Signage in front of a Taco Bell restaurant on May 1, 2024 in Richmond, California.
Justin Sullivan | Getty Images
Yum Brand The company reported strong quarterly results on Tuesday, with both Pizza Hut and KFC reporting declines in same-store sales.
“The impact of the conflict in the Middle East, as well as increased consumer cost consciousness, are creating headwinds for same-store sales,” Yum Brands Chief Executive Officer David Gibbs told analysts on the company’s conference call.
He added that sales trends in the U.S. are improving compared to the previous quarter, thanks to value menu items such as Pizza Hut’s $7 Deal Lovers.
Here’s how what the company reported compares to Wall Street expectations, based on an analyst survey by LSEG.
Adjusted earnings per share: $1.35 (expected: $1.33) Revenue: $1.76 billion (expected: $1.80 billion)
Yum said its second-quarter net income was $367 million, or $1.28 per share, down from $418 million, or $1.46 per share, a year earlier.
Excluding other items, the company earned $1.35 per share.
Net sales rose 4% to $1.76 billion due to new store openings. Yum’s same-store sales fell 1% in the quarter, while Pizza Hut and KFC both reported same-store sales declines of 3%.
KFC’s U.S. stores continue to struggle, with domestic same-store sales falling 5%, and while the chicken chain’s system sales rose in China, its largest market, during the quarter, KFC’s international same-store sales fell 3% overall.
Pizza Hut’s U.S. same-store sales fell 1%, while international same-store sales fell 4%.
Taco Bell, the top of Yum Brands’ portfolio, saw same-store sales grow 5% in the quarter. The chain is based mostly in the U.S., where its reputation for value has helped it weather the downturn in consumer spending. Taco Bell’s same-store sales rose across all income groups, Mr. Gibbs said.
Yum announced plans on Wednesday to expand the use of artificial intelligence in Taco Bell drive-thru lanes to hundreds of U.S. stores by the end of the year.
About 200 Yum Kranz restaurants have been temporarily closed in the Middle East, Malaysia and Indonesia, according to Chief Financial Officer Chris Turner. Some of those locations could reopen as soon as later this month, but he acknowledged there is a risk some will close permanently if the conflict worsens.