A Pizza Hut store is seen on November 1, 2023 in Austin, Texas.
Brandon Bell | fake images
Yum brands On Wednesday it reported quarterly earnings and revenue that missed analyst expectations as Pizza Hut and KFC struggled to attract customers.
The company's shares fell almost 4% in early trading.
Here's what the company reported compared to what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: $1.15 adjusted vs. $1.20 expected
- Revenue: $1.6 billion vs. $1.71 billion expected
Yum reported first-quarter net income of $314 million, or $1.10 per share, down from $300 million, or $1.05 per share, a year earlier.
Excluding investment losses and other items, the company earned $1.15 per share.
net sales fell 3% to $1.6 billion. Yum's global same-store sales also fell 3% in the quarter, missing StreetAccount estimates of same-store sales growth of 0.2%.
Among Yum's three biggest brands, only Taco Bell reported same-store sales growth. The metric rose 1% during the quarter at the Mexican-inspired chain. Taco Bell's U.S. locations posted same-store sales growth of 2%, while its international business posted a 2% decline. Executives said the chain got off to a stronger start in the second quarter.
KFC's comparable sales fell 2% in the quarter. The biggest drop occurred in the United States, where they fell by 7%. However, the chicken chain's international division saw same-store sales decline by just 2%, thanks to growth in China, its largest market. A year ago, KFC's quarterly same-store sales rose 9%.
Pizza Hut reported that same-store sales fell 7% as demand lagged both in its domestic market and internationally. The pizza chain's U.S. restaurants saw a 6% drop, while its international division saw an 8% drop. The chain faced tough comparisons with the same period a year earlier, when Pizza Hut reported 7% growth in same-store sales, boosted by its new Melts.
Overall, Yum's international business struggled, which the company attributed in part to its Middle Eastern restaurants. It is unclear whether the hit is due to war-related boycotts in Gaza that have affected other networks or other disruptions.
“While the impacts of the Middle East conflict have been scattered 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's digital business was one of the few bright spots this quarter. The company said its digital sales accounted for more than 50% of sales for the first time.
In the second quarter, Yum plans to expand its AI pilot program that accepts drive-thru orders. The original test was conducted at five Taco Bell locations in California; Soon, 35 restaurants will test the technology.
Yum's global presence grew 6% in the quarter, thanks to the opening of 808 new restaurants.
