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The restaurant group has been raising prices of tacos, fried chicken and pizzas but could not fully counter the blow from a 4% increase in overall expenses, as the war in Ukraine and persistent supply chain constraints have led to a surge in commodity prices.
Industry bellwethers McDonald’s Corp (NYSE:MCD) last month and Starbucks Corp (NASDAQ:SBUX) on Tuesday topped quarterly earnings estimates, managing to offset increased expenses through price hikes.
Yum reported largely in-line quarterly same-store sales on strong demand for its tacos and relaunched Mexican pizza at Taco Bell.
The company said comparable sales rose 1%, with Taco Bell posting a better-than-expected 8% increase and making up for declines at KFC and Pizza Hut. Analysts had also estimated a near 1% increase.
Excluding one-off charges, Yum earned $1.05 per share for the second quarter ended June 30, compared with estimates of $1.09 per share, according to IBES data from Refinitiv.
Quarterly net income slumped 43% to $224 million, or 77 cents per share, as income tax provision increased over tenfold to $166 million. Yum also said a strong U.S. dollar shaved $23 million off its operating profit for the quarter.
Yum also reiterated it was in advanced stages of selling its KFC business in Russia to a local operator, who would rebrand the restaurants.
