Yum Brands struggles to fire up US sales

The decision to spin off its struggling China business did little to fire up Yum Brands domestic sales during the fourth quarter.

The company behind Taco Bell, KFC and Pizza Hut, said same-store sales – a key industry metric – rose by just 1 per cent in the three months to December, below expectations for a 2.1 per cent rise, amid ever rising competition in the fast dining sector.

Total revenue for the quarter rose 2.4 per cent to $2.024bn thanks to new store openings and new franchisees. However that is still slightly short of the $2.038bn analysts had forecast.

Yum moved to carve out its China business into an independent, publicly-traded company last October after a string of food safety scandals and other missteps in the country marred what was once its biggest growth engine.

The company had hoped the spin off would allow it focus on reigniting its US sales growth. But Yum’s fourth quarter results underscore the challenges it faces in the oversaturated US restaurant market.

Pizza Hut remains the company’s weakest business, with like for like sales down 2 per cent during the period. KFC and Taco Bell fared better, with each posting same store sales growth of 3 per cent.

Net income fell to $267m, compared to the $275m recorded in the prior year period. However, earnings per diluted shares rose from 66 cents a share to 76 cents a share after a series of share buybacks helped shrunk the number of shares in circulation.