Yum Brands faced challenges in the quarter as both Pizza Hut and KFC reported declining same-store sales. CEO David Gibbs attributed the decline to the impacts from the Middle East conflict and a more cost-conscious consumer base. These factors presented headwinds to same-store sales, affecting the company’s overall performance.
Yum Brands reported mixed financial results compared to what Wall Street was expecting. The company’s earnings per share came in at $1.35 adjusted, slightly beating the expected $1.33. However, revenue fell short of expectations at $1.76 billion, compared to the projected $1.8 billion. Despite the challenges faced, Yum Brands reported second-quarter net income of $367 million, with earnings per share of $1.28, down from the previous year.
In terms of same-store sales, Yum Brands saw a 1% decline overall, with both Pizza Hut and KFC reporting 3% declines. KFC’s U.S. restaurants faced continued struggles, with a 5% decrease in domestic same-store sales. While KFC’s system sales in China improved, its overall international same-store sales dropped by 3%. Pizza Hut’s same-store sales in the U.S. decreased by 1%, and international same-store sales fell by 4%. On the other hand, Taco Bell witnessed a 5% increase in same-store sales during the quarter, with its reputation for value helping it sustain growth.
Despite the challenges, Yum Brands announced plans to expand the rollout of artificial intelligence across Taco Bell drive-thru lanes to hundreds of its U.S. restaurants by the end of the year. This move aims to enhance customer experience and drive efficiency within the business. Additionally, the company is exploring opportunities for growth and expansion in the face of changing consumer preferences and market conditions.
Yum Brands faced temporary closures of roughly 200 restaurants across the Middle East, Malaysia, and Indonesia due to the ongoing conflict. Chief Financial Officer Chris Turner mentioned that some of these locations may reopen later in the month, but there is a risk of permanent closure if the situation worsens. Despite these challenges, Yum Brands remains focused on navigating through difficult times and finding opportunities for growth and innovation in the market.