Yum! Brands second-quarter net income declines 15 per cent

China division sales and profits were affected by adverse publicity of Avian flu.

New Statesman
A KFC restaurant in California. Credit: Getty Images.

Yum! Brands, which owns the KFC, Pizza Hut and Taco Bell restaurants chain, has posted a net income of $281m for the second-quarter ending 15 June 2013, a decline of 15 per cent compared to $331m earned during the same period the previous year.

Operating profits fell by 17 per cent to $390m (2012: $473m), while total revenues declined by 8 per cent to $2.9bn (2012: $3.16bn).

The company, which has over 39,000 restaurants in more than 130 countries and territories, has said its sales and profits in China were affected by the adverse publicity surrounding Avian flu, apart from the residual effect of the December poultry supply incident.

During the quarter, the company’s same-store sales in China declined by 20 per cent, which included a 26 per cent decline at KFC that was offset by a 7 per cent growth at Pizza Hut Casual Dining.

David Novak, chairman and CEO of the company, said: “KFC sales and profits in China were significantly impacted by intense media surrounding Avian flu, as well as the residual effect of the December poultry supply incident. The good news is that China sales are recovering as expected. The extensive media surrounding Avian flu in China has subsided and same-store sales at KFC are clearly improving.

“I’m pleased with the very strong performance at Pizza Hut Casual Dining, which delivered solid same-store sales growth as we continue to open new units at a record pace. For the total China Division, we remain on track to open at least 700 new units this year. This means we will have opened about 1,600 units over a two-year period. As KFC sales continue to recover, we expect to have solid momentum in China heading into 2014.”

The company, which expects same-store sales in China to recover in the near future, opened about 1,600 new stores during the last two years.