Yum Brands reported third-quarter revenue that fell short of analysts’ forecasts on Wednesday, owing to disappointing same-store sales growth at Pizza Hut.
- IMPORTANT NOTES
- Yum Brands posted higher-than-expected earnings, but revenue fell short of Wall Street’s expectations.
- Same-store sales growth at Pizza Hut was lower than predicted, but KFC and Taco Bell surpassed forecasts.
- Yum’s same-store sales increased 6% in the third quarter, aided by strong sales at Taco Bell locations in the United States and KFC international stores.
Pizza Hut Sales: However, the profits announcement from its Chinese operator on Tuesday evening was less encouraging. Yum China CFO Andy Yeung stated that sales had slowed in late September and early October, impacting the company’s fourth-quarter earnings. KFC’s largest market and Pizza Hut’s second-largest is China. Nonetheless, Yum CEO David Gibbs stated in a statement that the firm intends to exceed its long-term growth strategy of 5% unit growth, 7% system sales growth, and 8% operating profit growth. Yum’s shares dropped more than 1% in premarket trade, while Yum China’s stock dropped more than 14%.
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Here’s how the company’s results compared to what Wall Street expected, according to a Refinitiv poll of analysts:
- Earnings per share: $1.44 adjusted, compared to $1.28 projected.
- Revenue: $1.71 billion, compared to $1.77 billion predicted
The restaurant chain posted a net income of $416 million, or $1.46 per share, in the third quarter, up from $331 million, or $1.14 per share, the previous year. Yum reported that a fair value remeasurement of its stake in its Indian franchisee increased earnings per share by 5 cents, but foreign currency reduced earnings per share by 1 cent.
Yum earned $1.44 a per share after deducting refranchising losses, certain tax benefits, and other considerations. Net sales increased by 4% to $1.71 billion. According to Gibbs, the company set a new milestone for digital sales growth. Yum’s same-store sales increased 6% in the third quarter, aided by strong sales at Taco Bell locations in the United States and KFC international stores.
KFC’s overall same-store sales rose 6% in the third quarter, exceeding StreetAccount’s forecast of 5.6%. The worldwide segment of the fried chicken restaurant recorded 7% same-store sales growth, buoyed by significant growth in China, its largest market.
However, in its second-largest market, the United States, KFC recorded flat same-store sales growth. The chain has recently suffered in its home nation. It has lost market share to Chick-fil-A and Restaurant Brands International’s Popeyes, which just surpassed KFC as the number-two chicken franchise in the United States.
Taco Bell reported 8% same-store sales increase, exceeding StreetAccount’s prediction of 6.3%. The chain’s high sales come primarily from its outlets in the United States. Its expanding foreign sector recorded 1% gain in same-store sales.
Pizza Hut’s same-store sales increased by only 1%, falling short of StreetAccount’s 1.7% prediction. The pizza chain reported 2% rise in overseas same-store sales and flat same-store sales in the United States. Pizza Hut isn’t the only pizza company that has struggled to gain a foothold in the United States. Domino’s Pizza reported a 0.6% decrease in same-store sales in the third quarter. Yum’s entire restaurant footprint increased by 6% during the quarter, with more than 1,100 new locations opening.
Frequently asked questions
Which is best Pizza Hut or Dominos?
Overall, it’s safe to say that both Domino’s and Pizza Hut provide a distinct experience on their own terms. While Domino’s delivers convenience and quality, Pizza Hut offers a variety of toppings and dough options that will have you going back for more.
Is Pizza Hut cheaper than Dominos in India?
Pizza chain costs might vary depending on location, menu items, and available promos. However, among the three pizza chains you listed, Domino’s is commonly considered to be the most economical, with Papa John’s and Pizza Hut being slightly more expensive.
Is Pizza Hut successful in India?
In 2022, Pizza Hut India recorded robust system sales growth of 47%, the highest among all Pizza Hut subsidiaries globally. Pizza Hut India Subcontinent increased system sales by 16% in the March quarter. We are still fairly little in terms of size.
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