Yum Brands reported a decline in quarterly global same-store sales on Wednesday, attributed to fluctuating demand for its KFC and Pizza Hut brands amidst cautious consumer spending due to inflationary pressures in the United States and overseas markets.
Consumers in the U.S. are increasingly prioritizing value-oriented meals amid persistent inflation, prompting fast-food chains to intensify promotional efforts and enhance the customer experience in their stores and ordering processes.
In premarket trading, shares of Yum Brands fell by 6% following the announcement, aligning with coffee giant Starbucks in experiencing its first decline in total same-store sales in approximately three years.
Yum Brands CEO David Gibbs acknowledged the anticipated pressure on same-store sales for the quarter but highlighted the company’s positive momentum, particularly with strong two-year same-store sales growth as the quarter concluded.
First-quarter total revenue for Yum decreased by nearly 3% to $1.60 billion, falling short of analysts’ expectations of $1.71 billion, according to LSEG data.
The company reported a 3% decline in worldwide same-store sales for the first quarter, contrasting analysts’ forecasts of a 0.04% growth.
Despite the launch of KFC’s inaugural loyalty program during the quarter, demand for the fast-food giant remained subdued as consumers sought more cost-effective dining options, including home-cooked meals.
In contrast, pizza chain Domino’s experienced positive results driven by a revamped loyalty program that maintained consumer engagement over the past two quarters.
Excluding one-time expenses, Yum Brands’ first-quarter profit per share of $1.15 fell below estimates of $1.20.
Global same-store sales at KFC outlets declined by 2%, while Pizza Hut experienced a 7% decrease. Taco Bell, however, recorded a 1% increase, surpassing expectations of a 2.83% rise.
