Yum Brands on Tuesday reported disappointing revenue as its KFC and Pizza Hut restaurants suffered a dismal sales slump in the US.
The company reported adjusted earnings per share of $1.44, missing Wall Street estimates of $1.46, and revenue of $1.93 billion, below projections of $1.94 billion.
Colonel Sanders’ famous fried-chicken franchise has been struggling for months, last year losing enough market share to rivals Raising Cane’s and Wingstop that it slipped to the No. 5 chicken chain in the US by sales.
Yum’s overall business – including results at Pizza Hut – was also hit by anxiety over the economy that has led consumers to grow more cautious and dine out less.
Net income for the company – which also owns Taco Bell, typically its star performer – hit $374 million, or $1.33 per share, in the second quarter, up from $367 million the year before.
The company’s overall same-store sales, which only tracks restaurants open at least 12 months, jumped 2% during the quarter.
“I’m proud that Yum Brands delivered another strong quarter in a tough consumer environment,” CEO David Gibbs said Tuesday.
It was his final earnings call ahead of his retirement in October, when chief financial officer Chris Turner will take the helm.
Same-store sales at global KFC restaurants rose 2% – but in the US, it slid 5%.
Though the chain has tried to boost sales with value options and new menu items, the offerings haven’t resonated with customers, executives said Tuesday.
Meanwhile, Pizza Hut’s global same-store sales fell 1% and its US same-store sales plunged 5% in the second quarter.
It was similarly hurt by an “insufficient value message,” according to Gibbs, as American customers flock to meal deals and value menus.
The company is rushing to put out new promotions, Gibbs added.
Taco Bell helped boost Yum’s earnings, reporting same-store sales growth in the US and internationally of 4% thanks to the success of its re-launch of Crispy Chicken Nuggets.
Its overall chicken sales have climbed 50% over the past two years as it has snapped up market share from other fast-food chains, Gibbs said.
“Most people are reporting negative quarters. We haven’t even had a negative week for Taco Bell,” Gibbs said Tuesday.
In the second quarter, Yum’s restaurant count across its companies rose 3% with 871 new locations – mostly international KFC restaurants.
