NPC International Inc. said its franchised Wendy’s business continued “to perform very strongly,” and noted improvements in its Pizza Hut sales trends in the fourth quarter, executives said Monday.
Overland Park, Kan.-based NPC International Inc., which franchises 143 Wendy’s units, in addition to 1,263 Pizza Hut restaurants, saw its burger division post a 3.1-percent increase in same-store sales for the third quarter ended Sept. 29.
The Pizza Hut division posted a 0.9-percent decline in same-store sales, over a 0.7-percent decrease in the same period last year.
“The Wendy’s brand positioning continues to resonate with consumers,” Jim Schwartz, NPC president and CEO, said in a call with analysts Monday. “And we’re excited about the consumer receptivity to the brand and the quality innovation that brand leadership is delivering.
“Besides Wendy’s propensity for cut-above, core innovation, the brand is also delivering new, innovative platforms, such as our new ‘4 for $4’ campaign, which is clearly meeting the needs of the value QSR user,” Schwartz said. The company has also completed eight of the 12 Wendy’s reimaged units expected for this year, he said.
Pizza Hut same-stores sales showed softness, but trends improved toward the end of the quarter, NPC executives said.
“We continue to work with Pizza Hut in their efforts to move the brand forward,” Schwartz said. NPC is the largest Pizza Hut franchisee in the brand’s system.
“Most of that is just simply a rollover — a more challenging, if you will, rollover — in the third quarter compared to the second quarter,” Schwartz said. “And, frankly, the Big Flavor Dipper promotion and the launch of our $6.99 promotion did incredibly well for us in the second quarter, and we just did not see that momentum continue into the third quarter. … We’re not totally disappointed, but clearly we know that we need to get our Pizza Hut business consistently positive quarter after quarter.”
For the fourth quarter, Troy Cook, NPC chief financial officer, added that the company was seeing “our Pizza Hut business right now solidly in in the low-single-digit comp growth range, which we are very pleased with.” He added that NPC had seen sales start to accelerate late in the third quarter, and that was continuing into the fourth quarter.
“We think there continues to be opportunities to grow in both brands, but primarily our focus is Wendy’s at this point in time,” Schwartz noted.
NPC posted a loss of $2.1 million in the third quarter, compared with a profit of $162,000 in the same quarter last year. Revenue rose slightly, to $300.6 million, from $299.6 million the previous year.
Executives said stabilized commodity prices were helping profitability, especially in the Pizza Hut division.
NPC International has Pizza Hut restaurants in 28 states and Wendy’s units in five states.
In management changes, Schwartz said John “J.” Hedrick was promoted in the third quarter to chief operating officer for both brands, from his role as senior vice president for the Wendy’s division.
Privately held NPC International is a subsidiary of NPC Restaurant Holdings LLC, which reports quarterly earnings to the Securities and Exchange Commission because of guaranteed senior notes.