YUM Brands reported a fall in quarterly global same-store sales on Wednesday, hurt by choppy demand for its KFC and Pizza Hut brands from inflation-weary consumers in the United States as well as in overseas markets.
Consumers in the United States are increasingly looking for value-oriented meals in the face of sticky inflation, pushing fast food chains to double down on promotions and offers and on revamping their store and order experiences.
Shares of Yum Brands slipped 6 per cent in premarket trade after the Pizza Hut parent joined coffee giant Starbucks in recording its first drop in total same-store sales in about three years.
The company’s quarterly results also echo that of burger giant McDonald’s, which missed profit estimates for the first time in two years as consumers with constrained discretionary budgets hunt for better bargains while dining out.
Yum Brands CEO David Gibbs said: “As expected, same-store sales were pressured this quarter, but we are encouraged by strong two-year same-store sales growth and positive momentum exiting the quarter.”
Total revenue at Yum fell nearly 3 per cent to US$1.60 billion in the first-quarter ended March 31, missing analysts’ estimates of US$1.71 billion, as per LSEG data.
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The company’s worldwide same-store sales fell 3 per cent in the first quarter, while analysts were expecting a growth of 0.04 per cent.
The launch of KFC’s first-ever loyalty programme in the reported quarter failed to drum up demand for the fast food giant, as consumers continued to look for cheaper alternatives, including meals at home.
This comes in contrast to results at pizza chain Domino’s, which reaped benefits from a revamped loyalty program that has kept consumers hooked over the last two quarters.
Excluding one-off items, Yum Brands’ profit per share of US$1.15 in the first quarter fell short of estimates of US$1.20.
Global same-store sales at its KFC restaurants fell 2 per cent, while that of Pizza Hut dropped 7 per cent. Taco Bell posted an increase of 1 per cent, compared with estimates of a 2.83 per cent rise. REUTERS
