Yum! Brands Provides Business Update Amid Coronavirus Pandemic

Yum! Brands, Inc. YUM announced an intra-quarter business update, including same-store sales, for the period ended May 31. Although the business has improved meaningfully in the recent weeks, the COVID-19 pandemic is still a major hurdle for the company as it continues to experience temporary restaurant closures in many markets across the world.

Same-Store Sales in the United States

In May, KFC generated mid-teens same-store sales growth versus a decline of low-20s reported at first quarter-end. As of May 31, the metric grew in mid-single digits.

Pizza Hut also delivered low-teens same-store sales growth in May. At March-end, the same fell in mid-teens. At the end of May, same-store sales were up in low-single digits. Particularly in delivery and carry-out-only restaurants, the same grew approximately 15% year over year.

Taco Bell registered slight growth in May same-store sales against nearly 30% decline in first-quarter end. As of May-end, same-store sales declined in high-single digits.

The company, which share space with Domino's Pizza, Inc. DPZ, Chipotle Mexican Grill, Inc. CMG and Brinker International, Inc. EAT in the same industry, noted that Pizza Hut U.S. recorded the highest delivery and carry-out average sales week in the past eight years during early May. KFC U.S. also reported that it registered historic average sales per store in a week. Meanwhile, Taco Bell is experiencing significant traffic declines during the breakfast and late-night occasions due to the COVID-19 pandemic. Yet, it is performing very well in the dinner daypart.

Same-Store Sales Internationally

Unlike the United States, the remaining international markets remain choppy as restaurants outside the country are not fully operational. In May, KFC and Pizza Hut reported respective decline in same-store sales of 25% and 10%. However, the figures improved slightly from April’s 40% and 30% decline, respectively.

Global Same-Store Sales (As of May)

Yum! Brands’ global same-store sales fell 19%. KFC, Pizza Hut and Taco Bell declined 26%, 10% and 11%, respectively.

Restaurant Reopening Updates

After being hurt by restaurant closures in early-April, when 30% of KFC restaurants and 25% of Pizza Hut restaurants were shut internationally, the company has now reopened approximately 90% of operations globally. As of Jun 9, it reopened another 1000 restaurants and only 10% of the total 50,000 restaurants are closed now.

In North America, 92% restaurants — reflecting approximately 38% of global unit count — are currently operational. Of the Asia Pacific restaurants, 97% are open (reflecting 34% of total units globally). In Africa, Europe, India, Latin America, Middle East, and Russia, comprising 27% of its global unit, 78% of the restaurants are open.

Share Price Performance

Shares of this Zacks Rank #3 (Hold) company have gained 19.9% in the past three months compared with the industry’s 27.9% rally. The underperformance can be primarily attributed to concerns regarding the coronavirus outbreak. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nonetheless, gradual opening of restaurants along with strong digital and delivery services will help it regain momentum.

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