After Wednesday’s closing bell, Yum Brands (YUM), known for its Taco Bell, KFC, and Pizza Hut concepts reported second-quarter earnings of $224 million, or $0.45 per share. That’s a pretty sharp increase from the $214 million, or $0.39 per share, it turned in during the same period last year, and $0.03 above analysts’ expectations.

Strong growth in the international division, particularly in China, were at least partially to thank for the strength of the quarter. KFC is the number-one consumer brand in China, above even global behemoths Nike (NKE) and Coca-Cola (KO). Yum Brands is the largest restaurant chain in the world, with over 14,000 of their 34,000 stores located outside the United States, primarily in Asia.

Shares were down in after-hours trading, which would seem to suggest that some were expecting the company to beat estimates, and that that expectation was built into the stock price, creating a “sell-on-the-news” effect.

That being said, Yum Brands’ worldwide same-store growth in the period was 4% - a respectable number, given the fact that comps were up 2% in the comparable period last year. It’s consistent with what some of the other big-name fast food chains have been reporting: Burger King (BKC), for example, reported a worldwide comp increase of 5.8% its most recent quarter; most recently, McDonald’s (MCD) reported a global comp increase of 7.4%.

Fast food chains, with their emphasis on low prices, are increasingly attractive to consumers whose buying power is dwindling. More upscale chains, including Benihana (BNHN) and Ruth's Hospitality (RUTH) both hit year-to-date lows under $10 on July 15.

Seeing management raise the earnings bar for 2008 was also a pleasant surprise - though the fact that the increase (from $1.87 to $1.89 per share) was only enough to bring guidance inline with the Street’s expectations makes it somewhat less encouraging. I don’t expect to see the sell side aggressively ratcheting up its numbers in the near-term.

But it pays to take a closer look at the company’s performance in the United States: On the one hand, comps were up 2%; on the other, the operating margin slipped to 13.7%, as compared with 15.6% in last year’s second quarter.

The rising cost of commodities certainly contributed to the slide, and I don’t see that changing in the near-term. In fact, the cost of food supplies and other items has me skeptical of management’s decision to raise the full-year earnings bar. They -- and shareholders -- could find themselves disappointed.

But I do think Yum Brands will do well over the long haul. But in the near-term, I intend to remain on the sidelines.

Yum closed at $36.47, up $1.01 or 2.85%. However, the shares were down almost $2 in after hours trading.

For more on Yum Brands, check out Hoof & Boo's always astute report.