Sat | Dec 16, 2017

Yum Brands grow sales, dismisses NFL factor

Published:Friday | November 3, 2017 | 12:00 AM
This January 24 photo shows a Pizza Hut in Miami. Yum Brands Inc operates Pizza Hut as well as the Taco Bell and KFC brands. (AP Photo/Alan Diaz)

Yum Brands saw a key sales measure rise at KFC, Pizza Hut and Taco Bell for the third quarter, and said it saw no effect on sales due to declining NFL viewership, a day after Papa John's blamed weaker pizza sales on the controversy over protests during the national anthem.

Sales rose one per cent at Pizza Hut's established locations, but all of that growth came from restaurants outside of the United States.

The company has been working to boost online orders in the US to catch up with the more tech-savvy Domino's Pizza Inc, which makes it easy for customers to order through apps, social media or texts. Yum CEO Greg Creed reiterated Thursday that a transformation at Pizza Hut won't happen "overnight".

The company, which is not an NFL sponsor, also said it wasn't seeing an impact from the controversy over football players kneeling during the national anthem. Papa John's, an NFL sponsor, had said customers have a negative view of the chain's association with the NFL.

Former San Francisco 49ers quarterback Colin Kaepernick started kneeling last year to protest what he said was police mistreatment of black males. More players began kneeling after President Donald Trump said in September that team owners should get rid of players who protest during the anthem.

Reasons for decline

Papa John's CEO John Schnatter said the controversy is hurting NFL ratings. While NFL viewership is down slightly, ESPN remains among the most popular cable networks and many reasons could be responsible for lower ratings.

"We believe the reason for the sales decline is more complicated than fewer people are watching NFL games," Stifel analysts said in a note about the Papa John's results. "Unlike Domino's and Pizza Hut, Papa John's appears to allocate a greater portion of its national and local advertising spend to NFL games, and it has fewer advertising dollars to allocate to other consumer segments."

Not a problem

Other companies don't see the NFL as a problem. Executives at chicken wing chain Buffalo Wild Wings Inc, which is not an NFL sponsor, said last week that it didn't expect declining NFL viewership to hurt a key sales figure.

Beyond pizza, Yum saw sales at its biggest brand, KFC, rise four per cent at existing locations around the world as it worked to boost delivery. Yum said it sees delivery as a way to increase sales at the chicken chain and plans to double delivery sales to UUS$2 billion by 2020.

Taco Bell's sales rose three per cent at established restaurants as it added new menu items, such as a US$1 burrito stuffed with potatoes, cheese and beef.

Overall, the company reported net income of US$418 million, or US$1.18 per share, in the three months ending September 30. Adjusted earnings came to 68 cents, a penny above what Wall Street analysts expected, according to FactSet.

Revenue fell five per cent to US$1.44 billion in the period, but beat the US$1.39 billion analysts expected.

Shares of Yum Brands Inc rose more than seven per cent to US$79.93 in morning trading on Thursday.

- AP