What To Know
- The domestic sales for the brand also dropped 5%, as consumers continue to cut back on dining out and competition in the pizza space intensifies.
- The brand reported a global same-store sales rise of 4%, bolstered by the return of its Crispy Chicken Nuggets and the introduction of new crispy chicken menu options.
International Business News: Mixed Performance from Global Fast-Food Giant
Yum Brands, the parent company of Pizza Hut, KFC, and Taco Bell, released its second-quarter earnings this week, revealing a performance that fell short of Wall Street’s expectations. Despite overall system sales increasing through digital channels and Taco Bell posting strong growth, the company’s other flagship brands—KFC and Pizza Hut—struggled, particularly in their home market of the United States.
Yum Brands’ KFC and Pizza Hut does badly in the United States
Image Credit: Yum Brands
According to figures for the quarter ending June 30, Yum Brands reported adjusted earnings of $1.44 per share, slightly missing the expected $1.46. Revenue reached $1.93 billion, just under the forecasted $1.94 billion. Net income was up slightly to $374 million, or $1.33 per share, compared to $367 million a year ago. This International Business News report highlights how despite these marginal misses, the company’s total digital transactions accounted for 57% of all system sales—a promising sign of evolving consumer behavior.
KFC and Pizza Hut Face Setbacks in the US
KFC’s international presence helped it post global same-store sales growth of 2%. However, U.S. performance remains a concern, with same-store sales dropping 5%. The brand has fallen to fifth place among U.S. chicken chains, now trailing behind upstarts like Raising Cane’s and Wingstop. Executives pointed to ineffective value messaging and underwhelming new menu items for the dip, prompting a leadership reshuffle. Scott Mezvinsky now leads KFC as CEO, with Catherine Tan-Gillespie overseeing U.S. operations.
Pizza Hut fared no better, with global same-store sales declining by 1%, largely due to weak demand in the U.S. The domestic sales for the brand also dropped 5%, as consumers continue to cut back on dining out and competition in the pizza space intensifies. Yum Brands’ outgoing CEO David Gibbs acknowledged that the value proposition for Pizza Hut has been “insufficient,” though new marketing strategies and promotions are in the pipeline.
Taco Bell Continues to Be the Star Performer
Taco Bell continues to carry the Yum Brands portfolio. The brand reported a global same-store sales rise of 4%, bolstered by the return of its Crispy Chicken Nuggets and the introduction of new crispy chicken menu options. Over the past two years, chicken sales at Taco Bell have soared 50%, and the brand is gaining ground on both fast-food and fast-casual competitors.
While Wall Street expected a slightly higher 5.2% growth, Taco Bell still outperformed many rivals in a tough market. Gibbs noted that even when others reported negative quarters, Taco Bell hadn’t had a single negative week. The brand’s international growth also contributed positively, with a 4% increase in same-store sales abroad.
Expansion Still a Priority Despite Challenges
Despite domestic setbacks for some brands, Yum Brands expanded its total restaurant count by 3%, opening 871 new locations during the quarter—most of which were international KFC outlets. The global expansion strategy remains critical as the company looks to offset weaker domestic performance with emerging markets and digital innovation.
While Taco Bell continues to shine, Yum Brands must now double down on reviving Pizza Hut and KFC in the U.S. with sharper value messaging and more relevant offerings. If the company can realign its U.S. strategy while accelerating international growth, especially through digital channels, it may yet beat expectations in the quarters ahead.
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