Yum Brands reported earnings on Tuesday that were better than expected, but an outbreak of Cyclospora virus, Taco Bell, dragged down the company's same-store sales growth. The outbreak is related to the iceberg lettuce used by Taco Bell.
However, Yum! Brands stated that Taco Bell – which the company considers to be its “growth engine” – has since rebounded.
Burger King's CEO, Chris Turner, stated in a statement: "Since the end of September, the same-store sales growth of Taco Bell's U.S. business has consistently outperformed the fast-food industry."
The following is a comparison of the data released by PepsiCo, based on the survey of analysts conducted with LSEG, versus what Wall Street expected:
- Earnings per share: $1.56 after adjustment, expected to be $1.49
- Revenue: $2.05 billion, expected to be $2.05 billion as well.
Yum! Brands announced that its net profit for the third fiscal quarter was $1.62 billion, or $5.92 per share, which is higher than the $397 million, or $1.41 per share, from the same period last year.
Excluding the revenue from the sale of Pizza Hut and other projects, this catering company earned a profit of $1.56 per share.
Net sales increased by 4% to $2.05 billion.
During this quarter, Yum! Brands completed the divestiture of Pizza Hut. On August 7th, the company sold Pizza Hut's operations in mainland China to Yum! China, and on September 1st, it sold the remaining Pizza Hut operations to LongRange Capital. Yum! Brands' third-quarter results include the Pizza Hut operations up to the aforementioned dates.
Excluding Pizza Hut, Yum! Brands' same-store sales were flat this quarter due to Taco Bell dragging down overall performance. Due to the outbreak of foodborne diseases, Taco Bell same-store sales declined by 4%, and consumers temporarily reduced their in-store spending.
A senior executive at PepsiCo previously stated that the weekend of July 18 had the most severe impact on sales, but since then, the sales trend has improved.
Outside of the United States, the same-store sales of Taco Bell's smaller international operations grew by 5%.
KFC Same-store sales grew by 1%, driven by increases in sales in China and Europe. The U.S. market is now the third-largest market for this fast-food chain, but system sales there declined by 6% this quarter.
Similar to Popeyes under Restaurant Brands International, KFC also faces the pressure of an increase in new competitors in the US market, as well as consumers paying more attention to their budgets.
