Yuck: Pizza Hut drags on Yum Brands' sales

Courtney Goldsmith
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Taco Bell Opens New Tokyo Store
Taco Bell has helped offset a loss in same-store sales from Pizza Hut (Source: Getty)

Shares in Yum Brands, the company that owns KFC and Taco Bell, slipped more than two per cent after it reported sales were behind expectations in the second quarter.

The figures

Same-store sales increased two per cent in the quarter ended 30 June, which missed the 2.2 per cent rise predicted by analysts polled by Consensus Metrix.

Sales were dragged down by Pizza Hut, which reported same-store revenue fell one per cent compared with a rise of three per cent at KFC and four per cent at Taco Bell.

Net income from continuing operations dropped 23 per cent to $206m (£156.9m), or 58 cents per share, while total revenues fell four per cent to $1.45bn.

The company's share price fell 2.47 per cent to $74.73 in New York afternoon trading.

Read more: KFC owner Yum Brands shares tumble

Why it's interesting

Yum Brands, which opened 174 net new units in the quarter, has been able to offset ongoing trouble at its Pizza Hut chain with the strong success of Taco Bell.

The Kentucky-based company has worked to strengthen its pizza business by funneling $130m into upgrading equipment, increasing advertising and revamping restaurant technology.

In the second quarter Yum Brands noted a $12m charge due to investments in Pizza Hut's digital initiatives.

What Yum Brands said

Chief executive Greg Creed said:

I’m pleased Yum Brands’ intensified focus on our four distinct growth drivers helped deliver another successful quarter.

We are maintaining our full-year 2017 guidance and are on pace with our multi-year transformation strategy designed to further unlock shareholder value.

Read more: Yum Brands blames drop in Chinese sales on South China Sea crisis

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