Yum Brands' sales at established outlets rose at just half the pace expected by Wall Street, as its KFC and Pizza Hut chains struggled to attract enough customers in a fiercely competitive restaurant industry.
Competition between restaurants has intensified as Yum, McDonald's and Domino's Pizza pull out all the stops to lure diners with dollar menus, discounts and new breakfast items as consumers increasingly spend less on processed food and eating out.
Yum's results showed that sales at restaurants open at least a year rose 1% in the three months ended March 31, compared with the 2% expected by analysts, according to Thomson Reuters.
The results also contrasted with stronger than expected quarterly sales from McDonald's and Domino's over the past week, indicating that Kentucky-based Yum may have lost market share to rivals.
Same-restaurant sales at KFC rose 2% in the first quarter of 2018, the slowest growth rate in four quarters. The fried chicken outlet's US same-restaurant sales were unchanged.
Yum executives said KFC would have recorded a 3% growth in same-restaurant sales had it not been for supply chain issues in the UK.
Yum was forced to shut hundreds of UK KFC outlets in February due to a shortage of chicken resulting from the abrupt change of a supplier.
Pizza Hut also missed expectations for same-restaurant sales, which rose a lower-than-expected 1% worldwide, reflecting a 2% decline in overseas markets.
Overall revenue at Yum fell 3% to $1.37 billion but topped estimates of $1.09 billion, thanks to stronger sales at Taco Bell.
Net income jumped to $433m from $280m last year, reflecting gains from the sale of company-owned restaurants to franchisees.
Excluding one-time items, Yum earned 90 cents per share, ahead of expectations of 68 cents.
