else in the industry. It’s just probably an environment that favors Taco Bell," outgoing CEO David Gibbs said on a post-earnings call.

The taco chain spruced up its value meal offerings at the start of the year, adding a $9 price point for five menu items with U.S. consumers on the lookout to keep their dine-out spending in check.

Taco Bell saw an increase in online orders from all income groups in the country, leading to U.S. same-store sales growth of 9% in the quarter, the company said.

Yum Brands’ worldwide comparable sales in the first quarter ended March 31 increased 3%, beating estimates of a 2.76% rise, according to data compiled by LSEG.

The company’s KFC International division, which together with Taco Bell makes up more than 80% of the company’s core operating profit, also reported comparable-sales growth of 3%, handily beating estimates of 1.6%.

"Yum’s performance was solid despite challenges, though recent success has elevated expectations," CFRA Research analyst Alex Fasciano said.

While total sales growth in China, its biggest market, slowed to 3% in the quarter from the preceding three-month period, Yum Brands said KFC International was recovering from the impact of boycotts related to the Middle East conflict that weighed on Western brands last year.

The Pizza Hut parent reiterated its long-term annual core operating profit target of an 8% increase, adding that growth would be higher in the second half of the year.

On an adjusted basis, Yum Brands earned $1.30 per share in the first quarter, compared with estimates of $1.29.