KFC parent Yum reports surprise drop in global same-store sales on weak demand
Reuters
Published May 01, 2024 07:16AM ET
Updated May 01, 2024 12:37PM ET
By Juveria Tabassum
(Reuters) -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 fell 3% after the Pizza Hut parent joined coffee giant Starbucks (NASDAQ:SBUX) 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 (NYSE:MCD) , which missed profit estimates for the first time in two years as consumers with constrained discretionary budgets hunt for better bargains while dining out.
The launch of KFC's first-ever loyalty program in the reported quarter failed to drum up demand as global same-store sales at the outlet fell 2%, while that of Pizza Hut dropped 7%. Taco Bell posted an increase of 1%, compared with estimates of a 2.83% rise, as per LSEG data.
"Probably more of an emphasis on value than there has been in past quarters," said CEO David Gibbs on a post-earnings call, while adding that the KFC brand was struggling in the U.S.
The company's worldwide same-store sales fell 3% in the first-quarter, while analysts were expecting a growth of 0.04%.
"Yum Brands' difficult quarter underscores the challenges that the fast-food industry is facing, as lower-income consumers cut back on dining out," said Insider Intelligence analyst Rachel Wolff.
Yum's quarter contrasts results at pizza chain Domino's, which reaped benefits from a revamped loyalty program that has kept consumers hooked over the last two quarters.
Yum Brands' quarterly adjusted profit per share of $1.15 fell short of estimates of $1.20, while total revenue also missed expectations.
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Written By: Reuters
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