Yum! Brands | 2nd quarter 2022

China weighs on KFC’s and Pizza Hut’s sales

KFC’s global same-store sales declined 1%. Without China - the fried chicken chain’s largest market, accounting for more than a quarter of its sales - same-store sales were up 7%.
IMAGO / Zuma Wire
KFC’s global same-store sales declined 1%. Without China - the fried chicken chain’s largest market, accounting for more than a quarter of its sales - same-store sales were up 7%.

Yum! Brands has reported results for the second quarter ended June 30, 2022. Worldwide system sales excluding foreign currency translation grew 3%, with 4% unit growth and 1% same-store sales growth, dragged down by Covid lockdowns in China. Excluding China, Yum! reported same-store sales growth of 6%.

Worldwide system sales grew 3%, excluding foreign currency translation, with KFC at 1%, Taco Bell at 10% and Pizza Hut flat. 781 gross units were added during the second quarter resulting in 463 net-new units, offset by the removal of 1,165 Russia units for a total decline in unit count of 702 units during the quarter. Worldwide same-store sales ex-China grew 6% during the quarter. Foreign currency translation unfavorably impacted divisional operating profit by $23 million.

While KFC’s global same-store sales declined 1% and Pizza Hut’s global same-store sales declined 3%, Taco Bell was the only Yum brand to report global same-store sales growth. Its restaurants saw same-store sales increase 8%, mainly due to price hikes. The chain also benefited from its popular Mexican Pizza promotion, which sold out much earlier than expected.
 
David Gibbs, CEO, said “Our second quarter system sales grew 5% excluding Russia, driven by sustained development momentum. Despite a complex operating environment and lapping the strongest same-store sales growth in our history, our global business continues to perform well, led by industry-leading results at Taco Bell U.S. including 8% same-store sales growth and in-line margins year-over-year. We are pleased with the continued growth of our digital business with digital sales of nearly $6 billion, fueled by the adoption of our global platforms and capabilities. Our second quarter results demonstrate the resilience and power of our unmatched global scale, unrivaled talent and world-class franchise partners that are the driving force behind the success of our iconic brands.”
 
In June, the company completed the transfer of ownership of the Russian Pizza Hut business to a local operator who has initiated the process of re-branding locations to a non-Yum! concept. According to Yum! transferring ownership of the KFC Russia restaurants has also advanced. The operating system and master franchise rights, including the network of franchised restaurants, will be transfered to a local operator who will be responsible for re-branding locations to a non-Yum! concept. Upon the completion of this process Yum! Brands will have fully exited from Russia. The market accounted for 2% of Yum’s systemwide sales in 2021.
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