KFC, Pizza Hut Still Faring Poorly In China But Not As Poorly

KFC, Pizza Hut Still Faring Poorly In China But Not As Poorly


Yum! Brands, the parent company of Taco Bell, KFC and Pizza Hut, is still being scorned in China.

System sales in China declined 6% in the first quarter, while same-store sales fell 12%. This is an improvement over last quarter鈥檚 16% same-store sales decline, but a far cry from the explosive growth the company used to depend on.

Chinese customers have been slow to return ever since a local meat supplier (the same one serving McDonald’s MCD -1.36%) was busted for improper food handling last summer, even though both fast food chains promptly apologized and switched suppliers.

The company still plans to open at least 700 new restaurants in China this year, it said.

The picture is rosier back in the U.S., where same-store sales grew 5% at KFC and 6% at Taco Bell.

鈥淥utside of China, our KFC and Taco Bell Divisions are firing on all cylinders,鈥 said CEO Greg Creed in a statement. 鈥淭hese powerhouse brands produced both strong sales growth and significant margin expansion.鈥

Operating margins edged up 1.8 percentage points to 26.3% at KFC and 5.2 percentage points to 26.6% at Taco Bell.

Yet, same-store sales were flat at Pizza Hut, which has struggled to gain traction among customers despite a brand relaunch.

Total revenue fell 5% to $2.18 billion, shy of analyst estimates of $2.64 billion.

Profit also declined to $362 million, or 81 cents per share, from $399 million, or 87 cents per share, a year ago. Yet, this handily beat analyst estimates of 72 cents per share.

Shares popped 4% to $84.23 in after-hours trading and are up 6% over the last 12 months.

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