Yum Brands Reports Disappointing Revenue Amid Sales Slump

On Tuesday, Yum Brands shared some not-so-great news regarding their revenue, especially as KFC and Pizza Hut experienced a serious drop in sales in the US.

The company reported earnings of $1.44 per share, which fell short of Wall Street’s prediction of $1.46, alongside revenue of $1.93 billion.

KFC, known for its famous fried chicken, has been facing challenges for several months. Last year, it lost enough market share to drop to fifth place among US chicken chains, primarily due to competition from wing-centric rivals.

In the second quarter, KFC’s same-store sales in the US dropped by 5%, according to reports.

Yum’s overall performance, which includes Pizza Hut, was also affected by economic concerns. Consumers are becoming a bit more cautious and, as a result, dining out less.

The net profit for the company, which usually benefits from Taco Bell’s strong performance, reached $374 million this quarter, translating to $1.33 per share. This was an increase from $337 million in the same period last year.

Overall, same-store sales, which only consider locations that have been open for at least a year, showed a 2% increase for the quarter.

CEO David Gibbs expressed some pride, stating that Yum Brands has managed to deliver a solid quarter despite a challenging consumer landscape.

In what will be his final earnings call before retirement in October, CFO Chris Turner shared the fiscal results.

Globally, KFC saw same-store sales rise by 2%, though the US numbers saw a 5% decline.

Executives acknowledged that, while the chain has attempted to attract customers with better options and new menu items, these efforts haven’t quite hit the mark.

Pizza Hut, too, faced struggles, with its same-store sales down by 1% globally and a 5% fall in the US during the last quarter.

Gibbs mentioned that a perceived lack of value was detrimental, as American customers are increasingly drawn to deals and value menus.

The company is not wasting time in rolling out new promotions, Gibbs added.

Taco Bell, on the other hand, managed to bolster Yum’s revenue with a 4% growth in same-store sales, although this was below the anticipated 5.2%. The chain benefitted from the successful relaunch of its chicken nuggets.

According to Gibbs, overall chicken sales have surged by 50% over the past two years, gaining traction from other fast-food competitors.

“It’s pretty common for many to report negative quarters. But Taco Bell hasn’t had a single negative week,” Gibbs stated.

During the second quarter, Yum expanded its number of restaurants by 3%, adding 871 new locations, primarily international KFC outlets.