Spending

KFC parent company doubles deals as consumers cut spending

  • Yum misses estimates as spending rises
  • Low-income consumers fall back – CEO
  • Decline in Pizza Hut sales

Aug 3 (Reuters) – Yum Brands Inc (YUM.N) said on Wednesday it would offer new items and promotional offers as it seeks to reverse slowing consumer demand for its pizza and fried chicken low income.

Americans are tightening their belts more and more as household savings fall and the prices of gasoline and basic necessities rise, weighing on corporate profits.

Retail giants Walmart Inc (WMT.N) and Best Buy Co Inc (BBY.N) have already lowered their profit estimates, while McDonald’s Corp eyes more discounts as consumers turn to less expensive items Dear. Read more

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People are becoming more cautious, with the pullback for low-income consumers becoming more pronounced, said Yum chief executive David Gibbs.

Yum has brought back its Mexican pizza at Taco Bell and its $5 macaroni and cheese bowls at KFC and is banking on low-cost deals at Pizza Hut to lure customers.

The company plans to double down on promotional offers after its quarterly results missed estimates on rising ingredient, labor and packaging material costs, pushing up its overall spending by 4 %.

Yum’s second-quarter adjusted earnings per share of $1.05 came in below estimates of $1.09, sending its stock down as much as 3.2%.

The company’s earnings follow better-than-expected profits from rivals McDonald’s Corp and Starbucks Corp , which managed to offset higher spending with price increases. Read more

Yum reported quarterly same-store sales growth of 1%, largely in line with estimates, with Taco Bell posting a better-than-expected 8% increase to offset declines at KFC and Pizza Hut.

Pizza Hut’s sales faltered even as more than half of its U.S. restaurants adopted third-party delivery services by the end of the quarter to bolster their operations, down from 40% at the start of the quarter.

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Reporting by Praveen Paramasivam in Bengaluru; Editing by Vinay Dwivedi

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