Same-store sales are once again down at Pizza Hut, a brand that’s been rehabbing its image for the past few years, according to parent Yum Brands’ latest earnings released Wednesday. The quick-service chain’s first quarter same-store sales were down 6% in the U.S.
Louisville, Ky.-based Yum Brands — parent to KFC, Taco Bell, The Habit Burger Grill, and Pizza Hut — announced its quarterly earnings for the period ended March 31, with every brand but Pizza Hut seeing same-store sales growth.
“Our system sales grew 8% despite the difficult operating environment, a testament to the demand for our iconic brands and the unmatched operating capabilities of our world-class franchise partners. We set a Q1 development record, opening nearly 1,000 gross units,” said Yum Brands CEO David Gibbs in a release. “Momentum in our digital sales continued in the first quarter as a result of both continued system sales growth and digital mix expansion, reaching a Q1 record of approximately $6 billion.”
Digital channels continue to grow for the company, exceeding $6 billion in Q1 globally — a 15% increase over Q1 2021 — and accounting for more than 40% of orders.
“I would say that the U.S. demand is generally strong. But this is a really complex environment,” said Gibbs on the company’s earnings call.
Quick-service KFC continued its quarterly earnings streak with positive same-store sales of 1% domestically and 4% internationally.
“The incremental sales layers we’ve built over the past two years, including our digital ordering channels and the chicken-sandwich platform, contributed to top-line growth this quarter in the face of a difficult operating environment,” said Gibbs.
Company-owned KFC units in Russia are closed temporarily due to the war in Ukraine, contributing negatively to KFC’s overall sales. The company did not disclose how much Russian stores impacted the international numbers for KFC specifically, however sales for Yum Brands declined 1% due to the closures.
In the first quarter, KFC opened 587 gross new restaurants in 49 countries. The company also said KFC Australia is piloting a drone delivery program that gets products to customers’ homes or offices in less than 15 minutes on average from when they’re ordered.
Taco Bell saw 12% same-store sales growth internationally with 5% same-store sales growth domestically.
When asked about inflation, Yum Brands chief financial officer Chris Turner said that it would help some of the company’s brands, particularly Taco Bell.
“We expect that if there’s cutting back, that there’ll be some trade down from fast casual back into QSR, which will be favorable for us, particularly Taco Bell, which I think is well-positioned to capture some of those visits,” he said on the company’s earnings call. “But it all comes back to this theme of, the QSR industry is built on convenience and value.”
Seventy percent of quick-service giant Taco Bell’s U.S. profit is from the cravings value menu, which has $1 and $2 price points, according to Turner.
Taco Bell opened 63 gross new restaurants in 13 countries.
Pizza Hut saw a 5% same-store sales growth compared to the 6% decline for domestic units.
The brand is experiencing staffing shortages, mainly around drivers, according to Turner.
Quick-service Pizza Hut opened 334 gross new restaurants in 40 countries.
Fast-casual Habit Burger Grill — which Yum Brands acquired in 2020 — saw 3% same-store sales growth domestically and opened 13 gross new restaurants in the U.S. and Cambodia.
The portfolio of brands opened 997 gross new restaurants in the first quarter, a record for the company.
Yum Brands is currently working with its master Pizza Hut franchisee to suspend all of its operations in Russia. All development in Russia is suspended as well.
Overall systemwide sales grew 8%, with 6% unit growth and 3% same-store sales growth.