Yum Brands announced today, Wednesday, that fourth-quarter sales fell short of Wall Street expectations due to weak growth in its major brands like Taco Bell, KFC, and Pizza Hut amid fluctuations in American consumer behavior. Yum Brands joined competitors McDonald's and Starbucks in declining sales, which have been affected by the war between Israel and Hamas. The company's sales in the fourth quarter of the previous year dropped below ten percent, as the conflict impacted its business in the Middle East and other markets like Malaysia and Indonesia. The company stated that the impact extended into the first quarter of the current year, but it is expected to moderate in the remaining months of the year.
The Middle East, Turkey, and North Africa represent about six percent of KFC's sales, compared to about five percent for Pizza Hut. In the United States, consumers, particularly low-income households frequenting fast food chains like Kentucky and McDonald's, have reduced their spending due to inflationary pressures, which include shifting to home-prepared meals. Data from Placer.ai showed a decline in foot traffic to Yum's brands, with Taco Bell being considered the "crown jewel" among the company's restaurants.
Brian Yarbro, an analyst at Edward Jones, noted, "For many fast food lovers, a meal that used to cost four, five, or six dollars has become ten, twelve, or thirteen dollars over the past few years... and buyers are starting to question why those increases have happened."
*Efforts to Boost Sales*
CEO David Gibbs stated in a conference call following the results announcement that Yum is planning initiatives aimed at boosting sales, including the launch of the first loyalty program at KFC in the first quarter, and limited-time offers on pizza and chicken wings at Pizza Hut. Taco Bell plans to introduce at least one new product every five weeks this year to attract more customers.
