Slow Pizza Hut sales in the U.S. weigh on Yum Brands’ revenue

Yum Brands on Wednesday reported quarterly revenue that fell short of analysts’ expectations, hurt by weak same-store sales growth at Pizza Hut.

Shares of the company fell more than 1% in premarket trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: $1.44 adjusted vs. $1.28 expected
• Revenue: $1.71 billion vs. $1.77 billion expected

The restaurant company reported third-quarter net income of $416 million, or $1.46 per share, up from $331 million, or $1.14 per share, a year earlier.

Excluding items, Yum earned $1.44 per share.

Net sales rose 4% to $1.71 billion. The company set a new record for digital sales growth, Yum CEO David Gibbs said in a statement.

Yum’s same-store sales grew 6% in the quarter, helped by strong sales at Taco Bell’s U.S. locations and KFC’s international restaurants.

KFC’s overall same-store sales increased 6% in the quarter, beating StreetAccount estimates of 5.6%. The fried chicken chain’s international division reported same-store sales growth of 7%, boosted by strong growth in China, its largest market.

But in the U.S., its second-largest market, KFC saw flat same-store sales growth. The chain has struggled in its home country recently. It has lost market share to chicken leader Chick-fil-A and Restaurant Brands International’s Popeyes, which recently overtook KFC as the number-two chicken chain in the U.S.

Taco Bell reported same-store sales growth of 8%, topping StreetAccount estimates of 6.3%. The chain’s strong sales came largely from its U.S. restaurants. Its expanding international division reported same-store sales growth of 1%.

Pizza Hut’s same-store sales rose just 1%, falling short of StreetAccount estimates of 1.7%. The pizza chain reported 2% same-store sales growth for international restaurants and flat same-store sales in the U.S.

Pizza Hut isn’t the only pizza chain that has struggled to win over U.S. consumers. Rival Domino’s Pizza reported a 0.6% drop in same-store sales during its third quarter.

Yum’s total restaurant footprint grew 6% as it opened more than 1,100 locations during the quarter.