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Pizza Hut problems for Yum Brands!

Thursday, February 9, 2017 8:14
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KFC and Taco Bell owner Yum! Brands Inc (NYSE:YUM) reported a lower-than-expected rise in sales in the final quarter of 2016, largely down to fewer diners eating at its Pizza Hut chain.

Sales at restaurants open for at least one year rose 1% in the three months to 31 December, although consensus on the Street was for a rise of 2.1%.

KFC and Taco Bell both enjoyed a 3% increase in same-store sales during the period, although this was dulled by a 2% fall at Pizza Hut.

“KFC and Taco Bell had relatively strong performance in December, despite difficult U.S. industry conditions,” said Yum!’s chief financial officer David Gibbs.

Competition from convenience stores, supermarkets and meal delivery services such as Chefd, coupled with dwindling diner figures, has hit restaurant chains in the US.

Increases in staff wages have forced restaurants to up their menu prices, while supermarkets and the like have been able to pass on lower food costs to their customers.

Today’s earnings release is the first since the group spun off its China business back in November.

For continuing operations, income fell to US$285mln during the quarter from US$290mln a year earlier.

Despite the miss, shares edged higher to US$66.50 shortly after Thursday’s open.

Story by ProactiveInvestors


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