Yum! Brands, the parent company of KFC and Pizza Hut, reported a larger-than-expected drop in same-store sales in the second quarter as high inflation led lower-income Americans to spend less on eating out.
U.S. same-store sales for its Yum Fried Chicken (KFC) division fell 5% in the second quarter, down from a 7% decline in the previous quarter, while Pizza Hut sales were down 1%, Yum Fried Chicken said Tuesday.
Like its fast-food peers, Yum, which also owns Taco Bell, has been investing in loyalty programs and revamping its menu to try to attract customers. Budget-conscious consumers.
But the competition is tough. Great value meal Promotional efforts have plagued Yum’s KFC business as consumers increasingly prefer to cook meals at home for more affordable prices.
The fried chicken chain founded by Colonel Sanders introduced a year-round deal in April to combat the impact of inflation on sales.
A single meal comes with two pieces of chicken, mashed potatoes, gravy and a biscuit for $4.99, while a $20 family meal includes six pieces of chicken, four side dishes and four biscuits.
Still, KFC lost out in a head-to-head battle with other fast-food value menu options.
The ongoing sales woes are in line with those of other fast-food giants such as McDonald’s and Domino’s Pizza, which have also seen U.S. customers flee during the pandemic and then return in fewer numbers as food prices soar.
“I am very pleased with how our team managed to navigate a challenging business environment,” Yum Brands CEO David Gibbs said in a statement.
Taco Bell emerged as a savior for the parent company, with same-store sales rising 5%, beating the 3.6% growth LSEG analysts had expected.
Gibbs attributed Taco Bell’s growth to “unmatched, crave-worthy innovation” due to its new Cantina Chicken menu items and the popularity of its Taco Tuesday promotion.
The Taco Tuesday promotion is a $5 Taco Discovery Box available for a limited number of weeks in April and June. This great deal includes a Crunchy Taco, Doritos Locos Taco, Cantina Chicken Crispy Taco and a medium drink.
Yum’s same-store sales fell 1% overall, an improvement from a 3% fall in the first quarter but disappointing compared with LSEG analysts’ forecast of a 0.2% fall.
The company reported a 10% increase in overall core operating profit and reaffirmed its guidance for an 8% increase in core operating profit for the full year.
Excluding special items, the company earned $1.35 a share, slightly beating the $1.33 LSEG analysts had expected.
Gibbs said the company is focusing on technology improvements, such as adding more kiosks and using AI in restaurants to speed up service times, such as the drive-thru voice technology being used in some Taco Bell locations.
