Yum Brands, which owns KFC and Pizza Hut, reported that their global same-store sales declined in the last quarter.
The drop in sales is due to weak demand from customers in the United States and overseas who are dealing with inflation.
As a result, fast-food chains are offering more promotions and deals while focusing on improving the ordering and store experiences.
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- Yum Brands reports a surprise drop in global same-store sales due to weak demand.
- KFC and Pizza Hut struggle, while Taco Bell posts modest growth.
- The fast-food industry faces challenges as inflation-weary consumers seek value.
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Yum Brands’ Loyalty Program Boosts Profits Despite Missed Estimates
Despite these efforts, Yum Brands experienced its first drop in total same-store sales in nearly three years, which is similar to the trend seen by Starbucks.
The company’s quarterly results mirror those of McDonald’s, which also missed profit estimates for the first time in two years as consumers with limited budgets search for better deals when eating out.
KFC’s introduction of its first-ever loyalty program failed to increase demand, resulting in a 2% decrease in global same-store sales.
Pizza Hut also saw a 7% drop in same-store sales. Taco Bell posted a 1% increase, which was less than the expected 2.83% rise.
CEO David Gibbs addressed the challenges during a post-earnings call, saying there should be more emphasis on value than in previous quarters.
He also acknowledged that the KFC brand was facing difficulties in the U.S.
Yum Brands’ worldwide same-store sales fell 3% in the first quarter, compared to expectations of a 0.04% growth.
Rachel Wolff, an analyst at Insider Intelligence, commented on the situation, saying that Yum Brands’ difficult quarter highlights the challenges faced by the fast-food industry, as lower-income consumers cut back on dining out.
Interestingly, Yum’s quarter stands in stark contrast to the results of pizza chain Domino’s, which has benefited from a revamped loyalty program that has kept consumers engaged over the last two quarters.
The company’s quarterly adjusted profit per share of $1.15 fell short of the estimated $1.20, and its total revenue missed expectations.
Yum Brands must adapt its strategies to maintain its position in the fast-food industry and attract value-seeking consumers during these challenging times.
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