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KFC parent Yum says April sales improving after virus hits first quarter

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Logos of KFC, owned by Yum Brands Inc, are seen on its delivery bicycles in front of its restaurant in Beijing
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By Nivedita Balu

(Reuters) - Yum Brands Inc <YUM.N> said on Wednesday sales in April showed signs of improvement as stay-at-home consumers ordered in more and diners returned to restaurants after certain countries started to ease restrictions.

The KFC and Pizza Hut operator said same-store sales fell 7% in the first quarter and deteriorated through March but were improving in April, with global sales trends picking up significantly across its brands in restaurants that are open.

Restaurants across the globe have shifted to a delivery and take-away model as nationwide lockdowns spurred by the coronavirus pandemic keep diners at home.

Digital sales played a major role during the health crisis as more consumers ordered in using the mobile apps of the restaurants. Yum Brands expects KFC's digital sales to account for a quarter of the company's annual sales.

"All the trends in the restaurant industry are playing out at warp speed... It (digital) is a win for consumers, a win for us," Chief Executive Officer David Gibbs told Reuters.

For Pizza Hut, a brand the company has struggled with for years due to intense competition, Gibbs sees the business coming out of the crisis much stronger than before.

"This 3-month period we're in right now is basically going to have 3 years' worth of changes to our businesses. And it's accelerating the plan that we had for Pizza Hut in getting us to be truly this digital delivery carry-out business," Gibbs told analysts.

Comparable store sales fell about 30% in the second half of March and into April, as about 20% of its about 50,000 stores were closed.

Yum China Holdings Inc <YUMC.N>, the sole licensee of KFC and Pizza Hut in China, also said the same-store sales decline was slowing, even though most consumers are still not going out in public.

Yum Brands said sales at stores open for more than a year fell 8% at KFC and declined 11% at Pizza Hut in the first quarter ended March 31, while they rose 1% at Taco Bell.

Analysts expected a 6.16% fall at KFC, 6.55% decline at Pizza Hut and 2.18% dip at Taco Bell, according to IBES data from Refinitiv.

Net income fell 68.3% to $83 million, partly due to a goodwill impairment charge of $139 million from its purchase of Habit Burger Grill earlier this year.

Excluding one-time items, Yum earned 64 cents per share, missing Wall Street estimates by a cent.

(Reporting by Nivedita Balu in Bengaluru; Editing by Anil D'Silva and Devika Syamnath)

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