On November 1, 2023, a Pizza Hut store in Austin, Texas.
Brandon Bell | Getty Images
Yum Brands Quarterly profit and revenue reported on Wednesday missed analysts’ expectations as Pizza Hut and KFC struggled to attract customers.
The company’s shares fell nearly 4% in early trading.
The company’s report compared with Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: Adjusted $1.15, $1.20 expected
- Revenue: $1.6 billion, $1.71 billion expected
Yum reported first-quarter net income of $314 million, or $1.10 per share, up from $300 million, or $1.05 per share, in the same period last year.
Excluding investment losses and other items, the company earned $1.15 per share.
net sales down 3% to $1.6 billion. Yum Brands’ global same-store sales also fell 3% this quarter, lower than StreetAccount’s forecast of 0.2% same-store sales growth.
Of Yum Brands’ three major brands, only Taco Bell reported same-store sales growth. The Mexican-style chain’s metric rose 1% in the quarter. Taco Bell’s U.S. same-store sales grew 2%, while its international business fell 2%. Executives say the chain is off to a strong start in the second quarter.
KFC’s same-store sales fell 2% in the quarter. The decline in the United States was even greater, down 7%. However, same-store sales at the chicken chain’s international division fell just 2% due to growth in China, its largest market. A year ago, KFC’s quarterly same-store sales grew 9%.
Pizza Hut reported a 7% decline in same-store sales as demand lagged in both domestic and international markets. The pizza chain’s U.S. restaurants were down 6%, while its international unit was down 8%. The chain faces tough challenges compared with the same period last year, when Pizza Hut reported a 7% increase in same-store sales, driven by newly launched Melts.
Overall, Yum Brands’ business is struggling, and the company blames some of its blame on its Middle Eastern restaurants. It was unclear whether the hit came from boycotts related to the Gaza war that affected other chains or other disruptions.
“While the impact of the conflict in the Middle East is diffuse and difficult to measure, we have begun to see improvements in the most affected markets,” Yum CEO David Gibbs told analysts on the company’s conference call.
Yum Brands’ digital business was one of the few bright spots this season. The company said its digital sales accounted for more than 50% of sales for the first time.
In the second quarter, Yum Brands plans to expand an artificial intelligence pilot that accepts drive-thru orders. Initial testing is taking place at five Taco Bell locations in California; soon, 35 restaurants will try the technology.
Yum!’s global footprint grew 6% this quarter, thanks to the opening of 808 new restaurants.
