An indication outside a Taco Bell restaurant in Richmond, California, on May 1, 2024.
Justin Sullivan |
Yum Brands on Tuesday reported a mixed quarter as each Pizza Hut and KFC reported declining sales at their stores.
“The impact of the Middle East conflict and increasing consumer cost awareness have created headwinds for store sales,” Yum CEO David Gibbs told analysts during an organization conference call.
He added that sales within the U.S. improved quarter-over-quarter due to inexpensive meals resembling Pizza Hut’s $7 lover’s offer.
Here’s what the corporate reported in comparison with Wall Street expectations, based on an analyst survey conducted by LSEG:
- Earnings per share: USD 1.35 adjusted versus USD 1.33 expected
- Revenue: $1.76 billion in comparison with expected $1.8 billion
Yum reported second-quarter net income of $367 million, or $1.28 per share, down from $418 million, or $1.46 per share, a 12 months earlier.
Excluding special items, the corporate earned $1.35 per share.
Net sales rose 4% to $1.76 billion, driven by restaurant openings. Yum’s store sales fell 1% within the quarter, while Pizza Hut and KFC reported sales declines of three%.
KFC’s U.S. restaurants continued to struggle, with sales at its domestic stores falling 5 percent. And although the chicken chain’s system sales increased in China, its largest market, KFC’s international sales overall fell 3 percent this quarter.
Pizza Hut’s store sales fell 1% within the U.S., while they fell 4% internationally.
Taco Bell, the crown jewel of Yum’s portfolio, grew its store sales 5% within the quarter. The chain operates primarily within the U.S., where its repute as a value-for-money brand has helped it weather the decline in consumer spending. Taco Bell’s store sales rose across all income groups, Gibbs said.
On Wednesday, Yum announced plans to expand the adoption of artificial intelligence in Taco Bell drive-ins to a whole bunch of its U.S. restaurants by the tip of the 12 months.
Chief Financial Officer Chris Turner said around 200 Yum restaurants within the Middle East, Malaysia and Indonesia are temporarily closed. Some of those locations could reopen later this month, but he acknowledged the chance that some could close permanently if the conflict intensifies.
